Blue Company owns 70 percent of Black Company's outstanding common stock. On December 31,
20X8, Black sold equipment to Blue at a price in excess of Black's carrying amount, but less than
its original cost. On a consolidated balance sheet
On July 1, 20X9, Link Corporation paid $340,000 for all of Tinsel Company's outstanding common
stock. On that date, the costs and fair values of Tinsel's recorded assets and liabilities were as follows:
Based on the preceding information,
Assuming no impairment in value prior to transfer, assets transferred by a parent company to another
entity it has created should be recorded by the newly created entity at the assets':
A. cost to the parent company.
B. book value on the
If Push Company owned 51 percent of the outstanding common stock of Shove Company, which
reporting method would be appropriate?
A. Cost method
C. Equity method
D. Merger method
Usually, an investment of 20 to 50 percen
All of the following are benefits the U.S. will gain from the adoption of globally consistent accounting
standards except for:
A. Reduction in reporting costs as the need for multiple sets of financial statements decreases.
B. Increased q
Consolidated financial statements tend to be most useful for:
A. Creditors of a consolidated subsidiary.
B. Investors and long-term creditors of the parent company.
C. Short-term creditors of the parent company.
D. Stockholders of a conso
1. A partnership is a(n):
I. accounting entity.
II. taxable entity.
A. I only
B. II only
C. Neither I nor II
D. Both I and II
Which of the following accounts could be found in the general ledger of a partnership?
A. Option A
B. Option B
A not-for-profit organization received a donation temporarily restricted as to use. The donated amount
was later spent in accordance with the restriction. In which category(ies) of net assets should the related
revenues and expenses be
The CRT partnership has decided to terminate operations and to liquidate the partnership assets. There
are no partner loans, and all partners have positive capital balances. Gains and losses on liquidation and
cash distributions to partne
Which of the following funds use the accrual basis of accounting?
I. Enterprise fund
II. Agency fund
III. Internal service fund
A. I only
B. II only
C. I and III only
D. I, II, and III
A special revenue fund should be used in which o
Which organization has the authority to establish generally accepted accounting principles for state and
local government entities?
A. The National Council on Governmental Accounting
B. The Governmental Accounting Standards Board
What is defined as a condition in which a company is unable to meet debts as the debts mature?
D. Credit squeeze
Under a composition agreement,
A. creditors agree to accept less than the face amo
Which sections of the cash flow statement are affected b y the difference in the direct and indirect
approaches of presenting a cash flow statement?
I. Operating activities section
II. Investing activities section
III. Financing activitie
The Securities and Exchange Commission is responsible for:
Which regulation created the Securities and Exchange Commission?
A. Securities Act of 1933
B. Securities Exchange Act of 1934
Trevor Company discloses supplementary operating segment information for its three reportable
segments. Data for 20X8 are available as follows:
Additional 20X8 expenses include indirect operating expenses of $200,000. Appropriately select
If 1 British pound can be exchanged for 180 cents of U.S. currency, what fraction should be used to
compute the indirect quotation of the exchange rate expressed in British pounds?
Suppose the direct
Cutler Company owns 80 percent of the common stock of Marina Inc. Cutler acquires some of Marina's
bonds from an unrelated party for less than the carrying value on Marina's books and holds them as a
long-term investment. For consolidat
On January 1, 20X9, Company A acquired 80 percent of the common stock and 60 percent of the
preferred stock of Company B, for $400,000 and $60,000, respectivel y. At the time of acquisition, the fair
value of the common shares of Compan y
When there are intercompany sales of inventory during the year and a three -part consolidation worksheet
is prepared, elimination entries related to the intercompany sales:
I. Always are needed.
II. Are not needed if the entire inventor y
Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8,
for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000.
Silver's balance sheet immediately