Jernigan Corp. had the following account balances at 12/1/10:
Several of Jernigan's accounts have fair values that differ from book value. The fair values are: Land $480,000; Building
$720,000; Inventory $336,000; and Liabilities $396,000.
The ABCD Partnership has the following balance sheet at January 1, 2010, prior to the admission
of new partner, Eden.
Eden acquired a 20% interest in the partnership by contributing a total of $71,500 directly to the
other four partners. Goodwill is to be
Holmes Corporation has filed a voluntary petition with the bankruptcy court in hope of
reorganizing. A statement of financial affairs has been prepared for the company showing these
Liabilities with priority:
Fully secured creditor
Bartlett Company, headquartered in Cincinnati, Ohio, has occasional transactions with
companies in a foreign country whose currency is the lira.
Transactions in 2011
Bought equipment for 40,000 lira on credit.
Brandlin Company of Anaheim, California, sells parts to a foreign customer on December 1,
2011, with payment of 20,000 korunas to be received on March 1, 2012. Brandlin enters into a
forward contract on December 1, 2011, to sell 20,000 korunas on March 1,
On December 18, 2011, Stephanie Corporation acquired 100 percent of a Swiss company for 3.7
million Swiss francs (CHF), which is indicative of fair value. At the acquisition date, the
exchange rate was $0.70 = CHF 1. On December 18, 2011, the fair values
1. Which of the following is correct for two companies that want to file a consolidated tax return as an
One company must hold at least 51 percent of the other co
One company must hold at least 80 percent of the other co
One company must
ACCT 424 Summer 2012 Final Exam
1. Whitley Corporation identified four operating segments: Automotive, Electrical, Lawn Equipment, and
Sporting Goods. Automotive met the revenue test and the profit or loss test. Electrical met all three tests. Lawn
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet
accounts as of January 1, 2011:
According to the artic
1. Which of the following combinations correctly describes the relationship between foreign currency
transactions, exchange rate changes, and foreign exchange gains and losses?
Type of Transaction
Gain or Loss
ACCT 420 Quiz 2 - Summer 2012
1. In a father-son-grandson combination, which of the following statements is true?
A. Companies that are solely in subsidiary positions must have their realized income computed first in the consolidation process.
1. What are the objectives of the bankruptcy laws in the United States?
Prevent insolvency and protect shareholders.
Protect the economy and stimulate growth.
Distribute assets fairly and discharge honest debtors from their obligations.
Provide relief for
1. Following are preacquisition financial balances for Padre Company and Sol Company as
of December 31. Also included are fair values for Sol Company accounts.
A partnership has the following capital balances:
Profits and losses are split as follows: Allen (20%), Burns (30%), and Costello (50%). Costello
wants to leave the partnership and is
ACCT Quiz 4 - Summer 2012
1. Where should a company undergoing reorganization report the gains and losses resulting from the
A. On the statement of retained earnings.
B. On the income statement, combined with the gains and losses from oper
A partnership begins its first year of operations with the following capital balances:
According to the articles of partnership, all profits will be assigned as follows:
1. On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding
voting shares of Soriano, Inc., in exchange for $31.25 per share cash. The remaining 20
percent of Soriano's shares continued to trade for $30.00 both before and after P
1. Which of the following is not a reason for the popularity of partnerships as a legal form
Partnerships can more easily generate significant amounts of capital.
In some cases, losses may be used to offset gains for tax purposes.
1. Sparkman Co. filed a bankruptcy petition and liquidated its noncash assets. Sparkman was paying forty cents
on the dollar for unsecured claims. Bailey Co. held a mortgage of $150,000 on land that was sold for $110,000.
The total amount of payment that
ACCT 424 Quiz 3
1. The disadvantages of the partnership form of business organization, compared to corporations, include
A. the legal requirements for formation.
B. unlimited liability for the partners.
C. the requirement for the partnership to pay income
A partnership begins its first year with the following capital balances:
The articles of partnership stipulate that profits and losses be assigned in the following manner:
Coyote Corp. (a U.S. company in Texas) had the following series of transactions in a foreign country during 2011:
The appropriate exchange rates during 2011 were as follows:
1. Prepare all journal entries in U.S. dollars along with any December 31
1. When an investor uses the equity method to account for investments in common stock,
cash dividends received by the investor from the investee should be recorded as
A deduction from the investors share of the investees profits.
A deduction from the stoc
1. When an investor elects the fair-value option for a significant influence investment, cash
dividends received by the investor from the investee should be recorded as
A deduction from the investment account.
A reduction from accumulated
1. Which of the following does not represent a primary motivation for business
Cost savings through elimination of duplicate facilities and staff.
Combinations as a vehicle for achieving rapid growth and competitiveness.
Quick entry for new
1. The parent company acquires all of a subsidiarys common stock but only 70 percent of its
preferred shares. This preferred stock pays a 7 percent annual cumulative dividend. No
dividends are in arrears at the current time. How is the noncontrolling inte
1. Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has
60,000 shares of its own common stock outstanding. During the current year, Porter
earns income (without any consideration of its investment in Street) of $150,000
1. Which of the following does the U.S. GAAP not consider to be an objective of segment
It helps users make comparisons between a segment of one ente
It helps users make more informed judgments
about the enterprise as a whol
1. What is a subsidiarys functional currency?
The currency in which transactions are
The currency in which the entity primarily
generates and expends cash.
Always the currency of the country in which the
company has its headquarters.
1. Which of the following could explain why accounting is more conservative in some countries
than in others?
Published financial statements are the basis for taxation.
Accounting is oriented toward stockholders as a major source
A common law legal system