A)Tiny’s inventory is included at $30,000 but none of its revenues are included.
B)Tiny’s inventory is included at $30,000 as well as its revenue of $400,000.
C)Tiny’s inventory is included at $45,000 but none of its revenues are included.
D)Tiny’s inventory is included at $45,000 as well as its revenue of $400,000.
2) On January 1, Year One, Big Company acquires 100 percent of the outstanding shares of Small Company by issuing its own stock worth $12 million. The shares of Small had been worth only $11 million in the period leading up to the acquisition but Big had to pay a premium in order to obtain all of the stock. Big paid an additional $200,000 in cash to attorneys as direct consolidation costs and another $150,000 in stock issuance costs. According to US GAAP, what should be the basis for reporting the assets and liabilities of Small within consolidated financial statements created on the date of acquisition?
3) On November 1, Year One, the Haynie Company signs a contract to receive one million Japanese yen on February 1, Year Two, for $10,000 based on the three-month forward exchange rate at that time of $1 for 100 Japanese yen (1,000,000 x 1/100 or $10,000). This contract is a derivative because its value is derived from the future value of the Japanese yen in relation to the US dollar. On December 31, Year One, the Haynie Company is producing financial statements. How is this forward exchange contract reported?
It is shown as an asset or a liability at its fair value.
It is shown only as an asset at its fair value.
It is shown only as a liability at its fair value.
It is only disclosed in the notes to the financial statements because it is a future transaction.
1. B)Tiny’s inventory is included at $30,000 as well as its revenue... View the full answer