Adv Accounting Chapter 1

Chapter 01 The Equity Method of Accounting for Investments Multiple Choice Questions 1. Gaw lodge owns 15% of the green stock of Trace Corporation and hold up the fair-value mode to account for this enthronement. Trace reported light up income of $110,000 for 2008 and gainful dividends of $60,000 on October 1, 2008. How much income should Gaw recognize on this enthronisation in 2008? A. $16,500 B. $9,000 C. $25,500 D. $7,500 E. $50,000 fuss: Easy 2. Yaro confederacy owns 30% of the green stock of Dew Co. and uses the beauteousness mode to account for the investment. During 2008, Dew reported income of $250,000 and paying(a) dividends of $80,000. There is no amortization associated with the investment. During 2008, how much income should Yaro recognize colligate to this investment? A. $24,000 B. $75,000 C. $99,000 D. $51,000 E. $80,000 trouble: Easy 3. On January 1, 2008, Pacer Company paid $1,920,000 for 60,000 shares o f Lennon Co.s voting common stock which represents a 45% investment. No allocation to grace or other detail account was made. Significant curve all over Lennon was achieved by this acquisition. Lennon distributed a dividend of $2.50 per share during 2008 and reported net income of $670,000. What was the balance in the Investment in Lennon Co.

account make up in the financial records of Pacer as of December 31, 2008? A. $2,040,500 B. $2,212,500 C. $2,260,500 D. $2,171,500 E. $2,071,500 Difficulty: spiritualist 4. A company should always use the equity method to account for an investment if A. It has the ability to drill significant set! back over the operating policies of the investee B. It owns 30% of a nonher companys stock C. It has a overbearing interest (more than 50%) of another companys stock D. The investment was made earlier to earn a return on excess cash E. It does not have the ability to exercise significant influence over the operating policies of the investee Difficulty: Easy...If you fate to get a broad(a) essay, order it on our website: OrderCustomPaper.com

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