ACCT 370 Read & Interact Revsine, Collins, Johnson, Mittelstaedt, Soffer Chapter 17 solution answers

ACCT 370 Read & Interact Revsine, Collins, Johnson, Mittelstaedt, & Soffer Chapter 17 solutions complete answers

 

Factors that should be assessed in determining whether an equity method investment impairment is other than temporary include (Check all that apply.)

 

On January 1, 2021, Johnson Company acquired 100% of the shares of Schisel, Inc. Johnson paid $100,000 for the investment, which is $40,000 more than the book value of Schisel's identifiable net assets. Johnson attributed $15,000 of the $40,000 difference to inventory that will be sold in the remainder of 2021, and the rest to goodwill. Johnson will show

 

Minority-passive equity investments generally

 

      securities are investments that are part of an actively managed investment portfolio designed to achieve gains.

 

Haynes Company purchases a ten-year $200,000 bond with an 8% coupon interest rate for $214,047 which indicates a 7% effective yield. This investment was made on January 1, 2021, and is considered a held-to-maturity investment. The bonds have a fair value of $213,500 on December 31, 2021. Which of the following statements is true?

 

Investments are only classified as held-to-maturity if management has

 

Available-for-sale securities are presented at             in the balance sheet.

 

Joshua Corporation has two investments in available-for-sale securities. They purchased Investment A for $60,000 and Investment B for $75,000 during 2020. At the end of the year, the fair values of these investments are $61,475 and $72,500 respectively. The journal entry for the year end adjustment would include

 

Available-for-sale securities may be classified as

 

When an available-for-sale investment is sold, which of the following is included in the income statement?

 

Identify the true statement regarding held-to-maturity securities.

 

It is unusual for held-to-maturity security to be sold prior to maturity because

 

Fair value adjustments for trading securities are recognized in            .

 

Which of the following are true regarding available-for-sale securities?`

 

The amount of the loss accrued according to the Current Expected Credit Loss rules is generally the difference between

 

Haynes Company purchases a ten-year $200,000 bond with an 8% coupon interest rate for $214,047 which indicates a 7% effective yield. This investment was made on January 1, 2021, and is considered an available-for-sale debt security. The bonds have a fair value of $213,500 on December 31, 2021. Which of the following statements is true? (Select all that apply)

 

The CECL credit loss associated with held-to-maturity securities is calculated as

 

A journal entry to record the sale of available-for-sale securities would

 

The process of recording credit losses for available-for-sale securities is complicated by the fact that these securities

 

Which of the following are true for Other-Than-Temporary Impairment (OTTI)?

 

Which of the following is a difference between trading securities and available-for-sale securities?

 

A ______ equity investment generally has 20% to 50% ownership, substantial influence, and uses the equity method to account for the investment.

 

The Current Expected Credit Loss rules are generally not applicable to

 

Ownership of less than ______ of another company's voting shares is presumed to be a passive investment by GAAP.

 

Which of the following are needed to calculate the credit loss associated with held-to-maturity securities?

 

Whittaker Corporation has two investments in trading securities. They purchased Company A for $50,000 and Company B for $40,000 during 2020. At the end of the year, the fair values of these investments are $52,500 and $38,500 respectively. How much would Whittaker report for these equity securities at the end of the 2020?

 

When there is a credit loss on available-for-sale securities, the fair value adjustment

 

Fair value adjustments tax effects are deferred because

 

Other-Than-Temporary Impairment (OTTI) is not an issue for ______ because these are already marked to fair value through the income statement.

 

Which of the following are true of the equity method?

 

A ______ equity investment generally has less than 20% ownership, no substantial influence, and uses fair value measurement with unrealized gains and losses reported in the income statement.

 

Vieu Company bought 30,000 shares of the voting common stock of Williams Corporation in January 2021 for $300,000. In December, Williams announced $150,000 net income for 2021 and declared and paid a cash dividend of $1 per share on the 100,000 shares of outstanding common stock. The carrying value in the investment account at the end of the year would be

 

Regardless of other factors, ownership of less than 20% of another company's voting shares must always be considered a passive investment.

 

Which of the following are true of goodwill?

 

Whittaker Corporation has two investments in equity trading securities. They purchased Company A for $50,000 and Company B for $40,000 during 2020. At the end of the year, the fair values of these investments are $52,500 and $38,500 respectively. The journal entry for the 2020 year end adjustment would include

 

For equity method investments, the fair value option can be elected

 

Whittaker Corporation has two investments in equity trading securities. They purchased Company A for $50,000 and Company B for $40,000 during 2020. At the end of the year, the fair values of these investments are $52,500 and $38,500 respectively. Their marginal tax rate is 35%. The journal entry for this tax effect would include

 

Factors that should be assess in determining whether an equity method investment impairment is other than temporary include

 

An investor has a(n) ______ investment when the investor has the ability to exert significant influence over an investee's decisions.

 

An investor is generally said to have a controlling financial interest when they own ______ of the outstanding voting shares of another entity.

 

Under the equity method dividends received from an investee company

 

An entity that gains a controlling financial interest in another entity is referred to as the       company.

 

Which of the following is not true when the cost of the shares acquired exceeds the underlying book value at acquisition date?

 

The stockholders' equity accounts of the subsidiary are eliminated

 

Which of the following is not true about the fair value option for equity method investments?

 

According to GAAP, how is business fair value determined when there is a less than 100% acquisition?

 

Which of the following would result in an investment being written down and a charge taken against net income if the impairment is considered not to be temporary?

 

Park Company paid $200,000 to purchase 100% of the outstanding common stock of Stream Incorporated on January 1, 2021. Stream's buildings were undervalued by $60,000 as of January 1, 2021; the buildings had a ten-year remaining life as of the date of acquisition. How does this affect the consolidated income statement in the first year?

 

The process of combining a subsidiary's financial statements with the parent's financial statements is referred to as

 

For a consolidated entity with a noncontrolling interests, the return on parent company equity is equal to net income attributable to the parent company divided by average parent company equity, where parent company equity includes

 

The equity interest in a subsidiary not attributable directly or indirectly to the parent is known as the (select all that apply)

 

Suppose that Pace Corporation borrowed $100,000 from Sparrow Corporation, its fully owned subsidiary. How would this loan be treated on the consolidated financial statements?

 

On January 1, 2021, Johnson Company acquired 30% of the shares of Schisel, Inc. Johnson paid $100,000 for the investment, which is $40,000 more than the book value of Schisel's identifiable net assets. Johnson attributed $15,000 of the $40,000 difference to inventory that will be sold in the remainder of 2021, and the rest to goodwill. Johnson will show

 

Park Corporation owns 80% of Recreation Company. During the current year, Park sold goods to Recreation for $80,000. The inventory originally cost Park $60,000. Recreation sold 60% of the inventory during the year. Which of the following statements is correct with respect to preparing Park's current year consolidated financial statements?

 

According to the economic unit concept of consolidation,

 

Examples of what may trigger impairment testing of goodwill includes each of the following except

 

Net income attributable to noncontrolling interests

 

What is the critical issue regarding a VIE?

 

For a consolidated entity with a noncontrolling interest, the return on total equity is equal to net income divided by average total equity, where total equity includes

 

Critics argue that joint ventures are used to

 

Suppose that Pace Corporation borrowed $100,000 from Sparrow Corporation, its fully owned subsidiary. Which of the following would be included in the consolidating worksheet?

 

Which of the following statements is correct with respect to preparing consolidated financial statements?

 

Which of the following statements is true regarding the current accounting standards for goodwill?

 

Which of the following is not a use of a variable interest entity?

 

A joint venture is created when two companies each own ______ of an entity and operate it together.

 

An entity that is acquired through a controlling financial interest by another entity is referred to as a (1).

 

A ______ equity investment generally has more than 50% ownership, effective control, and accounts for the investment through full consolidation.

 

Investments in debt securities may be classified as