Title | ACC 712 Midterm Flashcards Quizlet |
---|---|
Author | Hanane Zitan |
Course | Auditing 1 |
Institution | University of Florida |
Pages | 7 |
File Size | 221.3 KB |
File Type | |
Total Downloads | 42 |
Total Views | 148 |
auditing exercise and answers solution quizlet to course accpunting...
ACC 712 Midterm Flashcards | Quizlet
https://quizlet.com/448468348/acc-712-midterm-flash-car
m
ACC 712 Midterm Terms in this set (42) the investor acquired 100% of the inve equal to the Stockholders' Equity of th How is the reporting of an equity investment like a
and liabilities of the investee compan
consolidation (ie yielding the same SE for the parent
therefore, includes the Stockholders'
company that would result from a consolidation)? How is
assets and liabilities. In the consolidat
it different?
investee company are brought togeth same as that which the investor curren change.
How is the reporting of equity income in the investor's IS
If the investor owns 100% of the inves
a consolidation (ie yielding the same NI for the parent
equal to the net income of the investe
company that would result from a consolidation)? How is
Replacing the equity income with the
it different?
the consolidation process will yield th
Consider the following scenario: an investor owns 30% of
Even thoug
an investee company. The remaining 70% is owned by the
it cannot ex
investee's founder who has managed the company since
public com
its inception and takes no direction from "outsiders." How
cost metho
should the investor account for its investment?
traded stoc
The percentage thresholds are subject to...
How do we determine control?
Rebuttable presumptions
Degree of influence
0-20%
Passive. Change in FV -> NI or cost m
20-80%
Significant influence Equity method
ACC 712 Midterm Flashcards | Quizlet
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ACC 712 Midterm stock has a readily determinable fair value. The investor has representation on the investee's board of directors, participates in the investee's policy making process and has material business transactions with the investee. Which of the following alternatives best describes the investor's required accounting for its interest in the investee? a. The investor should recognize as income the dividends it receives from the investee. b. Because the investee's stock has a readily determinable fair value, the investor must use fair value method to account for its interest in the investee's common stock. c. The investee should recognize as income a proportionate share of the net income recognized by the investee. d. The investor must use the cost-based approach to account for its interest in the investee's common stock.
Which of the following factors is an indicator that an
d
investor company has significant influence over an investee company? a. The investor and investee sign an agreement under which the investor surrenders significant rights. b. Majority ownership of the investee is concentrated among a small group of shareholders who operate the investee without regard to the views of the investor c. The investor tries and fails to obtain representation on the investee's board of directors. d. The investee has technological dependency on the investor.
An investor company uses the equity method to account for its investment in 25% of the outstanding common stock of an investee company How should cash
a
ACC 712 Midterm Flashcards | Quizlet
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ACC 712 Midterm result of this transaction, the investor can exert significant influence over the investee. During each year ended December 31, 2018 and 2019 the investee reported $120,000 of net income and $50,000 of dividends. On January 1, 2018, the book value of the investee's net assets was $2,000,000 and all individual net assets had appraised fair values that equaled their reported book values. On December 31, 2019, what is the balance of the Equity Investment account on the Investor's balance sheet? Select one: a. $740,000 b. $642,000 c. $621,000 d. $600,000
On January 1, 2019, an investor purchases 18,000 common shares of an investee at $12 (cash) per share. The shares represent 20% ownership in the investee. The investee's common stock has a readily determinable fair value. On January 1, 2019, the book value of the investee's assets and liabilities equals $1,230,000 and $150,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values. During the year ended December 31, 2019, the investee company reported net income equal to $50,000 and dividends equal to $15,000. On December 31, 2019, the fair value of the investee's stock is $16 per share. Assume the investor cannot exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2019. a. $216,000 b. $223,000 c. $288,000
c
ACC 712 Midterm Flashcards | Quizlet
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ACC 712 Midterm represent 24% ownership in the investee. The investee's common stock has a readily determinable fair value. On January 1, 2019, the book value of the investee's assets and liabilities equals $1,700,000 and $600,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a customer list. On January 1, 2019, the customer list had a recorded book value of $0, an estimated fair value equal to $90,000 and a 5 year remaining useful life. During the year ended December 31, 2019, the investee company reported net income equal to $120,000 and dividends equal to $40,000. On December 31, 2019, the fair value of the investee's stock is $15 per share. 1. Assume the investor cannot exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2019. a. 432,000 b. 366,880 c. 352,000 d. 480,000
On January 1, 2019, an investor purchases 32,000 common shares of an investee at $11 (cash) per share. The shares represent 24% ownership in the investee. The investee's common stock has a readily determinable fair value. On January 1, 2019, the book value of the investee's assets and liabilities equals $1,700,000 and $600,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values, except for a customer list. On January 1, 2019, the customer list had a recorded book value of $0, an estimated fair value equal to $90,000 and a 5 year remaining useful life. During the year ended December 31, 2019, the investee company reported net income
b
ACC 712 Midterm Flashcards | Quizlet
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ACC 712 Midterm influence over the investee, and acquired its equity interest in the investee on January 1, 2018 for $525,000. On the date of acquisition, the investee's stockholders equity was $1,500,000, and the fair values of the investee's individual net assets were equal to their reported book values. During the year ended December 31, 2018, the investee reported net income of $50,000 and dividends of $10,000. During the year ended December 31, 2019, the investee reported net income of $60,000 and dividends of $15,000. The investor routinely sells inventory to the investee at a 25% profit margin. At December 31, 2018 and 2019, the investee held inventories purchased from the investor for $30,000 and $40,000, respectively. (At the end of each period, all of these inventories are sold by the investee to unaffiliated companies in the next period.) What amount of investment income from the investee did the investor recognize during the year ended December 31, 2019? Select one: a. $17,250 b. $18,000 c. $18,750 d. $20,250
An investor company owns 30% of the common stock of
Beginning balance at January 1, 2018 $
an investee company. The investor has significant
$50,000) 15,000 ‐ 30% of 2018 profit d
influence over the investee, and acquired its equity
dividends received (30% x $10,000) (3
interest in the investee on January 1, 2018 for $525,000. On
$60,000) 18,000 ‐ 30% of 2019 profit d
the date of acquisition, the investee's stockholders equity
of profit from 2018 recognized in 2019
was $1,500,000, and the fair values of the investee's
received (30% x $15,000) (4,500) Endi
individual net assets were equal to their reported book values. During the year ended December 31, 2018, the investee reported net income of $50,000 and dividends of $10,000. During the year ended December 31, 2019, the investee reported net income of $60,000 and dividends of $15,000. The investor routinely sells inventory to the
ACC 712 Midterm Flashcards | Quizlet
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ACC 712 Midterm
If assets purchased, entries.... If stock purchased, entries...
list A+L list "equity investment"
-Has INPUTS ... and According to ASC 805, a business....
-PROCESSES applied to those INPUT ... that have -ABILITY to contribute to creation of
•If "yes", the set of net assets is not a b If no... Is substantially all of the fair value of the gross assets acquired (or disposed of) concentrated in a single identifiable asset or a group of similar identifiable assets?
-Does the set of net assets have outp •If "no", the set must have at least one applied to that input, has the ability to • •If "yes", the set must have at least one applied to that input, has the ability to
-ASSET: 1.Does the asset or liability meet the definition of an element, as defined by FASB's Conceptual Framework? 2.Is the acquired asset or liability part of a business combination?
Probable future economic benefit ob past transactions or events. -LIABILITY: Probable future sacrifices of econom particular entity to transfer assets or p result of past transactions or events.
Required disclosures with regard to inputs to fair value measurement
There is managerial discretion with regard to method of fair value measurement
-LEVEL 1: at quoted prices -LEVEL 2: not at quoted prices, but ob -LEVEL 3: not at quoted prices, with u
Market approach; Income approach;
ACC 712 Midterm Flashcards | Quizlet
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ACC 712 Midterm Assume Company P acquires Compan Earn-outs
$1,000,000 in cash + an additional 20% to former Compa IF the 2-year ROA of Company S exce
What to do with CS and RE when consolidating?
Leave alone. No elim entries
AAP = invstment - (p% * NVNiA) AAP formula
or AAP = FV given up - BV gotten
Who is acquiring entity? what does B/S look like?
The entity that controls >50% after ac
Generally speaking, in a nontaxable t Nontaxable vs taxable transactions
subsidiary's net assets carry forward t result in deferred taxes if the recogniz carried forward tax base. IF taxable, g
The pushdown process results in the consolidation books. This will result in Pushdown accounting
being reported at fair value, consisten INCLUDE GW. Debit RE. Account used: pushdown equity
Restructuring costs
Typical restructuring activities include or to terminate the employment of or
Under the cost method, the pre‐cons Cost method
investment on the acquisition date....