Pract Questions Ch 10 - Mitsuyasu Myron PDF

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Mitsuyasu Myron...

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CHAPTER 10 1. Debt investments not held to maturity are reported at A. equity value. B. fair value. C. net value. D. amortized cost. 2. Equity securities with less than 20% ownership A. are held-to-maturity debt investments. B. earn dividend revenue. C. are accounted for under the equity method. D. are accounted for under the consolidation method. 3. Gourmet Donuts owns 800 shares of Coffee Express. Coffee Express, which has issued 100,000 shares of stock, declares a cash dividend of $0.50 per share to stockholders. Which journal entry correctly records the cash dividend received by Gourmet Donuts? A. Cash 50,000 Dividend Revenue 50,000 B.

Cash

800 Dividend Revenue

800

C.

Dividend Revenue Cash

400

D.

Cash

400

400

Dividend Revenue

400

4. Unrealized gains or losses occur when A. a company adjusts assets from cost value to book value. B. a company adjusts assets from fair value to cost value. C. a company adjusts assets from book value to fair value. D. a company adjusts assets from fair value to book value. 5. All of the following are reported as other comprehensive income except A. gains or losses from post-retirement benefit plans. B. foreign currency translation adjustments. C. unrealized holding gains or losses on held-to-maturity investments. D. deferred gains or losses from derivatives.

6. Equity securities with more than 20% but less than 50% ownership A. allow the investor to significantly influence the investee’s decisions. B. earn dividend revenue. C. are accounted for under the cost method. D. are accounted for under the consolidation method. 7. At the beginning of the year, Flavo Inc. purchased 10,000 shares of Tastey Company common stock for $80 per share. Tastey Company, which has issued 40,000 shares of stock, earned net income of $800,000 for the year and declared a cash dividend of $8 per share to stockholders. At the end of the year, Tastey Company stock sells for $85 per share. When Flavo Inc. prepares its balance sheet at the end of the year, what is the balance of the account for Equity Investment—Tastey Company? A. $800,000 B. $850,000 C. $880,000 D. $920,000 8. Consoom Corporation holds a debt investment as an available-for-sale investment. The investment is sold, and Consoom realizes a gain. The gain is the excess of the selling price over the investment’s A. market value. B. initial cost. C. fair value. D. present value. 9. Slender Corp. purchased 20,000 shares of Barm Co. common stock for $22 per share. Barm Co., which has issued 80,000 shares of stock, declares a cash dividend of $2 per share to stockholders. Which journal entry correctly records the Cash Dividend received by Slender Corp.? A. Cash 40,000 Dividend Revenue B.

Cash

40,000 40,000

Equity Investments C.

Cash

40,000 160,000

Dividend Revenue D.

Cash

160,000 440,000

Dividend Revenue

440,000

10. Assuming the following data, calculate rate of return on total assets (rounded amounts): Total Assets, May 31, 20X9 Total Assets, May 31, 20X8 For Yr. Ended May 31, 20X9: Depreciation Expense Interest Expense Net Income A. B. C. D.

7.6% 8.6% 9.5% 10.0%

$ 11,000,000 10,000,000

30,000 98,000 900,000...