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MAT Company




MAT Company Purchased 100% of the Stock of the LOWA Company. MAT Company will record the LOWA Assets and Liabilities at;? Fair value of the consideration given up by MAT Company;? The Fair value of the shares obtained from the owners of MAT Company;? It depend if we use the purchase or acquisition method;? None of the above is correct;MICKKEY Company buys all of the outstanding stock of Small Company on November 1, Year One for $500,000 and is now preparing consolidated financial statements at the end of Year One.;Small company Earned Revenues of $10,000 per month during Year One along with expenses of $8,000 per month.;On November 1, Year One, Small company had only one asset a piece of land with a cost of $300,000 and a Fair value of $450,000?and no Liabilities.;The land continues to appreciate in value and is worth $470,000 at the end of Year One. Which of the following statements is true about the consolidated financial statements at the end of Year One?;? Consolidated net income will include $120,000 minus $96,000 earned by Small;? Goodwill at the end of Year One is reported as 0 under the acquisition method;? The gain on the land owned by Small is reported as a $30,000 gain;? All above are wrong;FASB is the primary source for Accounting for Investments?;? FAS 123;? FAS 115;? SAS 112;? None are source for application of investment accounting.;SELECT FINANCING ACTIVITY;? Gain on the sale of common stock;? Selling short term investments;? Buying equipment;? None;SELECT TRUE FOR CASH FLOW STATEMENT;? The operations section (using the direct method) starts with net income;? An increase in accounts receivable adds back cash using the indirect method;? The financing section is the same under either the direct or indirect method;? None of the above is a true statement;Held to maturity securities includes;? Short term trading securities;? Preferred stock in an investee;? A 10 year bond held as investment;? None of the above are held to maturity securities;OF THE FOLLOWING which is TRUE STATEMENT;? Amortization of a premium causes the effective rate to be higher than the face rate on held to maturity investments;? Amortization of a premium causes the effective rate to be lower than the face rate on held to maturity investments.;? Since it is an investment there is no need to test for impairment;? None are True;SELECT TRUE STATEMENT Regarding Trading Securities;? Adjustments to FMV is a part of comprehensive income;? Adjustments to FMV flows though the income statement;? Amortization of a discount decreases the carrying value;? None;OF THE FOLLOWING Cost of available- for -sale Securities include;? Purchase price plus consulting fees;? Purchase price plus brokerage fees;? Gains on sale of securities used to purchase the new securities;? None;SELECT TRUE STATE Regarding available for sale securities?;? If FMV is greater than cost write up to market and recognizes gain as part of operations in the income statement;? Test available for sale securities for impairment;? Subsequent increases in value (after adjusting down for impairment) are allowed;? None


Paper#70353 | Written in 18-Jul-2015

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