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Accounting 302 final
intermediate accounting
35
Accounting
Undergraduate 4
04/22/2011

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Cards

Term
When using the equity method to account for an investment, cash dividends received by the inverstor from the investee should be recorded:
Definition
As a reduction in the investment account
Term

Balance sheet:

Equipment 500,000

less accumulated deprication: 135,000

 

use strait-line depriciation over 10 years and estimates salvage value at 10% of cost.  What is the average age of the equipment owned?

Definition
3 years
Term
When an impairment of an equity investment that is classified as available for sale occurs for a reason that is judged to be "other than temporary," the investment is written down to its fair value and the amount of the write-down is:
Definition
included in income
Term
The equity method of accounting for investments in voting common stock is appropriate when:
Definition
the investor can significantly influence the invetee
Term
Vega Corp. purchased a patent at a cost of 200,000.  Legal filling fees of 50,000 were paid for the patent.  10 year useful life, strait line amortization.  40,000 for unsucessful defense. The amount charged to income related to the patent is:
Definition
215,000
Term
Deprication:
Definition
Could be the product cost or a period cost depending on the use of the asset.
Term
Consolidated financial statements are prepared when on company has:
Definition
control over another company
Term
which of the following types of subsequent expenditures normally are capitalized?
Definition
Additions, improvements, and rearrangements.
Term
All investment securities are initially recorded at:
Definition
cost
Term
the income statement reports changes in fair value for which type of securities
Definition
Trading securities
Term

Trading securities bought:

  Cost:      Fair value:

80,000     84,000

60,000     54,000

22,000     22,000

what amount will be reported on the balance sheet, and how will it be classified?

Definition
$160,000  Current Asset
Term

Purchased securties during 2011 and classifed as securities available for sale:

Cost:  Fair value:

40,000  49,000

70,000  66,000

28,000  39,000

all decline are temporary.  how much gain will be reported in the income statement?

Definition
zero
Term
On 1/1Nana, paid 100,000 for 8,000 shares of Papa common stock.  These securities were classified as trading securities.  The ownership in Papa company is 10%. Papa reported net income of 52,000 for year ended 12/31.  the fair value of Papa stock on that date was 45/share.  what amount will be reported in the balance sheet of Nana company for the investment in papa at 12/31
Definition
360,000
Term
If a company exercises significant influence over Son Company and owns 40% of its common stock, then pop company
Definition
would record 40% of the net income of SOn Company as investment each year.
Term
Accumulated other comprehensive income in the shareholders' equity section of the balance sheet reflects changes in the fair value of securities for which type of securities?
Definition
Securities available for sale
Term
the replacement of a major compontenet increased the productive capacity of production equipment from 10 units per hour to 18 units per hour. The expenditure should be debited to:
Definition
Equipment
Term
When an equoty security is appropriately carried and reported as securities available for sale, a gain should be reported in the income statement:
Definition
Only when the security is sold.
Term
If the fair value of equity securities is not determinable and the equiy method is not appropriate, the securities should be reported at:
Definition
Cost
Term
Which of the following investment securities are not reported at fair value in its balance sheet?
Definition
Debt securities held to maturity.
Term
Securities that are purchased with the intent of selling them in the near future to take advantageshort-term price changes are classified as:
Definition
Trading securities
Term
Refer to the process of allocating the cost of long-term assets used in the business over future periods.
Definition
Deprication, depletion, and amortization.
Term
Which securities may be classified as held to maturity securities in its balance sheet?
Definition
Long-term debenture-bonds
Term
If common stock is classified as securities available for sale, cash dividends are classified by the investor as:
Definition
dividend income
Term
Amortization of goodwill?
Definition
$0.
Term
Gains on the cash sales of fixed assets:
Definition
Are the excess of the cash proceeds over the book value of the assets.
Term
Assming an asset is used evenly over a four-year service life, which method of depriciation will always result in the largest amount of deprication in the first year?
Definition
Double-declining balance.
Term
A change in the estimated useful life and residual value pf machinery in the current year is handled as:
Definition
a prospective change from the current year though the remainder of its useful, using new estimates.
Term
Trading securities, by definition, are property classified in the balance sheet as:
Definition
Current assets
Term
The investment category for which the investor's "positive intent and ability to hold" is important is:
Definition
Securities classified as held to maturity.
Term
Trading securities are most commonly found on the books of:
Definition
banks
Term
Reported at fair value
Definition
Trading securities
Term
Changes in market value affect comprehensive income, but not net income.
Definition
Securities available for sale only
Term
Changes in market value affect net income.
Definition
Trading securities only
Term
Reduces the investment account balance under the equity method
Definition
dividend received
Term
Temporary declines in the fair value of an available for sale security
Definition
unrealized losses
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