江西财经大学高级财务会计国际学院题库chapter_02

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1、AdvancedAccounting,11e(Beams/Anthony/Bettinghaus/Smith)Chapter2StockInvestments—InvestorAccountingandReportingMultipleChoiceQuestions1)Whatmethodofaccountingwillgenerallybeusedwhenonecompanypurchaseslessthan20%oftheoutstandingstockofanothercompany?A)Onlythefairvaluemethodmaybeused.B)Onl

2、ytheequitymethodmaybeused.C)Eitherthefairvaluemethodortheequitymethodmaybeused,dependingupontherelationshipbetweenthecompanies.D)Neitherthefairvaluemethodnortheequitymethodmaybeused,regardlessofthelevelofownership.Answer:CObjective:LO1Difficulty:Easy2)Whatmethodofaccountingwillgenerally

3、beusedwhenonecompanypurchasesbetween20%to50%oftheoutstandingstockofanothercompany?A)Onlythefairvaluemethodmaybeused.B)Onlytheequitymethodmaybeused.C)Eitherthefairvaluemethodortheequitymethodmaybeused,dependingupontherelationshipbetweenthecompanies.D)Neitherthefairvaluemethodnortheequity

4、methodmaybeused,regardlessofthelevelofownership.Answer:CObjective:LO1Difficulty:Easy3)Whichoneofthefollowingitems,originallyrecordedintheInvestmentinFalconCo.accountundertheequitymethod,wouldnotbesystematicallyusedtoreduceinvestmentincomeonaperiodicbasis?A)AmortizationexpenseofgoodwillB

5、)DepreciationexpenseontheexcessfairvalueattributedtomachineryC)AmortizationexpenseontheexcessfairvalueattributedtoleaseagreementsD)Interestexpenseontheexcessfairvalueattributedtolong-termbondspayableAnswer:AObjective:LO5Difficulty:Moderate29Copyright©2012PearsonEducation,Inc.Publishinga

6、sPrenticeHall4)Whichoneofthefollowingstatementsiscorrectforaninvestorcompany?A)ThebalanceintheInvestmentinOspreyCo.accountcanbereducedtorepresentadeclineinthefairmarketvalueoftheinvestment,butwillnotbeadjustedifthefairmarketvalueincreases.B)Undertheequitymethod,thebalanceintheInvestment

7、inOspreyCo.accountcanbenegativeiftheinvesteecorporationoperatesataloss.C)OncethebalanceintheInvestmentinOspreyCo.isreducedtozero,itwillnotbereducedanyfurther.D)Undertheequitymethod,thebalanceintheInvestmentinOspreyCo.accountwillincreasewhencashdividendsarereceived.Answer:CObjec