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26) On January 1, 2014, Red Deer Corporation paid $360,000 to purchase 32% of the outstanding voting stock of English Court Corporation. The equity method is used to account for the investment. The following data relate to this investment. 2014 ?Dividends received from English Court Corporation amounted to $20,000. ?Net income reported by.
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9.2   Explain the types, features, and pricing of bonds payable 1) Secured bonds are also called: A) mortgage bonds B) callable bonds C) debenture bonds D) convertible bonds 2) Bonds which are backed only by the good faith of the borrower are referred to as: A) mortgage bonds B) secured bonds C) registered bonds D) debenture bonds 3) Bonds which mature.
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9.1   Explain and account for current liabilities 1) Current liabilities are obligations due within: A) one year or within the company's normal operating cycle if it is longer than one year B) one year or within the company's normal operating cycle if it is shorter than one year C) one month or within the.
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18) Megawatt Corporation purchased inventory merchandise on June 15, 2015, from a Scottish company for 100,000 British pounds. Megawatt remitted payment to the Scottish company on July 13, 2015. The British pound was worth $1.74 on June 15, 2015, and $1.78 on July 13, 2015. Prepare entries for Megawatt Corporation needed.
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8.1   Analyze and report non-strategic investments 1) A short-term investment is not: A) referred to as a temporary investment B) referred to as a marketable security C) a current asset D) intended to be converted to cash in more than one year 2) The receipt of a cash dividend arising from an investment (5% ownership) held.
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10.1   Explain the main features of a corporation 1) Which of the following is not a characteristic that distinguishes corporations from proprietorships and partnerships? A) Corporations are separate legal entities apart from the owners. B) Corporate earnings are subject to double taxation. C) Corporations have mutual agency. D) Corporations have continuous lives regardless of changes.
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8.2   Analyze and report investments in affiliated companies using the equity method 1) Investments accounted for using the equity method are initially recorded at: A) fair market value of the investee company multiplied by the percentage of ownership acquired B) the total of the investee's equity accounts multiplied by the percentage of ownership.
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9.4   Calculate and account for interest expense on bonds payable 1) Under the effective-interest method of amortizing bond premiums, the interest expense recorded for each semi-annual interest payment: A) will increase over the life of the bond B) is equal to the carrying value of the bond times the contract rate of interest.
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7.5   Account for intangible assets 1) All of the following are intangible assets except: A) trademarks B) natural gas C) goodwill D) copyrights 2) Copyrights are granted for the life of the author plus: A) 10 years B) 40 years C) 50 years D) 100 years 3) Goodwill is equal to the excess of the cost of an acquired company over.
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6.2   Explain and apply three inventory costing methods 1) Given the following data, what is the weighted-average cost of ending inventory rounded to the nearest whole dollar? (Do not round in the process of your calculations, only round your final answer.) Sales revenue100 units at $15 per unit Beginning inventory40 units at $9.
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9.5   Explain the advantages and disadvantages of financing with debt versus equity 1) All of the following are advantages of issuing stock except: A) less risky to the issuing corporation B) creates no liabilities for the corporation C) creates no interest expense which must be paid D) generally results in a higher earnings per share 2).
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9.7   Describe other types of long-term liabilities 1) Which type of lease will not increase a company's assets or liabilities? A) a finance lease B) an operating lease C) a lease in which title is transferred to the lessee at the end of the lease term D) the present value of lease payments is 90%.
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6.5   Use the cost-of-goods-sold (COGS) model to make management decisions 1) Average inventory is equal to: A) beginning inventory plus cost of goods sold divided by two B) beginning inventory plus ending inventory divided by two C) cost of goods sold plus purchases divided by two D) ending inventory plus cost of goods sold divided.
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7.6   Analyze and evaluate a company's return on assets 1) Select financial information for Fried Banana's Inc. appears below: 20132014 Net sales$1,000,000$1,200,000 Net income100,000130,000 Net assets 2,000,0002,500,000 What is the company's net profit margin, total asset turnover, and return on assets for 2014? 7.7   Interpret tangible and intangible asset activities on the statement of cash flows 1) Prepare.
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11) On January 2, 2012 McNally's Extra Corporation acquired equipment for $120,000. The estimated life of the equipment is 5 years or 20,000 hours. The estimated residual value is $20,000. If McNally's Extra Corporation uses the straight-line method of depreciation, what will be the debit to Depreciation Expense for the.
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14) Why is understanding the extent to which ATCO Ltd. influences another company important for accounting purposes? What impact does the degree of influence ATCO Ltd. has over another company have on accounting? 15) Prepare journal entries to record the following transactions associated with at fair value through other comprehensive.
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9.3   Account for bonds payable 1) The carrying amount of bonds issued at a discount is calculated by: A) subtracting Discount on Bonds Payable from Bonds Payable B) subtracting Interest Payable from Bonds Payable C) subtracting the sum of Discount on Bonds Payable and Interest Payable from Bonds Payable D) subtracting Interest Expense from Bonds.
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11) If a corporation issues only one class of shares, it must be: A) par value B) preferred C) common D) common or preferred 12) In a corporation, the two basic sources of shareholders' equity are: A) share capital and operating capital B) share capital and retained earnings C) donated capital and share capital D) donated capital and retained.
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22) Solvency Limited purchased equipment costing $150,000 on October 1, 2013, by paying 10% down and signing an 8%, 9-month note payable for the balance. Solvency Limited's year end is December 31. a.Prepare journal entries to record the purchase of the equipment, the accrual of interest on December 31, and the.
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10.3   Explain why a company repurchases shares 1) Which statement below regarding a share repurchase is true? A) A share repurchase grows a company's assets and equity. B) The company repurchasing shares is not entitled to vote. C) Repurchasing shares shrinks a company's assets and equity. D) Repurchasing shares increases retained earnings. 2) A company may.
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11) Companies with investments accounted for by the equity method often refer to the investee as a(n): A) affiliated company B) wholly-owned company C) subsidiary company D) trading partner 12) Barking Power Company accounts for its 35% investment in Pipeline Corporation under the equity method of accounting. The investment was made on January 1, 2014,.
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6.4   Analyze and evaluate gross profit and inventory turnover 1) Inventory turnover is calculated by: A) dividing average inventory by cost of goods sold B) dividing cost of goods sold by average inventory C) multiplying average inventory by cost of goods sold D) subtracting ending inventory from cost of goods sold 2) The gross margin rate.
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22) The following data pertain to Home Office Company for the year ended December 31, 2014: Sales (25% were cash sales) during the year$1,100,600 Cost of goods sold during the year690,300 Beginning inventory319,800 Purchases (10% were cash purchases) during the year738,200 a.Prepare journal entries to record sales, cost of goods sold, and the purchase of.
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21) Treating a capital expenditure as an immediate expense: A) understates expenses and overstates owners' equity B) understates expenses and understates assets C) overstates assets and overstates owner's equity D) overstates expenses and understates net income 22) The cost of land would include all of the following except: A) survey and legal fees incurred B) costs of.
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6.3   Explain how accounting standards apply to inventories 1) If year-end inventory is reduced from cost to a lower net realizable value, which of the following accurately depicts the results? A) Year-end inventory is reduced and cost of goods sold is reduced by the same amount. B) Cost of goods sold is reduced.
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23) Energy Direct Corp. acquired 32% of Edmonton Limited for $2,000,000 on January 1, 2015. During 2015, Edmonton Limited earned $480,000 and paid dividends of $225,000. a. Prepare the journal entries required to record the acquisition, and the transactions during 2015. b. Determine the carrying value on Energy Direct Corp. of the.
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8.3   Analyze and report controlling interests in other corporations using consolidated financial statements 1) Goodwill arises when a parent company: A) pays less to acquire a subsidiary company than the market value of the subsidiary's net assets B) pays more to acquire a subsidiary company than the market value of the subsidiary's net.
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5) A firm can change their inventory costing method if it provides more reliable and relevant information. 6) A change in inventory costing method should be applied prospectively. 7) The disclosure principle indicates an organization should provide enough information for those outside of the organization to make an informed decision about the.
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10.2   Account for the issuance of shares 1) Assets received in exchange for the issuance of stock should be recorded at: A) historical cost B) historical cost less accumulated amortization taken to date C) fair market value as determined by a good-faith estimate from independent appraisers D) book value prior to the issuance 2) Quo Corporation.
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8.4   Analyze and report long-term investments in bonds 1) The amortization of a discount on a long-term bond investment: A) decreases the investor's Long-Term Investment account B) decreases the investor's interest revenue C) increases the investor's interest revenue D) increases the investor's interest expense 2) Amortization of a discount or premium on the bond affects all.
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10.4   Account for retained earnings, dividends, and stock splits 1) When a cash dividend is declared: A) the Cash account is debited. B) the Cash account is credited. C) the Retained Earnings account is debited. D) the Retained Earnings account is credited. 2) A cash dividend becomes a legal liability of the corporation on the: A) date.
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11) The carrying amount of bonds issued at a premium is calculated by: A) adding Premium on Bonds Payable to Bonds Payable B) subtracting Interest Payable from Bonds Payable C) adding Interest Payable to Bonds Payable D) subtracting Premium on Bonds Payable from Bonds Payable 12) When using the effective-interest method of amortizing a discount.
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7.1   Describe the types of tangible and intangible assets a business may own 1) Which of the following is not an intangible asset? A) Copyright B) Patent C) Leasehold improvement D) Trademark 7.2   Measure and account for the cost of property, plant, and equipment 1) Which of the following expenses is most closely associated with tangible long-lived.
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22) Amortization of a discount on a long-term bond investment will decrease the amount of interest revenue recorded by the investor. 23) For a company that prepares its financial results in accordance with IFRS, a held to maturity bond investment must use the effective rate interest method. 24) Under ASPE a reporting.
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8.5   Report investing activities on the statement of cash flows 1) The purchase of long-term investments would appear on a cash flow statement in the: A) operating activities section B) investing activities section C) financing activities section D) would not appear on a cash flow statement 2) The sale of a long-term investment would appear on.
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7.3   Calculate and record depreciation on property, plant, and equipment 1) The process of allocating property, plant, and equipment's cost to expense over the period the asset is used is called: A) accumulation B) depreciation C) interest D) repairs expense 2) Which of the following depreciation methods best fits those assets that tend to wear out.
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11) Potential liabilities that depend on future events arising out of past events are called: A) long-term liabilities B) estimated liabilities C) actual liabilities D) contingent liabilities 12) A repair to an appliance under warranty occurs within the warranty period. What adjustment is made? A) Warranty Expense is debited. B) Repair Expense is debited. C) Estimated Warranty Payable.
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6.6   Analyze how inventory errors affect the financial statements 1) An error in the ending inventory for the year ended December 31, 2013: A) automatically creates errors in cost of goods in the 2013 and 2014 financial statements B) has no effect on the 2013 financial statements but will create an error in.
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7.4   Explain additional topics in accounting for long-live tangible assets 1) Rhoundakona Corporation bought property, plant, and equipment on January 1, 2012, at a cost of $35,000. Estimated residual value is $5,000 and the estimated useful life is 8 years. The company uses straight-line depreciation. On January 1, 2015, Rhoundakona's management.
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11) A non controlling interest will appear on the consolidated balance sheet when the parent company owns more than 40% but less than 100% of the subsidiary's stock. 12) The parent and subsidiary relationship that is established in consolidation accounting is an example of the entity concept. 13) Non-controlling interest occurs when.
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26) Explain the concept of depreciation. Include in your discussion one common misconception regarding depreciation and its impact on the finances of a business. 27) For each of the independent situations below, determine the age of the asset in question. All assets were acquired at the beginning of the year. a.The balance.
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11) Bavarian Purity Corporation purchased equipment for $32,000. Bavarian Purity also paid $400 for freight and insurance while the equipment was in transit. Sales tax amounted to $240. Insurance, taxes, and maintenance the first year of use cost $1,000. How much should Bavarian Purity Corporation capitalize as the cost of.
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23) List several characteristics of a corporation. Indicate, wherever appropriate, if the characteristic is an advantage or a disadvantage of the corporate form of business. 24) What type of shares would an investor purchase if he or she were primarily interested in a safe investment? 25) What type of shares would an.
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