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ACC 206 Week 8 Quiz Chapter 16

ACC 206 Week 8 Quiz Chapter 16

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ACC 206 Week 8 Quiz Chapter 16 -

Multiple Choice Question 71           

The cost method of accounting for long-term investments in stock should be employed when the

  • investor owns more than 50% of the investee's stock.
  • market value of the shares held is greater than their historical cost.
  • investor has significant influence on the investee and the stock held by the investor are marketable equity securities.
  • investor's influence on the investee is insignificant.

 

Multiple Choice Question 63

In accounting for stock investments between 20% and 50%, the _______ method is used.

  • consolidated statements
  • controlling interest
  • cost
  • equity

 

Multiple Choice Question 97             

If one company owns more than 50% of the common stock of another company,

  • a partnership exists.
  • a parent-subsidiary relationship exists.
  • the company whose stock is owned must be liquidated.
  • the cost method should be used to account for the investment.

 

Multiple Choice Question 33           

Corporations invest in other companies for all of the following reasons except to

  • meet strategic goals.
  • increase trading of the other companies' stock.
  • house excess cash until needed.
  • generate earnings.

 

Multiple Choice Question 95

The company whose stock is owned by the parent company is called the

  • sibling company.
  • controlled company.
  • subsidiary company.
  • investee company.

 

Multiple Choice Question 74

On January 1, 2014, Lark Corporation purchased 35% of the common stock outstanding of Dinc Corporation for $700,000. During 2014, Dinc Corporation reported net income of $200,000 and paid cash dividends of $100,000. The balance of the Stock Investments—Run account on the books of Lark Corporation at December 31, 2014 is

  • $700,000.
  • $735,000.
  • $770,000.
  • $665,000.

 

Multiple Choice Question 90             

Viejo Inc. earns $600,000 and pays cash dividends of $150,000 during 2014. Cruz Corporation owns 73,500 of the 210,000 outstanding shares of Viejo.

What amount should Cruz show in the investment account at December 31, 2014 if the beginning of the year balance in the account was $40,000?

  • $250,000
  • $197,500
  • $210,000
  • $157,500

 

Multiple Choice Question 40

On January 1, 2014, Brenner Company purchased at face value, a $1,000, 8% bond that pays interest on January 1 and July 1. Brenner Company has a calendar year end.

The adjusting entry on December 31, 2014,

  • not required.

 

  • Interest Receivable..............   40       

Interest Revenue........                        40

 

  • Cash.................................       40       

Interest Revenue........                        40

 

  • Interest Receivable..............   40       

Debt Investments.......                        40

 

 

Multiple Choice Question 89

On January 1, 2014, Gene Corp. paid $800,000 for 100,000 shares of Onofine Company's common stock, which represents 30% of Onofine's outstanding common stock. Onofine reported net income of $200,000 and paid cash dividends of $60,000 during 2014. Gene should report the investment in Onofine Company on its December 31, 2014, balance sheet at:

  • $842,000
  • $758,000
  • $818,000
  • $800,000

 

Multiple Choice Question 41

On January 1, 2014, Brenner Company purchased at face value, a $1,000, 10% bond that pays interest on January 1 and July 1. Brenner Company has a calendar year end.

The entry for the receipt of interest on January 1, 2015 is

 

  • Cash.................................       50       

            Interest Revenue........                        50

 

  • Cash.................................       100     

Interest Receivable.....                                   100

 

  • Cash.................................       100     

Interest Revenue.......                         100

 

  • Cash.................................       50       

Interest Receivable.....                                   50

 

 

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