Acc 440 Final Exam Solutions

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June 2013 Updated Acc 440 Final Exam : http://guyswithlonghair.blogspot.com/2013/06/acc.440.final.exam.solutions.html

ACC 440 Final Exam
1) Under the cost method of accounting for a stock investment, the differential A.is written down if related to limited-life assets
B.is written off
C.is not amortized or written off
D.is amortized

2) Accounting for investments depends in part to the level of influence or control. What method is generally tied to influence deemed to be insignifcant? A.Consolidation
B.Equity Method
C.Full Disclosure
D.Cost Method

3) Which of the following observations is consistent with the equity method of accounting? A.Dividends declared by the investee are treated as income by the investor. B.It is used when the investor lacks the ability to exercise significant influence over the investee. C.It may be used in place of consolidation.

D.Its primary use is in reporting nonsubsidiary investments.

4) On January 1, 2007, Yang Corporation acquired 25 % of the outstanding shares of Spiel Corporation for $100,000 cash. Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 2007 and 2008. The fair value of shares held by Yang was $110,000 and $105,000 on December 31, 2007 and 2008, respectively. What amount will be reported by Yang as balance in investment in Spiel on December 31, 2008, if it used the equity method of accounting? A.$111,250

B.$118,750
C.$100,000
D.$122,500

5) On January 1, 2007, Yang Corporation acquired 25 % of the outstanding shares of Spiel Corporation for $100,000 cash. Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 2007 and 2008. The fair value of shares held by Yang was $110,000 and $105,000 on December 31, 2007 and 2008, respectively. What amount will be reported by Yang as income from its investment in Spiel for 2008, if it used the equity method of accounting? A.$7,500

B.$11,250
C.$18,750
D.$26,250

6)
Bista Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?

Fair Value Method | Equity Method
A.Increase | Decrease
B.No Effect | Decrease
C.No Effect | No Effect
D.Decrease | No Effect

7) The primary role of the International Accounting Standards Board (IASB) is to

A. set international standards and facilitate convergence of accounting practices

B. regulate accountancy throughout Europe

C. ensure compliance with international accounting standards and impose sanctions for noncompliant countries or businesses D. All of these answers are correct.

8) Which of the following statements about the International Accounting Standards Board (IASB) is accurate?

A. The IASB’s standards have not been widely adopted in the European Union.

B. The IASB’s recommendations standards are primarily based on and grow out of the GAAP of the United States. C. The United States’ Financial Accounting Standards Board is collaborating with the IASB to bring about convergence based on high quality standards. D. Throughout the 1970s, the competing standards issued by the IASB and the International Federation of Accountants (IFAC) discouraged early adopters.

9) The Securities and Exchange Comission is working prospectively towards requiring public companies in the United States to complete their financial statements in accordance with A. Technical Bulletins

B. Generally Accepted Auditing Standards
C. International Financial Reporting Standards
D. Generally Accepted Accounting Principles

10) On December 5, 2008, Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR), to be paid on January 10, 2009. The transaction is denominated in Saudi riyals. Imperial's fiscal year ends on December...
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