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Questions
Q:
Which of the following statements about business organizations is TRUE?A) Partnerships are more common than proprietorships and are responsible for a larger percentage of business receipts.B) Proprietorships are more common than either partnerships or corporations but are responsible for the smallest share of total business receipts.C) Corporations are larger in number than either proprietorships or partnerships and also receive a larger percentage of total business receipts.D) Partnerships are larger than both proprietorships and corporations but are less numerous than corporations.
Q:
A review of Ace Industries, a U.S. corporation, shows the following balances in accounts receivable and accounts payable detail at September 30, 2011, their fiscal year end.
ACCOUNTS RECEIVABLE
Receivables denominated in U.S. dollar $426,000
Receivable denominated in 40,000 Australian dollar 43,000
Receivable denominated in 70,000 Canadian dollar 71,750
$ 540,750
ACCOUNTS PAYABLE
Payables denominated in U.S. dollar $ 107,000
Payable denominated in 50,000 Canadian dollar 51,250
Payable denominated in 200,000 Hong Kong dollar 26,500
$ 184,750
As Ace prepared to close their books, they noted that the September 30 exchange rates for the Australian dollar, Canadian dollar and Hong Kong dollar were $1.0366, $1.0301 and $0.1284, respectively.
Required:
Determine the exchange gain or loss to be included in the 2011 financial statements, and the amount of Accounts Receivable and Accounts Payable that will be included on the September 30, 2011 balance sheet.
Q:
Mutual funds provide the following for their shareholders.
A. diversification
B. professional management
C. record keeping and administration
D. all of these options
Q:
The budget constraint shows thatA) the consumer faces a trade-off in the consumption of goods. B) the consumer can have as many goods as he wants.C) as consumers spend more on one good, they spend more on others.D) total income equals total spending on one good.
Q:
Tank Corporation, a U.S. manufacturer, has a June 30 fiscal year end. Tank sold goods to their customer in Columbia on May 27, 2011 for 18,000,000 Columbian pesos. The customer agreed to pay pesos in 60 days. When the customer wired the funds to Tank on July 26, Tank held them in their bank account until July 31 before selling them and converting them to U.S. dollars. The following exchange rates apply:
May 27 $0.00055
June 30 $0.00052
July 26 $0.00058
July 31 $0.00056
Required:
Record the journal entries related to the dates listed above. If no entry is required, state "no entry."
Q:
Part B of a mutual fund prospectus contains information about:
I. Fund holdings by directors and officers
II. Front-end and back-end loads
III. Securities held by the fund at the end of the fiscal year
A. I only
B. I and II only
C. I and III only
D. I, II, and III
Q:
Crabby Industries, a U.S. corporation, purchased inventory from a company in Sweden on November 18, 2011 when the Swedish krona was trading at 1 krona = $0.161. The transaction was for 600,000 krona, and was to be paid in krona in 90 days. Crabby closed their books at December 31 for financial reporting purposes when the krona was trading at $0.167. On February 16, 2012, Crabby paid the invoice when the krona was trading at $0.156.
Required:
Show the journal entries recorded by Crabby on November 18, 2011, December 31, 2011, and February 16, 2012.
Q:
On a hot summer day, a construction worker enters a McDonaldʹs fast -food restaurant. He orders the first Big Mac. He consumes it within 3 minutes. He then orders a second Big Mac and consumes it in 10 minutes. He eats only half of the third one in 18 minutes and throws away the rest. The store manager offers him the fourth for free. The construction worker says: ʺNo thanks.ʺ Why?A) For the construction worker, total utility increased at an increasing rate.B) Marginal utility increased at an increasing rate.C) Marginal utility declined as he consumed additional Big Macs.D) The law of diminishing marginal utility does not apply to consumption of Big Macs.
Q:
In the United States in 2014, there were approximately _______ mutual funds offered by fewer than _______ fund complexes.
A. 12,000; 600
B. 7,000; 100
C. 8,000; 800
D. 9,000; 300
Q:
On April 1, 2012, Button Industries enters into an agreement with Bows Incorporated to lock in the price of cotton. Button agrees to purchase (and Bows agrees to sell) 100,000 pounds of cotton at $1.19 per pound, six months from the date of agreement. On October 1, 2012, the price of cotton is $1.17 per pound. The contract allows for net settlement.
Required:
Determine the net settlement on the forward contract.
Q:
PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. Suppose the price of Y rises from $18 to $20. What is the cross price elasticity of demand between X and Y?A) -2 B) -1 C) 0 D) +1
Q:
A contingent deferred sales load is commonly called a ____.
A. front-end load
B. back-end load
C. 12b-1 charge
D. top-end sales commission
Q:
Jefferson Company entered into a forward contract with Washington Company on October 1, 2011, under which Jefferson agreed to buy (and Washington agreed to sell) 10,000 tons of coal at $80.00 per ton in 90 days. On October 1, 2011, the price of coal is $82.00 per ton. On December 29, 2011, the price of coal is $85.00 per ton. The contract allows for net settlement.
Required:
Determine the net settlement on the forward contract.
Q:
Relative percentage changes are used in measuring price elasticity of demand, so thatA) it does not matter whether price increases or decreases when calculating the elasticity. B) it does not matter what units are used to measure prices or quantities.C) we always obtain a positive number.D) larger numbers indicate greater responsiveness.
Q:
The two principal types of REITs are equity trusts, which _______________, and mortgage trusts, which _______________.
A. invest directly in real estate; invest in mortgage and construction loans
B. invest in mortgage and construction loans; invest directly in real estate
C. use extensive leverage; distribute less than 95% of income to shareholders
D. distribute less than 95% of income to shareholders; use extensive leverage
Q:
On November 1, 2010, the Yankee Corporation, a US corporation, purchased and received an extruding machine from Wales Corporation, a UK company. The purchase price was $10,000(U.S. dollars) and Yankee agreed to pay in pounds on February 1, 2011. Both corporations are on a calendar year accounting period. Assume that the spot rates for the British pound on November 1, 2010, December 31, 2010, and February 1, 2011, are $1.60, $1.62, and $1.66, respectively.
Required:
Record the November 1, December 31, and February 1 transactions in the General Journals of Yankee Corporation and Wales Corporation. If no entry is required on a particular date, indicate "No entry" in the General Journal.
Q:
Explain how the optimal quantity of air pollution is determined.
Q:
The NAV of which funds is fixed at $1 per share?
A. equity funds
B. money market funds
C. fixed-income funds
D. commingled funds
Q:
On October 15, 2011, Napole Corporation, a French company, ordered merchandise listed on the internet for 20,000 Euros from Adams Corporation, a U.S. corporation. The euro rate was $1.20 (U.S. dollars) on October 15. On November 15, 2011 Adams shipped the goods and billed Napole the purchase price of 20,000 Euros when the euro rate was $1.30. Napole paid the bill on December 10, 2011, and Adams immediately exchanged the 20,000 Euros for US dollars when the Euro rate was $1.28 on December 10, 2011.
Required:
Compute the foreign currency gain or loss on the December 31, 2011 financial statements of Adams and show the related journal entries.
Q:
How can absolute poverty be eliminated? How can relative poverty be eliminated? Does the elimination of one lead to the elimination of the other? Explain.
Q:
Which of the following typically employ significant amounts of leverage?
I. Hedge funds
II. REITs
III. Money market funds
IV. Equity mutual funds
A. I and II only
B. II and III only
C. III and IV only
D. I, II, and III only
Q:
On September 1, 2011, Bylin Company purchased merchandise from Himeji Company of Japan for 20,000,000 yen payable on October 1, 2011. The spot rate for yen was $0.0079 on September 1 and the spot rate was $0.0077 on October 1. The purchase was paid on October 1, 2011.
Required:
1. Did the U.S. dollar strengthen or weaken from September to October and what are the implications for Bylin's business?
2. What journal entry did Bylin record on September 1, 2011?
3. What journal entry did Bylin record on October 1, 2011?
Q:
In the above figure, what is the quantity of workers that would be hired in a perfectly competitive market?A) Q1 B) Q2 C) Q3 D) Q4
Q:
Advantages of investment companies to investors include all but which one of the following?
A. record keeping and administration
B. low-cost diversification
C. professional management
D. guaranteed rates of return
Q:
On January 1, 2011, Gregory Company acquired a 90% interest in Subway Company for $200,000 cash. On January 1, 2011, Subway Company had the following assets and liabilities:
Book Value Fair Value
Cash $5,000 $5,000
Accounts Receivable 30,000 35,000
Inventory 40,000 50,000
Other Current Assets 10,000 10,000
Plant Assets 60,000 80,000
Total Assets $145,000 $180,000
Liabilities $25,000 $25,000
Common Stock 100,000
Retained Earnings 20,000
Total Liabilities &
Stockholders' Equity $145,000
The plant assets have 20 years of useful life remaining. Straight-line depreciation is used. The excess fair value over book value associated with Accounts Receivable and Inventory is realized in 2011.
In 2011, Subway reported net income of $35,000 and declared and paid common dividends of $10,000. Gregory reported Income from Subway in 2011 of $17,100.
Required:
Assume both companies use the entity theory. Prepare the elimination entry(ies) on consolidating work papers for the year ending December 31, 2011.
Q:
The CIO was formed as a(n)A) closed shop. B) association of industrial unions.C) union shop. D) bilateral monopoly.
Q:
A __________ is a private investment pool open only to wealthy or institutional investors that is exempt from SEC regulation and can therefore pursue more speculative policies than mutual funds.
A. commingled pool
B. unit trust
C. hedge fund
D. money market fund
Q:
On January 1, 2011, Brody Company acquired an 80% interest in Kristin Company for $240,000 cash. On January 1, 2011, Kristin Company had the following assets and liabilities:
Book Value Fair Value
Cash $10,000 $10,000
Accounts Receivable 50,000 50,000
Inventory 50,000 70,000
Plant Assets 100,000 100,000
Total Assets $210,000 $230,000
Liabilities $100,000 $120,000
Capital Stock 100,000
Retained Earnings 10,000
Total Liabilities &
Stockholders' Equity $210,000
Push-down accounting is used for the acquisition. Both companies use the entity theory.
Required:
1. What is the goodwill associated with Kristin Company on January 1, 2011?
2. Prepare the journal entry(ies) on Kristin's books on January 1, 2011.
3. Prepare the journal entry(ies) on Brody's books on January 1, 2011.
4. Prepare the elimination entry(ies) on the consolidating working papers on January 1, 2011.
Q:
Suppose a new technology allows firms to substitute mechanical tomato pickers for farm laborers. As a result, the demand curve for farm laborers willA) become less elastic. B) become more elastic. C) shift to the right. D) not be affected.
Q:
______ are partnerships of investors with portfolios that are larger than most individual investors but are still too small to warrant managing on a separate basis.
A. Commingled funds
B. Closed-end funds
C. REITs
D. Mutual funds
Q:
The Federal Trade Commission regulates which of the following?A) Unfair trade practices by businesses B) Financial marketsC) Trade with third world countries D) The banking industry
Q:
On January 1, 2011, Jennifer Company acquired a 90% interest in Jayda Company for $270,000 cash. On January 1, 2011, Jayda Company had the following assets and liabilities:
Book Value Fair Value
Cash $10,000 $10,000
Accounts Receivable 50,000 70,000
Inventory 50,000 80,000
Plant Assets 100,000 200,000
Total Assets $210,000 $360,000
Liabilities $100,000 $120,000
Capital Stock 100,000
Retained Earnings 10,000
Total Liabilities &
Stockholders' Equity $210,000
Push-down accounting is used for the acquisition. Both companies use the entity theory.
Required:
1. What is the goodwill associated with Jayda Company on January 1, 2011?
2. Prepare the journal entry(ies) on Jayda's books on January 1, 2011.
3. Prepare the journal entry(ies) on Jennifer's books on January 1, 2011.
4. Prepare the elimination entry(ies) on the consolidating working papers on January 1, 2011.
Q:
Which one of the following invests in a portfolio that is fixed for the life of the fund?
A. mutual fund
B.money market fund
C. managed investment company
D. unit investment trust
Q:
Initial public offerings (IPOs) are usually ___________ relative to the levels at which their prices stabilize after they begin trading in the secondary market.
A. overpriced
B. correctly priced
C. underpriced
D. mispriced, but without any particular bias
Q:
On January 1, 2011, Jeff Company acquired a 90% interest in Marian Company for $198,000 cash. On January 1, 2011, Marian Company had the following assets and liabilities:
Book Value Fair Value
Cash $5,000 $5,000
Accounts Receivable 30,000 35,000
Inventory 40,000 50,000
Plant Assets 60,000 80,000
Total Assets $135,000 $170,000
Liabilities $25,000 $25,000
Capital Stock 100,000
Retained Earnings 10,000
Total Liabilities &
Stockholders' Equity $135,000
Push-down accounting is used for the acquisition.
Required:
1. Assume both companies use the entity theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2011.
2. Assume both companies use the parent company theory. Prepare the elimination entry(ies) on consolidating work papers on January 1, 2011.
Q:
A market situation in which there are a few firms that recognize their mutual interdependence isA) monopolistic competition. B) oligopoly.C) monopoly. D) regulated monopoly.
Q:
The bulk of most initial public offerings (IPOs) of equity securities goes to ___________.
A. institutional investors
B. individual investors
C. the firm's current shareholders
D. day traders
Q:
On January 1, 2011, Jeff Company acquired a 90% interest in Margaret Company for $198,000 cash. On January 1, 2011, Margaret Company had the following assets and liabilities:
Book Value Fair Value
Cash $5,000 $5,000
Accounts Receivable 30,000 35,000
Inventory 40,000 50,000
Plant Assets 60,000 80,000
Total Assets $135,000 $170,000
Liabilities $25,000 $25,000
Capital Stock 100,000
Retained Earnings 10,000
Total Liabilities &
Stockholders' Equity $135,000
Push-down accounting is used for the acquisition.
Required:
1. Assume both companies use the entity theory.
a. Record the journal entry on Margaret's separate books on January 1, 2011.
b. Record the journal entry on Jeff's separate books on January 1, 2011.
2. Assume both companies use the parent company theory.
a. Record the journal entry on Margaret's separate books on January 1, 2011.
b. Record the journal entry on Jeff's separate books on January 1, 2011.
Q:
IndustryRatio (percent)W72X30Y84Z55The most oligopolistic industry of those presented in the above table is likely to be industryA) W. B) X. C) Y. D) Z.
Q:
In the short run, the profit-maximizing monopolistically competitive firm will produce the rate of output at whichA) P = MC. B) MR = MC. C) P = ATC. D) MR = ATC.
Q:
The process of polling potential investors regarding their interest in a forthcoming initial public offering (IPO) is called ________.
A. interest building
B. book building
C. market analysis
D. customer identification
Q:
On January 1, 2011, Penny Company acquired a 90% interest in Lampire Company for $180,000 cash. On January 1, 2011, Lampire Company had the following assets and liabilities:
Book Value Fair Value
Cash $10,000 $10,000
Accounts Receivable 30,000 35,000
Inventory 40,000 50,000
Plant Assets 60,000 80,000
Total Assets $140,000 $175,000
Liabilities $25,000 $25,000
Capital Stock 100,000
Retained Earnings 15,000
Total Liabilities &
Stockholders' Equity $140,000
Push-down accounting is used for the acquisition.
Required:
1. Assume both companies use the entity theory. Record the push-down adjustment on Lampire's separate books on January 1, 2011.
2. Assume both companies use the parent company theory. Record the push-down adjustment on Lampire's separate books on January 1, 2011.
Q:
Refer to the above figure. The profit-maximizing price for this firm isA) P1. B) P2.C) P3. D) P4.
Q:
When matching orders from the public, a specialist is required to use the _______.
A. lowest outstanding bid price and highest outstanding ask price
B. highest outstanding bid price and highest outstanding ask price
C. lowest outstanding bid price and lowest outstanding ask price
D. highest outstanding bid price and lowest outstanding ask price
Q:
Patch Corporation has a 50% undivided interest in Saric Corporation, a joint venture. Patch accounts for its interest in Saric by the equity method and also prepares consolidated financial statements for external reporting purposes. Patch follows specialized industry practices and uses proportionate consolidation for its interest in Saric. Separate financial statements for Patch and Saric are as follows:
Patch Saric Consolidation
Cash $30,000 $18,000 ________
Accounts receivable 70,000 42,000 ________
Inventories 80,000 72,000 ________
Investment in Saric 140,000 ________
Land 116,000 40,000 ________
Plant, property, equipment 200,000 128,000 ________
Total assets $636,000 $300,000 ________
Accounts payable $24,000 $20,000 ________
Common stock 340,000 0 ________
Retained earnings 272,000 ________
Venture capital ________ 280,000 ________
Total liab. & equity $636,000 $300,000 ________
Required:
Prepare the consolidated balance sheet for Patch Corporation and its undivided interest in Saric Corporation.
Q:
The __________ was established to protect investors from losses if their brokerage firms fail.
A. CFTC
B. SEC
C. SIPC
D. AIMR
Q:
Johnsen Corporation paid $225,000 for a 70% interest in Jonas Corporation on January 1, 2011. On that date, Jonas's balance sheet accounts, at book value and fair value, were as follows:
Book Value Fair Value
Assets
Cash $25,000 $25,000
Accounts receivable-net 45,000 55,000
Inventories 40,000 60,000
Plant, property and equipment-net 140,000 125,000
Total assets $250,000 $265,000
Equities
Accounts payable $40,000 $40,000
Common stock 120,000
Retained earnings 90,000
Total liab. & equity $250,000
Required:
1. Prepare the journal entry necessary on January 1, 2011 on Jonas Corporation's books. Both companies use push-down accounting and the entity theory.
2. Prepare the balance sheet for Jonas Corporation immediately after the acquisition on January 1, 2011.
Q:
In the long run in a perfectly competitive industry, A) opportunity costs are negligible.B) economic profits will be zero.C) some firms will be experiencing economic losses.D) only entrepreneurs will earn more than their opportunity costs.
Q:
Pascal Corporation paid $225,000 for a 70% interest in Sank Corporation on January 1, 2011. On that date, Sank's balance sheet accounts, at book value and fair value, were as follows:
Book Value Fair Value
Assets
Cash $25,000 $25,000
Accounts receivable-net 45,000 55,000
Inventories 40,000 60,000
Plant, property and equipment-net 140,000 125,000
Total assets $250,000 $265,000
Equities
Accounts payable $40,000 $40,000
Common stock 120,000
Retained earnings 90,000
Total liab. & equity $250,000
Both companies use the parent company theory. Push-down accounting is used for the acquisition.
Required:
1. Prepare the journal entry on January 1, 2011 on Sank Corporation's books.
2. Prepare a balance sheet for Sank Corporation immediately after the acquisition on January 1, 2011.
Q:
Suppose that at the current level of output, price = $10, MC = $10, AVC = $7, and ATC = $9.Which of the following is true?A) The firm should decrease output.B) The firm should shut down.C) The firm should increase output.D) The firm should maintain the current level of output.
Q:
Advantages of ECNs over traditional markets include all but which one of the following?
A. lower transactions costs
B. anonymity of the participants
C. small amount of time needed to execute and order
D. ability to handle very large orders
Q:
On a given day a stock dealer maintains a bid price of $1,000.50 for a bond and an ask price of $1003.25. The dealer made 10 trades that totaled 500 bonds traded that day. What was the dealer's gross trading profit for this security?A. $1,375B. $500C. $275D.$1,450
Q:
Party Corporation acquired an 80% interest in Sang Corporation on January 1, 2011 for $20,000. Balance sheet and fair value information on this date is summarized as follows:
Party Book Value Sang Book Value Sang Fair Value
Current assets $15,000 $9,000 $9,000
Land and Building-net 35,000 7,000 7,000
Equipment 8,000 4,000 6,000
Total assets $58,000 $20,000 $22,000
Liabilities $27,000 $10,000 10,000
Capital stock 18,000 4,000
Retained earnings 13,000 6,000
Total liab. & equity $58,000 $20,000
Required:
1. Prepare an entry on the books of Sang Corporation to record the push-down adjustment under parent company theory.
2. Prepare an entry on the books of Sang Corporation to record a push-down adjustment under entity theory.
Q:
A firm has average fixed costs of $0.20 and average variable costs of $2.50 at an output of 500 units. The firmʹs total costs are thereforeA) $1,250. B) $1,350. C) $1,150. D) $1,500.
Q:
During the short run, a firm cannotA) increase its use of labor. B) change its plant size.C) purchase more raw materials. D) change its variable costs.
Q:
Partridge Corporation purchased an 80% interest in Sandy Corporation for $840,000 on January 1, 2011. Sandy's balance sheet book values and accompanying fair values on this date are shown below.
Parent
Entity Company
Theory Theory
Push- Push-
Down Down
Book Fair Balance Balance
Value Value Sheet Sheet
Cash $30,000 $30,000 ________ ________
Receivables 200,000 200,000 ________ ________
Inventory 300,000 360,000 ________ ________
Land 50,000 90,000 ________ ________
Plant assets-net 250,000 300,000 ________ ________
Total Assets $830,000 $980,000 ________ ________
Current liabilities $180,000 $180,000 ________ ________
Other liabilities 120,000 100,000 ________ ________
Common Stock 400,000 ________ ________
Retained Earnings 130,000 ________ ________ ________
Total Liab. & Equity $830,000 ________ ________ ________
Required:
Complete the push-down columns of Sandy Corporation's restructured balance sheet using entity theory and parent company theory.
Q:
If an investor places a _________ order, the stock will be sold if its price falls to the stipulated level. If an investor places a __________
order, the stock will be bought if its price rises above the stipulated level.
A. stop-buy; stop-loss
B. market; limit
C. stop-loss; stop-buy
D. limit; market
Q:
Dividends are
A) the portion of a corporationʹs profits that are distributed to stockholders.
B) the portion of a corporationʹs revenues that are distributed to bondholders.
C) bonuses given to managers of corporations, to ensure that the managers perform in the way that stockholders want.
D) taxes on the profits of corporations.
Q:
On January 1, 2011, Parton Corporation acquired an 80% interest in Sandra Corporation for $184,000. Sandra's net assets on this date had a book value of $160,000 and a fair value of $210,000. The excess of fair value over book value at acquisition was attributable to $20,000 of understated plant assets with a remaining useful life of five years from January 1, 2011, and $30,000 to an understated patent with a remaining economic life of six years from January 1, 2011. Separate net incomes (excluding investment income) of Parton and Sandra for 2011 were $300,000 and $50,000, respectively.
Required:
1. Compute goodwill at January 1, 2011 under the parent company theory and the entity theory.
2. Determine consolidated net income and noncontrolling interest share for 2011 under the parent company theory and the entity theory.
Q:
The term latency refers to _____.
A. the lag between when an order is placed on the NYSE and when it is executed.
B. the amount of time it takes to accept, process, and deliver a trading order.
C. the time it takes to implement new rules and procedures for stock exchanges and computer trading systems.
D. the lag between when an order is executed and when the investor takes possession of the securities.
Q:
The term inside quotes refers to _____.
A. the difference between the lowest bid price and the highest ask price in the limit order book.
B. the difference between the highest bid price and the lowest ask price in the limit order book.
C. the difference between the lowest bid price and the lowest ask price in the limit order book.
D. the difference between the highest bid price and the highest ask price in the limit order book.
Q:
Patane Corporation acquired 80% of the outstanding voting common stock of Sanlon Corporation on January 1, 2011, for $500,000. Sanlon Corporation's stockholders' equity at this date consisted of $250,000 in Capital Stock and $100,000 in Retained Earnings. The fair value of Sanlon's assets was equal to the book value of the assets except for land with a fair value $40,000 greater than its book value, and marketable securities with a fair value $50,000 greater than its book value. Sanlon also had a valuable patent with a fair value of $25,000 and a book value of zero because its development costs were expensed as incurred. The fair value of Sanlon's liabilities is $10,000 higher than the $40,000 book value.
Required:
Calculate the amount of goodwill under the parent company and entity theories of consolidation.
Q:
If incomes fall, thenA) the budget constraint shifts inward.B) the budget constraint shifts out.C) there is no change in the budget constraint.D) there is no relationship between the budget constraint and income.
Q:
Olga buys a bag of potato chips every day after her economics class. The first potato chip always tastes wonderful. The second does not taste quite as good as the first. The third does not taste quite as good as the second. Olga is experiencingA) irrational behavior. B) the law of diminishing marginal utility.C) the income effect. D) the substitution effect.
Q:
An order to buy or sell a security at the current price is a ______________.
A. limit order
B. market order
C. stop-loss order
D. stop-buy order
Q:
Pashley Corporation purchased 75% of Sargent Corporation on January 1, 2011, for $115,000. Balance sheets for the two companies on this date, prepared just prior to the purchase, are provided below.
Pashley Sargent Sargent
Book Values Book Values Fair Values
Cash $165,000 $5,000 $5,000
Inventory 135,000 35,000 45,000
Buildings & equipment-net 250,000 60,000 95,000
Total assets $550,000 $100,000 $145,000
Common stock $150,000 $47,500
Retained earnings 400,000 52,500
Total equities $550,000 $100,000
Required:
Prepare a consolidated balance sheet using the entity theory of consolidation.
Q:
PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. Based on the information in the table, we can say thatA) all three goods are substitutes for each other. B) all three goods are complements.C) X and Y are substitutes, Y and Z are complements, and X and Z are substitutes.D) X and Y are complements, Y and Z are substitutes, and X and Z are complements.
Q:
Restrictions on trading involving insider information apply to:
I. Corporate officers and directors
II. Major stockholders
III. Relatives of corporate directors and officers
A. I only
B. I and II only
C. II and III only
D. I, II, and III
Q:
Partel Corporation purchased 75% of Sandford Corporation on January 1, 2011, for $230,000. Balance sheets for the two companies on this date, prepared just prior to the purchase, are provided below.
Partel Sandford Sandford
Book Values Book Values Fair Values
Cash $330,000 $10,000 $10,000
Inventory 270,000 70,000 90,000
Buildings & equipment-net 500,000 120,000 190,000
Total assets $1,100,000 $200,000 $290,000
Common stock $300,000 95,000
Retained earnings 800,000 105,000
Total equities $1,100,000 $200,000
Required:
1. Prepare a consolidated balance sheet using the entity theory of consolidation.
2. Prepare a consolidated balance sheet using the parent company theory of consolidation.
Q:
Which one of the following is a false statement regarding NYSE specialists?
A. On a stock exchange most buy or sell orders are executed via an electronic system rather than through specialists.
B. Specialists cannot trade for their own accounts.
C. Specialists maintain limit order books, which contain the outstanding unexecuted limit orders.
D. Specialists stand ready to trade at narrower bid-ask spreads in cases where the spread has become too wide.
Q:
Wheat is sold in world markets, usually priced in terms of bushels. In the market for wheat, the price elasticity of demand for wheat would be expressed asA) the number of bushels of wheat sold.B) the number of whatever currency is used in purchasing the wheat.C) the number of dollars spent on wheat. D) a unitless number.
Q:
On July 1, 2010, Parslow Corporation acquired a 75% interest in Sanderson Corporation for $150,000. Sanderson's net assets on this date had a book value of $140,000 and a fair value of $160,000. The excess of fair value over book value at acquisition was due to understated plant assets with a remaining useful life of five years from July 1, 2010. Separate net incomes (excluding investment income) of Parslow and Sanderson for 2011 were $400,000 and $20,000, respectively.
Required:
1. Compute goodwill at July 1, 2010 under the parent company theory and the entity theory.
2. Determine consolidated net income and noncontrolling interest share for 2011 under the parent company theory and the entity theory.
Q:
Which one of the following types of markets requires the greatest level of trading activity to be cost-effective?
A. broker market
B. dealer market
C. continuous auction market
D. direct search market
Q:
The marginal benefit of pollution abatement is the
A) additional cost to clean up an additional unit of pollution.
B) additional benefit from cleaning up an additional unit of pollution.
C) total social costs of pollution clean-up divided by total social benefits.
D) total social costs of pollution clean-up divided by the total units of clean -up.
Q:
Use the following information to answer the question(s) below.On January 1, 2011, Penelope Company acquired a 90% interest in Leah Company for $180,000 cash. On January 1, 2011, Leah Company had the following assets and liabilities:Book Value Fair ValueCash $10,000 $10,000Accounts Receivable 30,000 35,000Inventory 40,000 50,000Plant Assets 60,000 80,000Total Assets $140,000 $175,000Liabilities $25,000 $25,000Capital Stock 100,000Retained Earnings 15,000Total Liabilities &Stockholders' Equity $140,000Push-down accounting is used for the acquisition.Assume the parent company theory is used. On January 2, 2011, Leah Company will report Goodwill of ________ and Accounts Receivable of ________ on Leah's balance sheet.A) $27,000; $30,000B) $27,000; $35,000C) $30,000; $30,000D) $45,000; $34,500
Q:
Initial margin requirements on stocks are set by _________.
A. the Federal Deposit Insurance Corporation
B. the Federal Reserve
C. the New York Stock Exchange
D. the Securities and Exchange Commission
Q:
Some economists argue that the official poverty figures overstate poverty in this country. Why?
Q:
Purchases of new issues of stock take place _________.
A. at the desk of the Fed
B. in the primary market
C. in the secondary market
D. in the money markets
Q:
In the above figure, what is the quantity of workers that would be hired by a monopsonist?A) Q1 B) Q2 C) Q3 D) Q4
Q:
Under push-down accounting, the ________ of the acquired subsidiary's assets and liabilities are reported on the financial statements of the ________.
A) book value; subsidiary
B) book value; parent
C) fair value; subsidiary
D) present value; parent