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Question
Which of the following statements does not properly describe the accounting for business combinations?
A. Under the purchase method, the subsidiary's assets and liabilities are not valued at their full fair values on the consolidated balance sheet when minority interests are present.
B. Under the acquisition method, the subsidiary's assets and liabilities are valued at their full fair values on the consolidated balance sheet when minority interests are present.
C. The parent company has the option of choosing either the purchase method or the acquisition method to account for the business combination.
D. The noncontrolling interest is reported as a component of stockholders' equity when using the acquisition method.
Answer
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Related questions
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Briefly explain the forces behind the rise of IFRS.
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B. permit only one accounting treatment for similar business transactions and events to promote comparability.
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D. follow a more generalized overview approach than do U.S. GAAP counterpart standards.
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B. consistency.
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Increase in prepaid expenses: $14,000
Amortization of discount on bonds payable: $10,000
Decrease in accounts payable: $20,000
Increase in inventory: $21,000
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Cash dividends were paid to the common shareholders.
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550,000 shares of common stock were outstanding on January 1, 2011.
Bonds convertible into 50,000 shares of common stock were issued on July 1, 2011; the bonds have been determined to be dilutive.
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A. Diluted earnings per share must be shown on the income statement.
B. Diluted earnings per share and basic earnings per share must both be shown on the income statement.
C. The company might have convertible bonds outstanding.
D. The company must have participating preferred stock outstanding.
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Which of the following is not indicative of a complex capital structure?
A. Outstanding convertible bonds.
B. Outstanding convertible preferred stock.
C. Outstanding cumulative preferred stock.
D. Outstanding stock options.
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Assuming that the preferred stock is cumulative, and that there are no dividends in arrears, what is the maximum dividend that may be distributed to common shareholders at December 31, 2012?
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What is the owners' equity balance on December 31, 2012?
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B. $8,738,350
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What is the retained earnings balance on December 31, 2012?
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Which of the following does not accurately describe the proprietary view of the firm?
A. Its focus is on the firm's net assets.
B. It is the prevailing view of GAAP.
C. Its focus is on owners' equity.
D. Whether creditors or shareholders provided the firm's assets is irrelevant.
Q:
By using the book value method to record the conversion of convertible bonds, managers are able to protect themselves from recording conversion losses.
Q:
SFAS No. 123 required companies to use the fair value approach when determining compensation expense pertaining to stock options.