Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
32 Cards in this Set
- Front
- Back
the fmv adjustment for a trading portfolio at the end of the period goes where...
|
income statement
|
|
the fmv adjustment for available for sale goes where...
|
stockholders' equity
|
|
what is used to prove significant control
|
equity method
|
|
when an investor uses the equity method to account for investments in common stock, cash dividends received by the investor from the investee should be recorded as...
|
a deduction from the investment account
|
|
what would indicate that an investor company does not have an ability to significantly influence an investee
|
investor owns 30% of the investee but another owner holds the remaining 70%
|
|
a company recently required an additional 30% of another company after previously owning 10% with no sig. influence. Using the equity method now, how will the investor report this change
|
a retrospective adjustment to restate all prior years
|
|
under the fair value option, what affects the income the investor recognizes from its ownership of the investee
|
changes in the fair value of the investor's ownership shares of the investee
|
|
when an investor elects the fair value option for a sig influence investment, cash dividends received by the investor from the investee should be recorded as...
|
dividend income
|
|
investor company applies equit method for 25% investment in another company. Goods were sold to the investee with a 40% gross profit. The investee sold all these goods. How should the investor report the effect of the intra-entity sale on its income statement
|
no adjustment is necessary
|
|
when do acquisitions occur
|
when control of another company happens
|
|
what does dissolution of investee mean
|
full effect at time of the acquistion with one single entry
|
|
what is the journal entry for dissolution
|
individual assets at fmv
(plug goodwill) individual liabilities at fmv cash note payable |
|
what happens when a company acquires an investee
|
choose to maintain their separate legal status
|
|
what are the reasons to keep legal status separate in an acquistion
|
facilitate performance measurement and facilitate a later sale of that unit
|
|
what are the journal entries for an acquisition
|
investment
cash note payable at end of period: assets & liab - fmv investment account |
|
what is the current gaap for consolidation of financial info
|
acquistition method
|
|
what is the acquisition method
|
fmv at time of acquisition
|
|
what is the difference between physical assets and intangibles for acquisition method
|
difficulty assigning fmv to intangibles vs physical assets
|
|
what is in process R&D using acquistion method
|
intangible assets
|
|
what are the differences between prior GAAP purcahse method and acquistion method
|
no in process R&D, fees paid to make acquistion happen were included as part of price (expensed under current GAAP), long term assets need to be written down (recognize a gain when bargain purchase occurs), ignore contingent consideration
|
|
what occurred during prior pooling method
|
ignored fmv and combined book values
|
|
what is a theoretical justification for consolidated financial statements
|
in form the companies are separate; in substance they are one entity
|
|
what is a statuatory merger
|
a business combination in which only one company continues to exist as a legal entity
|
|
what is the appropriate accounting treatment for the value assigned to in process R&D acquired in a business combination
|
capitalize as an asset
|
|
in its financial statements, the acquiring firm should report the value assigned to the long term lease contract of the acquired entity as...
|
an intangible asset
|
|
when does gain recognition accompany a business combination
|
when a bargain purchase occurs
|
|
using the acquistion method, costs paid to attorneys and accountants for services in arranging a merger should be...
|
recorded as an expense in the period of the merger
|
|
when negotiating a business acquistion, buyers sometimes agree to pay extra amounts to sellers if performance metrics are acheived in the future. how should buyers account for such contingent consideration in recording an acquisition
|
the fair value of the contingent consideration is included in the overall fair value of the consideration transferred, and a liability or additional owners' equity is recognized
|
|
a company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. why might the company decide to apply the initial value method for internal reporting purposes
|
the method is a relatively easy method to apply
|
|
a company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. why might the company decide to apply the equity method for internal reporting purposes
|
operating results appearing on the parent's financial records reflect consolidated totals
|
|
if no legal, regulatory, contractual, competitive, economic, or other factors limit the life of an intangible asset, the asset's assigned value is allocated to expense over...
|
indefinitely with an annual impairment review until its life becomes finite
|
|
a subsidiary's recording of the fair value allocations as well as subsequent amortization is...
|
push down accounting
|