Intermediate Accounting 2 Exam 1 Review Already Graded A

Intermediate Accounting 2 Exam 1 Review Already Graded A Why do companies issue commercial paper? Cheaper interest rate In a lawsuit where the company believes that an unfavorable outcome to the dispute is probable. They believe that it will be settled within a known range of amounts. What amount should be accrued at year end? Loss contingency If a company exercises significant influence over their subsidiary company and owns between 20 and 50% of its common stock then how should the parent company report original investment? Investment Cash If a company exercises significant influence over their subsidiary company and owns between 20 and 50% of its common stock then how should the parent company report dividends? Investment Cash If a company exercises significant influence over their subsidiary company and owns between 20 and 50% of its common stock then how should the parent company report net income? Investment Investment Revenue How does an increase in unearned revenue in the current period affect revenue in a future period? Decreases future period How does an decrease in unearned revenue in the current period affect revenue in a future period? Increases future period If A company owns less than 20% of the common stock in B company how will A company record the original investment? Investment Discount on Investment Cash Cash If A company owns less than 20% of the common stock in B company how will A company record the dividends? Investment Revenue If A company owns less than 20% of the common stock in B company how will A company record the new income? Cash Discount Investment Revenue When can short-term obligations be reported as long-term liabilities? At what amount are current liabilities normally recorded? maturity when refinanced both fair values and subsequent growth of the investee are more relevant for investments in what? Securities reported under the equity method, trading securities, and securities available for-sale When should a company accrue a loss contingency? paid and the amount can be reasonably estimated When it's probable that an amount will be How is a monetary rebate program for purchasing a product accounted for? warranties similar to product When a deposit on returnable containers is forfeited what entry will the firm holding the deposit record? liability -refundable deposits revenue - sale of containers What are the characteristics of a transaction for it to be recorded as a liability? sacrifices 2) arise from present obligations 3) result from past transactions 1) probable, future Under what method, available-for-sale and/or trading, can a company increase or decrease net income by choosing to sell particular investments with net unrealized gains or losses? trading How are cash dividends recorded when an investor classifies an investment in common stock as securities available for sale? cash investment revenue NONE How are cash dividends recorded when an investor classifies an investment in common stock as held to-maturity? cash How are cash dividends recorded when an investor classifies an investment in common stock as trading? investment revenue As an accountant what are the two main considerations that should be considered as it relates to accounts payable? 1) determining their existence 2) ensuring that they are recorded in the appropriate accounting period When the equity method of accounting for investments is used by the investor what effect foes the amortization of additional depreciation due to differences between book values and fair values of investee assets on the date of acquisition have on investor's accoun