ADVANCED ACCOUNTING 15TH EDITION LATEST UPDATED
ACTUAL 2024 FINAL EXAM WITH COMPLETE QUESTIONS AND
CORRECT DETAILED ANSWERS ALREADY A+ GRADED
Yaro Company owns 30% of the
common stock of Dew Co. and uses the
equity method to account for the
investment. During 2013, Dew reported
income of $250,000 and paid dividends
of $80,000. There is no amortization
associated with the investment. During
2013, how much income should Yaro
recognize related to this investment? -
ANSWER-$75,000.
250,000 x 30% = 75,000.
,*Don't do anything with dividends in this
case because it's only asking for income.
A company should always use the equity
method to account for an investment if:
- ANSWER-it has the ability to exercise
SIGNIFICANT INFLUENCE over the
operating policies of the investee.
An upstream sale of inventory is a sale -
ANSWER-made by the investee to the
investor
On January 1, 2011, Dermot Company
purchased 15% of the voting common
stock of Horne Corp. On January 1, 2013,
,Dermot purchased 28% of Horne's
voting common stock. If Dermot
achieves significant influence with this
new investment, how much Dermot
account for the change to the equity
method? - ANSWER-It must restate the
financial statements for 2012 and 2011
as if the equity method had been used
for those two years.
On January 2, 2013, Austin Corp.
purchased 25% of the voting common
stock of Gainsville Co., paying
$2,500,000. Austin decided to use the
equity method to account for this
investment. At the time of this
investment, Gainsville's total
, stockholders' equity was $8,000,000.
Austin gathered the following
information about Gainsville's assets and
liabilities.:
Book Value Fair Value
Buildings (10 yr life): $400,000 $500,000
Equipment (5 yr life): $1,000,000
$1,300,000
Franchises (8 yr life): $0 $400,000
For all other assets and liabilities, book
value and fair value were equal. Any
excess of cost over fair value was
attributed to goodwill, which has not
been impaired. What is the amount of
ACTUAL 2024 FINAL EXAM WITH COMPLETE QUESTIONS AND
CORRECT DETAILED ANSWERS ALREADY A+ GRADED
Yaro Company owns 30% of the
common stock of Dew Co. and uses the
equity method to account for the
investment. During 2013, Dew reported
income of $250,000 and paid dividends
of $80,000. There is no amortization
associated with the investment. During
2013, how much income should Yaro
recognize related to this investment? -
ANSWER-$75,000.
250,000 x 30% = 75,000.
,*Don't do anything with dividends in this
case because it's only asking for income.
A company should always use the equity
method to account for an investment if:
- ANSWER-it has the ability to exercise
SIGNIFICANT INFLUENCE over the
operating policies of the investee.
An upstream sale of inventory is a sale -
ANSWER-made by the investee to the
investor
On January 1, 2011, Dermot Company
purchased 15% of the voting common
stock of Horne Corp. On January 1, 2013,
,Dermot purchased 28% of Horne's
voting common stock. If Dermot
achieves significant influence with this
new investment, how much Dermot
account for the change to the equity
method? - ANSWER-It must restate the
financial statements for 2012 and 2011
as if the equity method had been used
for those two years.
On January 2, 2013, Austin Corp.
purchased 25% of the voting common
stock of Gainsville Co., paying
$2,500,000. Austin decided to use the
equity method to account for this
investment. At the time of this
investment, Gainsville's total
, stockholders' equity was $8,000,000.
Austin gathered the following
information about Gainsville's assets and
liabilities.:
Book Value Fair Value
Buildings (10 yr life): $400,000 $500,000
Equipment (5 yr life): $1,000,000
$1,300,000
Franchises (8 yr life): $0 $400,000
For all other assets and liabilities, book
value and fair value were equal. Any
excess of cost over fair value was
attributed to goodwill, which has not
been impaired. What is the amount of
