答案和详解如下： 11．Stone now asks Smith how Gemeni's accounts receivable turnover is affected under the consolidation method when compared to the equity method. Which of the following most accurately describes the difference on accounts receivable turnover under the two methods? Under the consolidation method, Gemeni's accounts receivable turnover will be: A) lower because reported sales will decrease under consolidation. B) lower because accounts receivables will be higher under consolidation. C) higher because accounts receivables will be lower under consolidation. D) higher because reported sales will increase under consolidation.
The correct answer was D) Under the consolidation method, sales would increase. Note that the accounts receivable account of the subsidiary will also increase, but not as much as sales. This will cause the accounts receivable turnover ratio to be higher.
12．Company A owns 40 percent of a joint venture, Jovent, Inc., and each company has reported the following information: Information Statement Information | | | Company A | Jovent, Inc. | Revenues | $8,000 | $2,000 | Cost of goods sold | 2,400 | 800 | Selling and administration expenses | 1,600 | 200 | Interest expense | 1,000 | 100 |
Balance Sheet Information | | | Company A | Jovent, Inc. | Cash | $900 | $300 | Inventory | 700 | 200 | Accounts receivable | 800 | 250 | Plant and equipment | 3,000 | 600 | Accounts payable | 1,300 | 200 | Long-term debt | | |
Additional information: Company A purchases 20 percent of Jovent’s annual production, Jovent has an account receivable from Company A for $100, and both companies have a 40 percent tax rate. Using the equity method, what will be the before tax income for Company A, including its equity from Jovent? A) $3,000. B) $3,216. C) $2,650. D) $2,800.
The correct answer was B) The net income for Jovent must be calculated first in order to determine the equity in Jovent that will be included on Company A’s income statement. | Company A | Jovent, Inc. | Revenues | $8,000 | $2,000 | Equity in Jovent | 216 | -- | Cost of goods sold | 2,400 | 800 | Selling and administration expenses | 1,600 | 200 | Interest expense | 1,000 | 100 | Earnings before tax | $3,216 | $900 | Tax | | 360 | Net income | | $540 |
Multiply Jovent’s net income by the equity ownership by Company A to get Company A’s equity in Jovent. (0.40)($540) = $216.
13．Using the proportionate consolidation method, what will be the total assets for Company A? A) $5,900. B) $6,750. C) $5,400. D) $6,150.
The correct answer was A) Cash | $1,020 | $900 + 0.40($300) | Inventory | 780 | $700 + 0.40($200) | Accounts receivable | 860 | $800 + 0.40($250 - 100) | Plant and equipment | $3,240 | $3,000 + 0.40($600) |
14．Which of the following statements about accounting for joint ventures is FALSE?
A) When using the equity method to account for a joint venture, it results in less than complete information for analysts about assets, liabilities, revenues, and expenses. B) With proportionate consolidation, the parent company includes its proportionate share of assets, liabilities, and equity in the joint venture. C) Many financial ratios will be different when using the proportionate consolidation method than if the equity method is used in accounting for joint ventures. D) The proportionate consolidation method to account for joint ventures provides financial analysts with better financial information.
The correct answer was B) Stockholder’s equity will be unaffected by use of the proportionate consolidation method to account for joint ventures.
15． The proportionate consolidation method achieves the same results as the consolidation method EXCEPT: A) no joint ventures are included. B) equity accounts are added together. C) that there are no minority interests. D) the use of the equity method on the income statement.
The correct answer was C) Proportionate consolidations and regular consolidations are the SAME except for the exclusion of minority interests in proportionate consolidations. | 
发表于 2008-4-2 17:15
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