Q55. Which of the following best describes the differences between the non-marketable securities cost method and the equity method for accounting for intercorporate investments?
A) Under the non-marketable cost method, the balance sheet valuation reflects changes in the market value of the security whereas under the equity method, recognized income only includes dividends received from the affiliate company. B) Under the cost method, the balance sheet valuation of the investment remains at cost whereas under the equity method, the balance sheet valuation reflects changes in the retained earnings of the affiliate company. C) Under the cost method, the income recognized by the investor is the dividends received from the investee firm whereas under the equity method, the balance sheet valuation reflects changes in the market value of the affiliate's shares.
Q56. Which of the following statements regarding a comparison of the equity method with the consolidation method is FALSE?
A) Operating Income will tend to be higher under consolidation relative to the equity method. B) Total Equity will be the same under both methodologies. C) ROE will tend to be higher under the equity method relative to consolidation.
Q57. Which of the following methods is NOT considered U.S. GAAP? A) Consolidation method. B) Cost method. C) Proportionate consolidation method.
Q58. The proportionate consolidation method results in: A) different net income from the equity method. B) same equity as the cost method. C) same net income as the equity method.
Q59. On December 31, 2006 Company P invests $5,000 in Company S in exchange for 25% of the company. During 2007 Company S earns $2,000 and pays a dividend of $500. If Company P uses the cost method of accounting, what values will be reported on the balance sheet and income statement? How much cash will be recognized from the investment? Balance Sheet
Income Statement Cash
A) $5,375 $500 $125 B) $5,000 $0 $0 C) $5,000 $125 $125
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发表于 2009-1-8 10:50
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