Reading 21:Intercorporate Investments LOS d ～ Q19-21 equity, received, method, accounting, class

mayanfang1

Q19. Assuming the equity method of accounting is used, What will be the cash flow received by Birtch, due to their

investment in TRQ during 2002?

A)     $227,500.

B)     $52,500.

C)     $65,400.

Q20. On December 31, 2001 Company P invests $5,000 in Company S in exchange for 25% of the company. During 2002,

Company S earns $2,000 and pays a dividend of $500. If Company P uses the equity method of accounting, what values will be

reported on the balance sheet and income statement? How much cash will be recognized from the investment?

A) Balance Sheet                              Income Statement       Cash

   $5,375                            $500                   $125

B) Balance Sheet                              Income Statement       Cash

  $5,500                               $0                 $0

C) Balance Sheet                              Income Statement       Cash

   $5,375                               $125            $125

Q21. Fiduciary Investors held two portfolios for marketable equity securities:

§        $50 million in Portfolio A was accounted for as available-for-sale.

§        $50 million in Portfolio B was accounted for as trading securities.

Assume that Fiduciary transferred $10 million in trading securities from Portfolio B into Portfolio A. It was determined that subsequent to the transfer these securities had a market value of $8 million. If no previous write downs were made, Fiduciary must:

A)   charge $2 million to its income statement.

B)   do nothing to its income statement or equity section of its balance sheet.

C)   charge $2 million to the equity section of its balance sheet.

fengleng

thanks

rosemarie

thanks

woshidengl

kk

suodi

[em50]

htpeng

才v

milkbaby

ss

ah149

 thx

maxsimax

thanks

yan_superman

 XIE