答案和详解如下： 26．Haggs wonders which accounting method Simpson uses to calculate the book value of the BC investment for the year ending December 31, 1998. Which is the correct method? A) Equity method. B) Consolidation method. C) Pooling-of-interests method. D) Cost method.
The correct answer was D) When a company owns a non-influential and non-controlling interest in another company the investment must be carried at cost. Simpson must carry its BC investment at cost for 1998.
27．Haggs wonders which accounting method Simpson uses to calculate the book value of the BC investment for the year ending December 31, 2000. Which is the correct method? A) Equity method. B) Pooling-of-interests method. C) Cost method, but with all of BC's assets and liabilities marked to market. D) Consolidated method.
The correct answer was D) When a company's interest in another exceeds 50% it is considered to have controlling interest and must consolidate the financial statements. 28．Haggs wants to make sure that he assumes the proper accounting method when he does his analysis. The acquisition of BC stock will lead to Simpson's total net cash flow equaling which of the following for the year ending December 31, 1999? A) $-3,190,000. B) $-2,830,000. C) $-2,170,000. D) $360,000.
The correct answer was B) Simpson paid a total of $-3,190,000 (290,000 shares X $11) however, they also received a dividend from BC of $360,000. For 1999 Bailey Corporation is paying $1.20 in dividends per share (1,200,000/1,000,000). As of December 1999, Simpson has purchased 300,000 shares of BC (290,000 + 10,000). So dividends received is 300,000 * $1.20 = $360,000. This will make the total cash flow for the year $-2,830,000.
29．Which of the following statements about proportionate consolidation is TRUE? A) The proportionate consolidation method is required under US GAAP. B) Minority interest is computed and shown on a proportionate consolidation balance sheet and income statement. C) Under the proportionate consolidation method, all asset and liability accounts are added together using original historical costs. D) The porportionate consolidation method is employed by analysts to better reflect the economic reality of the relationship between an investor and affiliate company which is currently accounted for under the equity method.
The correct answer was D) The proportionate consolidation method is most appropriate when two firms have entered into a joint venture relationship but the investor accounts for the investment under the equity method because it owns between 20 and 50% of the outstanding shares of the JV. The proportionate consolidation method is used by analysts to better reflect the true economic linkage between the JV and the investor firm. The equity method provides nothing more than a "one-line" consolidation.
30．Which of the following statements about proportionate consolidation and the equity method is FALSE? A) The equity balance under a proportionate consolidation will differ from that of the equity method because the investor records his pro-rata share of the equity of the affiliate firm in a proportionate consolidation. B) Total assets under proportionate consolidation will most likely exceed the total assets reported under the equity method. C) Net income will be the same between a proportionate consolidation and the equity method. D) In a proportionate consolidation, the analyst adds the investor's pro-rata share of each of the affiliate's asset and liability accounts to the historical cost financial statements of the investor.
The correct answer was A) The equity balance of the investor will remain unchanged irrespective of whether or not the equity method or proportionate consolidation is employed. | 
发表于 2008-4-2 17:25
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