Investments are reported at fair value when a company has a significant influence over another company...

Investments are reported at fair value when a company has a significant influence over another company in which it invests. True False

Consolidated financial statements combine the separate financial statements of the purchasing company and the acquired company into a single set of financial statements. True False

When the investor has insignificant influence, the receipt of cash dividends is recorded as dividend revenue. True False

When significant influence exists, the investment should be accounted for by the equity method. True False

Bond investments are long-term assets that earn interest revenue, while bonds payable are long-term liabilities that incur interest expense. True False

Expert Solution

ekkarill92 answered 2 years ago

what advantages does a company achieve when it possesses significant influence owe another company through voting...

what advantages does a company achieve when it possesses significant influence owe another company through voting stock ownership?

What are the differences between significant influence investments and controlling investments? For the former, how to...

What are the differences between significant influence investments and controlling investments? For the former, how to account for the investment, whereas for the latter how to account for the investment? What are the major reasons to control another company?

If a company acquires a 40% interest in another company one of the fair value models...

If a company acquires a 40% interest in another company one of the fair value models is usually applicable. the equity method is usually applicable. the investor does not have the ability to exert significant influence over the investee. it would always have a controlling interest.

How can a 20% ownership position represent significant influence over a company?

According to GAAP, companies can elect the fair value option when accounting for many investments. Describe...

According to GAAP, companies can elect the fair value option when accounting for many investments. Describe how accounting for a held-to-maturity investment, an available-for-sale investment, and an equity-method investment is affected by a company electing the fair value option.

The value of goodwill is the excess of The purchase price over the fair value of...

The value of goodwill is the excess of The purchase price over the fair value of tangible and identifiable intangible net assets acquired. The purchase price over the fair value of tangible net assets acquired. The purchase price over the carrying value of tangible and identifiable intangible net assets acquired. The purchase price over the carrying value of tangible net assets acquired.

If the assets of a subsidiary are reported at below fair value in the balance sheet...

If the assets of a subsidiary are reported at below fair value in the balance sheet at the date of acquisition, and a fair value adjustment is not undertaken as part of the consolidation process, will goodwill be overstated? Why or why not?

Prussman Company acquires a 30% interest in Sully Corporation and concludes that it has significant influence...

Prussman Company acquires a 30% interest in Sully Corporation and concludes that it has significant influence over Sully. The book value of Sully’s stockholders’ equity is $600,000 and Prussman pays $300,000 for the investment. An excess of purchase price over book value was attributable to an unrecorded customer list worth $400,000, with a useful life of 10 years. After the acquisition, Sully reported net income of $150,000 and declared and paid a dividend of $40,000. At the end of the...

One number has three significant figures and another number has four significant figures. If these numbers...

One number has three significant figures and another number has four significant figures. If these numbers are added, subtracted, multiplied, or divided, which operation can produce the greatest number of significant figures? The answer given is ADDITION. But why? How? Please explain and give examples. Thanks.

Please compare the fair value and equity methods of accounting for investments in stocks subsequent to...

Please compare the fair value and equity methods of accounting for investments in stocks subsequent to acquisition.

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