Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 13Q
To determine
Explain why the amount of the adjustment changes from year to year.
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TRUE OR FALSE?
The prior period will be affected if during the current year the management of an entity decides to classify a non currrent asset as held for sale.
If an entity capitalized transaction costs to a financial asset at fair value through profit or loss, then subsequently adjusted the initial cost to fair value at year-end, what is the overall effect on the current year net income? *
A. Current year net income will be understated
B. Current year net income will be overstated
C. Current year net income will either be overstated or understated, depending on whether the fair value at year end is more than, less than, or equal to the initial cost
D. No effect
Which of the following statements regarding capital asset holding periods is false?
Group of answer choices
A. Trade dates, rather than settlements dates, are used to determine the date of acquisition and sale.
B.The holding period for property received as a gift usually includes the holding period of the donee.
C.The holding period for property acquired from a decedent is long term even if the property is sold less than one year after it was acquired.
D. A holding period of exactly one year or more is long term.
Chapter 5 Solutions
Fundamentals of Advanced Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Prob. 2DYS
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Similar questions
- Which of the following statements is correct with respect to the sale of a depreciable asset? Multiple Choice A gain occurs when the selling price exceeds book value. A sale for a gain results in a decrease in total assets. A sale for a loss results in an increase in total assets. A loss occurs when the selling price is more than book value.arrow_forwardIn reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct? A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting. B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets. C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting. D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.arrow_forwardWhen an entire interest in a passive activity is disposed of any passive loss carryover with respect to that activity can be deducted by the seller in the year of the sale. True or falsearrow_forward
- A gain on a bargain purchase is A. Recognized in profit or loss in the year of acquisitionB. Amortized in profit or loss over the lower of its legal life and estimated useful lifeC. Recognized in profit or loss in the year of acquisition but only after reassessment of the assets acquired and liabilities assumed in the business combinationD. None of the abovearrow_forwardWhen an entity sells a non-current asset at a profit to another entity within the same group, which of the following adjustments is necessary on consolidation? Select one: a. Dr Asset, DR Gain on sale b. Dr Gain on sale, CR Asset c. Dr Gain on sale, CR Cash d. Dr Asset, CR Casharrow_forwardIn computing for the present value of a business or property on a liquidation basis, why is it necessary that the estimated net proceeds be discounted at a rate that reflects the risk involved back to the date of the original valuation?arrow_forward
- 5. How should accounting fees for acquisition be treated? A. Expensed in the period of acquisition B. Capitalized as part of acquisition cost C. Deferred and amortized D. Deferred until the company is disposed of or wound-up 6.The excess of the price paid over the fair value of the net identifiable assets acquired should be recognized as A. Goodwill to be amortized periodically for 20 yearS. B. Expenses immediately C. Goodwill not subject to amortization but subject to impairment D. Goodwill to be amortized for 40 years 7.Under PFRS 3 (Business Combinations) A. Both direct and indirect costs are to be capitalized B. Both direct and indirect costs are to be expensed C. Direct costs are to be capitalized and indirect costs are to be expensed D. Indirect costs are to be capitalized and direct costs are to be expensedarrow_forwardLynch Corporation changes from the sum-of-the-years’-digits method of depreciation for existing assets to the straight-line method. How should the change be reported? Explain.arrow_forwardIn a transaction accounted for using the acquisition method where consideration transferred is less than fair value of net assets acquired, which statement is true? Multiple Choice Negative goodwill is recorded. A deferred credit is recorded. A gain on bargain purchase is recorded. Long-term assets of the acquired company are reduced in proportion to their fair values. Any excess is recorded as a deferred credit. Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values. Any excess is recorded as gain.arrow_forward
- Why does an intra-entity sale of a depreciable asset (such as equipment or a building) require sub-sequent adjustments to depreciation expense within the consolidation process?arrow_forwardA consolidation adjustment will have a tax effect if: Select one: A. It adjusts the carrying amount of an asset B. It adjusts the carrying amount of liabilityC. All of the above D. It recognizes assets and liabilities not recorded in accounting records of groupcompaniesarrow_forwardDuring the measurement period, which of the following may affect the amount ofgoodwill from business combination? A.New information regarding estimates in the contingent consideration that are not existing atthe date of acquisitionB.Nothing can affect the amount of goodwill.C.New information regarding estimates in the contingent consideration that are existing at thedate of acquisition.D.New information regarding estimates in the contingent considerationarrow_forward
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