Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 6, Problem 1P
To determine
Identify the appropriate answer for the given statement from the given choices.
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Choose the correct. An enterprise that holds a variable interest in a variable interest entity (VIE) is required to consolidate the assets, liabilities, revenues, expenses, and noncontrolling interest of that entity if:a. The VIE has issued no voting stock.b. The variable interest held by the enterprise involves a lease.c. The enterprise has a controlling financial interest in the VIE.d. Other equity interests in the VIE have the obligation to absorb the expected losses of the VIE.
Which of the following is characteristic of liabilities ratherthan of equity? (More than one answer may be correct.)a. The obligation matures.b. Interest paid to the provider of the capital is deductiblein the determination of taxable income.c. The capital providers’ claims are residual in the eventof liquidation of the business.
d. The capital providers normally have the right to exer-cise control over business operations.
What is a noncontrolling interest?
Select one:
A. A component of debt representing amounts owed to a subset of investors
B. Amounts distributed to investors that own less than a controlling interest
C. The portion of a subsidiary’s net assets not owned by the parent-company
D. An amount equal to investor contributions less dividends distributed
Chapter 6 Solutions
Advanced Accounting
Ch. 6 - Prob. 1QCh. 6 - Prob. 2QCh. 6 - When is a firm required to consolidate the...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - How do noncontrolling interest balances affect the...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Problems 7 and 8 are based on the following...Ch. 6 - Prob. 8PCh. 6 - Bens man Corporation is computing EPS. One of its...Ch. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42P
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- Choose the correct. Under fair-value accounting for an equity investment, which of the following affects the income the investor recognizes from its ownership of the investee?a. The investee’s reported income adjusted for excess cost over book value amortizations.b. Changes in the fair value of the investor’s ownership shares of the investee.c. Intra-entity profits from upstream sales.d. Other comprehensive income reported by the investee.arrow_forward6. What is the proper treatment for noncash asset received from a non-stockholder? Group of answer choices a. The share premium shall be credited for the fair value of the noncash asset. b. The share premium shall be credited for the book value of the noncash asset. c. The income account shall be credited for the fair value of the noncash asset. d. The income account shall be credited for the book value of the noncash asset.arrow_forwardUnder fair-value accounting for an equity investment, which of the following affects the income the investor recognizes from its ownership of the investee? The investee’s reported income adjusted for excess cost over book value amortizations. Changes in the fair value of the investor’s ownership shares of the investee. Intra-entity profits from upstream sales. Other comprehensive income reported by the investee.arrow_forward
- If an entity has elected to use the fair value option for a financial liability; a. It is measured at fair value through other comprehensive income. b. It is measured at fair value through profit or loss. c. It is measured at amortized cost. d. Fair value op don is prohibited for financial liabilities.arrow_forwardWhen acquiring a business, typically all of the assets and liabilities will be acquired, even those off-balance sheets. Consider operating leases. This is a legal liability that currently is not reflected on a balance sheet. How is this accounted for upon acquisition and for consolidation? Consider ASC Codification 805-20 through 25 .arrow_forwardA property is classified as investment property if Question options: a it is leased out under a finance lease b the owner-occupied portion of the property is significant. c the entity provides relatively insignificant ancillary services (e.g., security, janitorial services, and the like) to the occupants of the property. d it is rented between a parent entity and a subsidiary and consolidated financial statements are prepared for the grouparrow_forward
- A contingent liability assumed in a business combination: a. Is not accounted for by the acquirer if the contingent liability has an improbable outflow of economic resources. b. Is recognized even if it has an improbable outflow of economic resources for as long as there is present obligation and the fair value of the obligation can be measured reliably c. Is recognized only if there is present obligation, probable outflow of economic resources, and can be measured reliably. d. Are not accounted for by the acquirer if the contingent liability has an improbable outflow of economic resources and recognized only if there is present obligation, probable outflow of economic resources, and can be measured reliably.arrow_forwardAt initial recognition, an entity may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is A. Acquired principally for the purpose of selling it in the near term. B. A derivative. C.None of these. D. On initial recognition is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking.arrow_forward1. Which of the following would not be reported as investment property? a. Property owned by the entity and leased out under one or more operating leases. b. Property held by the entity to be leased out under one or more operating leases c. Real estate held for an undetermined future use. d. Property owned by the entity and leased out to another entity under a finance lease. 2. All of the following do not qualify as investment property, except a. Machineries that are held for lease b. Hotels or motels c. Agricultural land purchased for appreciation purposes d. Equipment purchased for an indeterminate purpose 3. A property is classified as investment property if a. it is leased out under a finance lease. b. the owner-occupied portion of the property is significant. c. the entity provides relatively insignificant ancillary services (e.g., security, janitorial services, and the like) to the occupants of the property. d. it is rented between a parent entity and a subsidiary and…arrow_forward
- IFRS requires companies to measure their financial assets at fair value except when based on:(a) whether the equity method of accounting is used.(b) whether the fi nancial asset is a debt investment.(c) whether the fi nancial asset is an equity investment.(d) whether an investment is classifi ed as trading.arrow_forwardWhich of the following represents an obligation of the company? Liability Asset Owners' Equity Liabilities of its competitorsarrow_forwardAt initial recognition, an entity may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is Group of answer choices Acquired principally for the purpose of selling it in the near term. On initial recognition is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. A derivative. None of these.arrow_forward
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