Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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Textbook Question
Chapter C, Problem 14QS
Complete the following descriptions by filling in the blanks using the terms or phrases a through d.
a. subsidiary b. parent c. controlling d. non-controlling
1. The controlling investor is called the _____ and the investee is called the _____.
2. A long-term investment classified as equity securities with controlling influence implies that the investor can exert a ___ influence over the investee.
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Students have asked these similar questions
1. Explain the concept of control and its relationship to ownership percentage
2. which criteria do you prefer to use to classify equity investments ( quantitative, qualitative, or a combination of both)? Explain your answer (you may wish to highlight the advantages and disadvantages of each one)
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.
An investor prepares a single set of financial statements which encompasses the financial results for both it and its investee because:
a.
The investor has a controlling interest in its investee.
b.
The investor has a passive interest in its investee.
c.
The investor has an influential interest in its investee.
d.
The investor has an active interest in its its investee.
Chapter C Solutions
Loose Leaf for Financial Accounting: Information for Decisions
Ch. C - Under what two conditions should investments be...Ch. C - Prob. 2DQCh. C - Prob. 3DQCh. C - Identify the three classes of debt investments and...Ch. C - Prob. 5DQCh. C - Prob. 6DQCh. C - Prob. 7DQCh. C - Prob. 8DQCh. C - Prob. 9DQCh. C - Prob. 10DQ
Ch. C - Prob. 11DQCh. C - Prob. 12DQCh. C - Prob. 13DQCh. C - Prob. 14DQCh. C - Which of the following statements a through g are...Ch. C - Prob. 2QSCh. C - Prob. 3QSCh. C - Prob. 4QSCh. C - Prob. 5QSCh. C - Prob. 6QSCh. C - Journ Co. purchased short-term investments in...Ch. C - Prob. 8QSCh. C - Prob. 9QSCh. C - Prob. 10QSCh. C - Prob. 11QSCh. C - Prob. 12QSCh. C - Complete the following descriptions by filling in...Ch. C - Complete the following descriptions by filling in...Ch. C - Prob. 15QSCh. C - Prob. 17QSCh. C - Complete the following descriptions by filling in...Ch. C - Prob. 2ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Prob. 6ECh. C - Prob. 7ECh. C - Use the following information of Prescrip Co. to...Ch. C - Prob. 9ECh. C - Prob. 10ECh. C - Prob. 12ECh. C - Complete the following descriptions by filling in...Ch. C - Prob. 14ECh. C - Prob. 1PSACh. C - Prob. 3PSACh. C - Prob. 4PSACh. C - Prob. 5PSACh. C - Prob. 6PSACh. C - Prob. 1PSBCh. C - Prob. 3PSBCh. C - Prob. 4PSBCh. C - Prob. 5PSBCh. C - Prob. 6PSBCh. C - Prob. CSPCh. C - Prob. 1GLPCh. C - Prob. 2GLPCh. C - Prob. 1FSACh. C - Prob. 2FSACh. C - Prob. 3FSACh. C - Prob. 2BTN
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- State whether the following statements are true or false and justify your answer in each case: a) The investor's relative exposure to the risks and rewards of the investee is known as the investor's 'extent of equity ownership' in the investee. b) The investor's 'extent of equity ownership' in the investee determines whether the investee is equity accounted. consolidated or simply measured as an investment in the investor's consolidated financial statements. c) The investor's degree of influence over an investee increases as the investment changes from a simple investment to a subsidiary. finally reaching the strongest degree of influence when the subsidiary becomes an associate. d) An investment over which the investor has significant influence is called an associate. e) An investee that is jointly controlled by the investor is called a subsidiary. f) The only instance where the investor may equity account for its investee is when such an investee is classified as an associate. g)…arrow_forwardChoose the correct.When an investor uses the equity method to account for investments in common stock, the investor’s share of cash dividends from the investee should be recorded as: a. A deduction from the investor’s share of the investee’s profits.b. Dividend income.c. A deduction from the stockholders’ equity account, Dividends to Stockholders.d. A deduction from the investment account(AICPA adapted)arrow_forward3. Which of the following categories of investments are reported at their fair values on the balance sheet and have unrealized holding gains and losses included as a separate component of stockholders' equity? a. held-to-maturity debt securitiesb. marketable securitiesc. available-for-sale securitiesd. trading securitiesarrow_forward
- Which of these entities has more stable and secured investment?a. Common stockholderb. Preferred stockholderc. Bondholderd. All of the abovearrow_forward2. This represents a share of interest in a firm representing rights of ownership and claims of benefits such as dividends and book value. a. Short-term investments b. Derivative securities c. Equity securities d. Debt securities e. None of the abovearrow_forwardOne of the primary reasons for investing in equity securities includes a. Receiving dividend payments. b. Acquiring debt of competing companies. c. Earning interest revenue. d. Deducting dividend payments for tax purposes.arrow_forward
- When an investment is acquired, what is the initial reporting basis for all investments in equity securities? Group of answer choices: a) Fair market value b) Equity value c) Discounted present value d) Costarrow_forward1 Unrealized holding gain/loss which are taken to profit or loss are from securities that are classified as a. held to maturity b. investment in associate c. equity investment at fair value through profit or loss d. equity investment at fair value through other comprehensive incomearrow_forwardWhich of the following statements is correct in regard to trading bond investment? a. Trading bond investments are held with the intention of selling them in a short period of time b. Unralized gains and losses are reported as part of income c. both are correct d. both are incorrectarrow_forward
- Which of the following statement is true? a. In brokered markets, buyers and sellers confront each other directly and bargain over price. b. Primary market is the market for trading outstanding securities. c. Preference shareholders have a higher priority claim on company’s assets than ordinary shareholders in the event of insolvency. d. Ordinary shareholders receive fixed dividend payments.arrow_forwardn reference to intercompany transactions between an investor and an investee, when the investor can significantly influence the investee, which of the following statements is correct, assuming that the investor is using the equity method? Question 9Answer a. As long as the investor recognizes the effects of the transaction in its financial statements, it is notrequired to provide any additional disclosures. b. In reporting its share of earnings and losses of an investee, the investor must eliminate the effect of profits and losses on the intercompany transactions until they are realized. c. None of the others are correct. d. There is the presumption of arms-length bargaining between the related parties.arrow_forwardInvestment banking firms offer to facilitate the sale of securities to the public in a variety of ways. Which of the following methods guarantees the corporation with a pre - determined price for the securities? OA. a commission basis OB. a competitive bid Oc. a best efforts basis D. an underwriting diarrow_forward
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