1:
Following is a portion of the investments footnote from Allstate's 2016 10-K.
(in millions)
Amortized cost of available-for-sale securities
Gross unrealized gains
Gross unrealized losses
2016
$56,576
1,710
(447 )
What amount does Allstate report for available-for-sale securities on its 2016 balance
sheet?
Select one:
A. $59,008 million
B. $57,839 million
C. $60,910 million
D. $61,483 million
E. None of the above
2:
Following is a portion of the investments footnote from Redfield Inc.'s 2017 annual report.
(in millions)
Amortized cost of marketable equity
Gross unrealized gains
Gross unrealized losses
2017
$546,673
13,114
$ 38,983
What amount does Redfield report for its passive investments in marketable equity
securities on it 2017 balance sheet?
Select one:
A. $ 19,899 million
B. $400,619 million
C. $380,443 million
D. $520,804 million
E. None of the above
3:
In 2017, Palmyra Corp. purchased 100% of the common stock of Rochester Tech for a total
purchase price of $8,906.8 million. On Palmyra’s unconsolidated accounts, it uses the
equity method to account for Rochester Tech. For public disclosure, Palmyra Corp.
consolidates the accounts of Rochester Tech.
Which of the following is true?
Select one:
A. The consolidated shareholders' equity exceeds the unconsolidated shareholders' equity
by $8,906.8 million.
B. The consolidated total assets are greater than the unconsolidated total assets by
$8,906.8 million.
C. Net income is the same on the consolidated and unconsolidated financial statements.
D. The consolidated net income is greater than the unconsolidated net income.
E. None of the above
4:
In footnotes to its 2016 annual report, Bancfirst Corp. reported that held-to-maturity debt
securities with an amortized cost of $4,365 thousand had an estimated fair value of $4,403
thousand. The balance sheet reported:
Select one:
A. Held-to-maturity assets of $4,365 thousand
B. Held-to-maturity assets of $4,403 thousand
C. Accumulated other comprehensive income of $38 thousand related to held-to-maturity
assets
D. Both A and C
E. Both B and C
5:
Significant influence is often presumed when the investor owns:
Select one:
A. Greater than 20% of the voting stock of the investee
B. Greater than 50% of the voting stock of the investee
C. Between 20% and 50% of the voting stock of the investee
D. Greater than 20% of the voting stock or of the fair value of the investee
E. None of the above
6:
When equity method accounting is used for investment, which component of ROE would
always be understated?
Select one:
A. Net Profit Margin
B. Total Asset Turnover
C. Financial leverage
D. Return on Equity
E. None of the above
7:
When the fair value of a company’s portfolio of passive investments in marketable equity
securities exceeds its book value, the difference should be:
Select one:
A. Added to the investment account
B. Added to stockholders’ equity of the investee
C. Written off as an impairment
D. Added to goodwill
E. None of the above
8:
Which of the following would not be considered an intangible asset?
Select one:
A. Trademarks and internet domain names
B. Plant, Property, and Equipment
C. Patents, computer software, databases and trade secrets
D. Customer lists, production backlog, and customer contracts
E. None of the above
9:
At the beginning of fiscal 2017, Wooster Company acquired a small savings and loan
association for $102 million. The book value of the assets of the acquired company were
$261 million, its liabilities $172.5 million. An appraiser determined that the acquiree’s land
had a fair value of $3 million in excess of its net book value. Wooster also determined that
the acquiree had an unrecorded liability of $6.75 million relating to a lawsuit. The book value
of all other assets and liabilities approximated fair value.
What did Wooster Company record as goodwill for this acquisition?
Select one:
A. $11.50 million
B. $ 9.75 million
C. $17.25 million
D. $-0E. None of the above
Goodwill = Cost to acquire - Fair value of net assets acquired
= $102 million - ($261 million + $3 million - $172.5 million - $6.75 million)
= $17.25 million
10:
Columbus Company owns 25% of Zanesville Inc. and accounts for the investment using the
equity method. During the year, Zanesville Inc. reports a net loss of $1,602,000 and pays
total dividends of $73,800.
Which of the following describes the change in Columbus’s investment in Zanesville during
the year?
Select one:
A. The investment increases by $326,700.
B. The investment decreases by $232,750.
C. The investment decreases by $418,950.
D. The investment decreases by $400,500.
E. None of the above