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1) The investor should generally use the equity method of accounting for the investee if the investor owns what percentage of the outstanding stock of
1) The investor should generally use the equity method of accounting for the investee if the investor owns what percentage of the outstanding stock of the investee? A) 0%-15% B) 20%-50% C) any percentage greater than 50% D) any percentage greater than 60% 2) Goodwill arises when a parent company: A) pays less to acquire a subsidiary company than the market value of the subsidiary's net assets B) pays more to acquire a subsidiary company than the market value of the subsidiary's net assets C) pays less to acquire a subsidiary company than the book value of the subsidiary's net assets D) pays more to acquire a subsidiary company than the book value of the subsidiary's net assets 3) A controlling interest is normally one where the investor: A) owns more than 20% of the investee's voting stock B) owns more than 50% of the investee's voting stock C) uses the equity method to account for the investment D) uses the market value method of accounting for the investment 4) A non-controlling interest arises only when a parent company purchases: A) less than 20% of the stock of a subsidiary company B) between 20% and 50% of the stock of a subsidiary company C) more than 50% but less than 100% of the stock of a subsidiary company D) all of the stock of a subsidiary company 5) Yukon Electrical Company owns all of the stock of Simmons Corporation and 80% of the stock of I-Tek Corporation. In 2017, Yukon earned net income of S450,000, Simmons earned $120,000, and I-Tek earned $180,000. Yukon's consolidated income statement would report consolidated net income of: A) $450,000 B) $570,000 C) $750,000 D) $714,000 6) The purchase of long-term investments would appear on a cash flow statement in the A) operating activities section B) investing activities section C) financing activities section D) would not appear on a cash flow statement 7) What is the present value of $520,000 expected to be received in three years' time, if the business concerned requires a return of 10% on sums invested? A) S620,000 B) $427,983 C) $472,893 D) $390,684 8) Assume that the interest rate is greater than zero. Which of the following cash-inflow streams totaling $1,500 would you prefer? The cash flows are listed in order for Year 1, Year 2, and Year 3 respectively? A) $700; $500; $300 B) $300; $500; $700 C) $500; S700; $300 D) Any of the Above as they all equal $1,500 9) _means current value of a future amount of money evaluated at a given interest rate? A) Compounding B) Nominal Rate C) Discounting D) Continuous Rate 10) All else constant, the net present value of a typical investment project increases when: A) The rate of return decreases. B) The initial cost of the project increases C) Each Cash flow is delayed for one year D) Discount Rate Increases
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