Choose the right answer:

1-Which account is not used under the equity method ?

a dividends receivable

b- dividend Income

c-equity in net income of subsidiary d-Investment in subsidiary

2-Aparent cannot consolidate a subsidiary that

3-Is in an unrelated line of business b-is in a foriegn country.

c-Has a different year-end.

d-Has filed for bankruptcy protection.

3-Patro Inc. acquired 100% of Sage Inc. outstanding common stock at a total

cost of $ 100000. Sage s net assets have a book value of $ 50000 and a

current value of $ 90000. In the parents general ledger, how much would

be shown in the good will account?

a-5-0- b-5100000-$30000 d-540000

4-Debt investments are initially recorded at:

a-cost b-cost plus accrued interest c-fair value d-none of the above

5-The statement of cash flows should not be used to evaluate an entitys

ability to:

a-earn net income b-generate future cash flows

C-pay dividends

d-meet obligations