Accounting Multiple Choice Questions Answers

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Cap Inc. acquired 100% of the voting common stock of Decker Inc. on January 1, year 1. The book value and fair value of Decker’s land account on that date (prior to creating the combination) follow, along with the book value of Cap’s land accounts:
Cap’s book value $280,000
Decker’s book value $220,000
Decker’s fair value $240,000
Assume that Cap issued 12,000 shares of common stock with a $5 par value and a $42 fair value for all of the outstanding stock of Decker. What is the consolidated balance for Land as a result of this acquisition transaction?
520,000 OR 280,000 OR 0, Or 500,000
Dividends received are reported as revenue under the investment account when using the equity method.
TRUE OR FALSE
Cap Co. paid cash for all of the voting common stock of Decker Corp. Decker will continue to exist as a separate corporation. Entries for the consolidation of Cap and Decker would be recorded in
Decker’s general journal
Cap’s general journal
the worksheet
Both Cap’s and Decker’s general journal
A partnership is insolvent and will be unable to pay $30,000 in liabilities currently due. The partnership’s creditors may seek remuneration from any partner they choose.
TRUE OR FALSE
The Schedule of Liquidation provides a listing of transactions to date, current cash, and capital balances.
TRUE OR FALSE

Under the current rate method, common stock would be translated at what rate?
Average rate OR HISTORICAL RATE OR CURRENT RATE OR Beginning of the year rate

In translating a foreign subsidiary’s financial statements, which exchange rate does the current method require for the subsidiary’s assets and liabilities?
the exchange rate in effect as of the balance sheet date
the exchange rate in effect when each asset or liability was acquired
the exchange rate in effect at the start of the current year
the average exchange rate for the current year
The dissolution of a partnership occurs when there is any change in the individuals who make up the partnership
TRUE OR FALSE

In accounting, the term translation refers to
the procedure required to identify a company’s functional currency

a procedure to prepare a foreign subsidiary’s financial statements for consolidation
the calculation of gains or losses from hedging transactions
the calculation of exchange rate gains or losses on individual transactions in foreign currencies
What is a company’s functional currency?
THEe currency of the primary economic environment in which it operates
the currency of the country where it has its headquarters
the currency in which it prepares its financial statements
the currency it chooses to designate as such

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