If stock is issued in exchange for noncash assets, the assets should be valued at the
____________________ of the consideration ___________________ or the assets
____________________, whichever is more clearly evident.
Answer:
Retained earnings that are restricted are unavailable for dividends.
Answer:
On January 1, 2014, Mink Company purchased 5,000 shares of Kusher Company stock for
$360,000. Mink’s investment represents 30 percent of the total outstanding shares of Kusher.
During 2014, Kusher paid total dividends of $100,000 and reported net income of $300,000.
What revenue does Mink report related to this investment and what is the amount to be
reported as an investment in Kusher stock at December 31?
Answer:
Allowance for Doubtful Accounts is a _____________ account which is
______________ from Accounts Receivable on the balance sheet.
Answer:
Goodwill is an unusual asset in that it cannot be sold individually apart from a business
as a whole. If goodwill is an intangible asset, why can’t it be sold like other intangible
assets such as copyrights and patents? Briefly explain what makes goodwill different.
Answer:
If the unit price of inventory is increasing during a period, a company using the LIFO
inventory method will show less gross profit for the period, than if it had used the FIFO
inventory method.
Answer:
The economic entity assumption states that economic events can be identified with a
particular unit of accountability.
Answer:
On December 31, 2015, Colaw Company reports the following amounts in its
stockholder’ equity section:
The common stock has a stated value of $10 per share. One million shares of common
stock are authorized and 40,000 shares are held in the treasury.
Instructions
Compute the book value per share of common stock
Answer:
A worksheet is an optional working tool used by accountants to facilitate the
preparation of financial statements. Consider the steps followed in preparing a
worksheet. How does the use of a worksheet assist the accountant. Could financial
statements be prepared without a worksheet? Evaluate how the process would differ.
Consider factors such as timeliness, accuracy, and efficiency in your evaluation.
Answer:
For efficiency of operations and better control over cash, a company should maintain
only one bank account.
Answer: