Company X Owns 15 Of The Outstanding Common Stock Of Company Y 2841773

1. Company X owns 15% of the outstanding common stock of Company Y. During the year, the market value of this stock increased by $10,000. This unrealized holding gain was reported in other comprehensive income. Based on this, in which portfolio would this investment be classified?
A. Trading Portfolio
B. Available for Sale Portfolio
C. Hold-to-Maturity Portfolio
D. Any of the above portfolios could include this investment
E. None of the above
2. In order for a company to classify its investment in corporate bonds (an investment in marketable securities) in the hold-to-maturity portfolio, which of the following must be true?
A. Management must have the intent to hold the investment to maturity.
B. The company must have the ability to hold the investment maturity.
C. The market value of the bonds must be undeterminable.
D. Both A and B
E. A, B, and C
3. Company A accounts for dividends received on an investment in Company B as a “return on investment.” Based on this, how is the related investment in common stock most likely accounted for?
A. As a marketable security (FAS 115)
B. As an equity method investment
C. As an investment that will be consolidated for financial statement purposes
D. As if Company A has “control” over Company B
E. None of the above
4. Which of the following would typically be accounted for as an investment in marketable securities under the guidelines of FAS 115?
A. Ownership of 25% of the preferred stock of Company X
B. Ownership of 45% of the common stock and significant influence over the management of Company X
C. Ownership of the bonds of Company X
D. Both A and C
E. A, B, and C
5. Related to accounting for marketable securities, the accounting under the fair value election is similar to that for which of the following portfolios (be sure to consider both the balance sheet and income statement impact)?
A. Trading portfolio
B. Available-for-sale portfolio
C. Hold-to-maturity portfolio
D. Both A and B
E. None of the above
6. Derivatives are financial instruments whose value is based on an observable variable – another instrument, index, or interest/exchange rate. What are the “units” used to compute (measure) the value of a derivative (and the related unrealized gains and losses)?
A. Base
B. Basis
C. Notional amount
D. Underlying
E. None of the above
7. Refer to the question above. What name is typically used to describe the “observable variable”?
A. Base
B. Counter-party
C. Notional amount
D. Underlying
E. None of the above
8. Firms typically include available-for-sale securities in __ in the __ section of the ___
A. held-to-maturity securities; current assets; balance sheet
B. marketable securities; noncurrent assets; balance sheet
C. marketable securities; current assets; statement of cash flows
D. held-to-maturity securities; noncurrent assets; balance sheet
E. held-to-maturity securities; current assets; statement of cash flows
9. Which of the following is false?
A. A derivative is a financial instrument whose value changes in response to changes in an underlying observable variable, such as a stock price, an interest rate, a currency exchange rate, or a commodity price.
B. Unlike most equity securities, derivatives have a definite settlement date.
C. A derivative requires an investment that is small, relative to the investment in a contract that is similarly exposed to changes in market factors, or requires no investment at all.
D. Firms may use derivative instruments to hedge the risks that arise from changes in interest rates, foreign exchange rates, and commodity prices.
E. None of the above
10. Which of the following is/are false?
A. U.S. GAAP and IFRS allow firms to choose whether to designate a particular derivative as a hedge, and therefore eligible for hedge accounting.
B. Firms re-measure all derivatives designated as a hedge to fair value at every balance sheet date and include changes in fair value in net income.
C. For a derivative designated as a hedge, firms must further designate it as hedging the risk of a change in fair value (fair value hedges) or a change in cash flows (cash flow hedges).
D. all of the above
E. none of the above
11. Company A made an equity method investment in Company B in the amount of $500,000 during 2009; this represents a 40% stake in the company. During 2009, Company B announced earnings (net income) of $30,000 and paid a dividend of $5,000. During 20010, Company B announced a net loss of $10,000. Given this, what is the value of the investment in Company B on Company A’s books at the end of 2010?
A. $500,000
B. $504,500
C. $506,000
D. $507,500
E. $515,000
12. Company P acquires 100% of Company S for $130,000 cash. The book value of Company S’s total equity (net assets) at the time was $110,000. Assuming that the market value of S’s fixed assets exceeded book value by $20,000 and $5,000 of (previously unrecognized) identifiable intangible assets were included as part of the purchase, how much would be reported as goodwill on the initial consolidated balance sheet?
A. $0
B. -$5,000
C. $5,000
D. $10,000
E. $20,000
13. Assume Company A owns 80% of Company B. Which of the following is false?
A. A non-controlling interest exists
B. The full value of B’s assets and liabilities are consolidated and the 20% non-controlling interest is recognized in the equity section of the consolidated balance sheet
C. The net income attributable to the non-controlling interest is displayed on the consolidated income statement
D. Only 80% of B’s assets, liabilities, revenues, and expenses are consolidated.
E. None of the above (i.e., all of the above are true)
14. Which of the following is/are false?
A. When one firm, P, owns more than 50% of the voting stock of another company, S, P can control the activities of S in terms of broad policy making.
B. When one firm, P, owns more than 50% of the voting stock of another company, S, P can control the activities of S in terms of day-to-day operations.
C. When one firm, P, owns more than 50% of the voting stock of another company, S, common usage refers to P as the parent and to the majority-owned company S as the subsidiary.
D. U.S. GAAP and IFRS require the parent to combine the financial statements of majority-owned companies with those of the parent in consolidated financial statements.
E. None of the above
15. U.S. GAAP and IFRS require firms to account for current business combinations using the _____ method.
A. Acquisition
B. Pooling-of-interests
C. Uniting-of-interests
D. Equity
E. Cost
16. Often, the parent does not own 100% of the voting stock of a consolidated subsidiary. The parent now refers to the owners of the remaining shares of voting stock as a…
A. noncontrolling interest.
B. nonconsolidated group
C. minority share
D. noninfluential interest
E. None of the above
17. Which of the following is false relative to the accounting for patient service revenue for a healthcare entity such as a hospital?
A. Patient service revenue is presented in the income statement (results of operations) on a “net” basis
B. Medicare contractual adjustments are recorded as reductions to patient service revenue, not as expenses
C. Most hospital bad debts are accounted for as a deduction in patient service revenue, not as expenses
D. Net patient service revenue, in essence, represents the net realizable value of patient service revenues
E. None of the above are false
ACCOUNTING FOR MARKETABLE SECURITIES. As of December 31, 2017, Company A has the following investments in marketable securities:
Acquisition December 31, 2017
Cost Market Value
Trading Portfolio –
Company B Common Stock $110,000 $108,000
Available for Sale Portfolio –
Company C Common Stock $355,000 $357,000
Hold-To-Maturity Portfolio –
Company D Debentures $500,000 $495,000
Additional Information: All three investments were purchased during 2017. During 2018, Company A sold its investment in Company B for $109,000 and its investment in Company C for $356,000. As of December, 2018, the market value of the investments in Company D Debentures was $501,000. Calculate the following (and be sure to identify whether a gain or loss):
A. Holding gain/loss recognized in the income statement in 2017
B. Holding gain/loss recognized in other comprehensive income in 2017
C. Holding gain/loss recognized in the income statement in 2018
D. Holding gain/loss recognized in other comprehensive income in 2018
E. Balance of accumulated other comprehensive income as of December 31, 2018
Clearly and concisely respond to the following question.
1. What was the underlying theoretical rationale for the pooling-of-interest method? When it was permissible under GAAP, why did some managers prefer to account for their business combinations as a pooling-of-interest (be sure to consider both the balance sheet and income statement impact)?
2. Under current accounting rules, health care providers are not permitted to recognize the value of the services they provide to charity patients as revenue. Based on what you’ve learned thus far in the course, why do you think this is? Given that charity care is not recognized as revenue, does its provision impact the income statement at all? If so, how?
The Pfizer, Inc. 2017 Financial Report has been provided for you in PDF form in the “Content” section of Blackboard. This report is 145 pages long. You do not need to read the entire report and probably shouldn’t waste your paper and ink to print it. The audited financial statements and auditor’s reports begin on page 73 of the document. Using this part of the Report, answer the following questions:
1. What is the value of short-term investments Pfizer reported in 2017?
2. The majority of these short-term investments represent investments that are categorized in which portfolio?
3. How much equity is attributable to non-controlling interests in 2017?
4. How much net income was attributable to non-controlling interests in 2017?
5. How much goodwill was recognized upon the acquisition of Anacor Pharmaceuticals in 2016?
6. What is the gross amount of unrealized holding gains (losses) on available-for-sale securities reported in 2017? Be sure to include reversals of previously recognized unrealized gains/losses for AFS securities that were sold during 2017.
7. What is the amount of unrealized holding gains (losses) on derivatives reported in 2017?
8. What is the fair value of available-for-sale debt securities as of December 31, 2017?
9. What is the total fair value of derivatives reported as liabilities as of December 31, 2017?
HINT: Some of this information is included in the appropriate footnotes. Be sure to pay attention to the title of each footnote so you don’t waste time reading footnotes that are not relevant to the questions.

Attachments:

Accounting-Qu….docxPfizer-2017-A….pdf

Prof. Angela

4.6/5

Calculate Price


Price (USD)
$