Exam 8: Investing Activities

The three types of costs incurred in coal production are acquisition costs (costs to acquire the coal rich lands plus the present value of future cash flows necessary to restore the sites minus the cost of the land),exploration costs (costs of mining),and development costs (pipes,roads,and so on,to extract and transport the coal to customers). Required: Should each of these costs be capitalized or expensed? Explain.

When an intangible asset has a finite life,it is reported on the balance sheet at original cost with no ____________ taken.

An investing firm consolidates the variable interest entity if it absorbs the majority of the entity's expected ____________________ if they occur,receives a majority of the entity's expected ______________________________ if they occur,or both.

For some transactions U.S.GAAP requires that value changes are recognized on the balance sheet and the income statement when they occur,even if not realized.Discuss what types of transactions get this type of treatment and the logic behind this accounting.

Most publicly traded firms in the United States use the _________________________ method of depreciation for ______________ statement purposes.

When a company records the cost of cutting down timber,this cost is deemed to be:

When there are two or more investing firms in an entity,how is it determined which entity consolidates the variable interest entity?

The method used to account for oil and gas exploration costs that capitalizes the exploration costs of productive wells is the:

Unrealized holding gains and losses from investments classified as trading are reported in the ___________________________________.

Snowflake Corp. Penguin,Inc.acquires 100% of the outstanding shares of Snowflake Corp.for $2,250,000 and accounts for the transaction using the purchase method.Snowflake's balance sheet at the acquisition date is as follows: -Based on the information concerning Snowflake Corp.what is the value of the goodwill related to the acquisition?

Firms that capitalize routine maintenance and repair charges will end up with the result of having the current period's income being ____________________.

Ashley Company Ashley Company purchased 2,000 of the 10,000 outstanding shares of Judd,Inc.'s common stock for $60,000 on January 1,2010.During 2010,Judd declared a dividend of $5 per share and reported net income of $75,000.At the end of 2010 the market value of a share of Judd,Inc.stock has increased to $32 per share. -If Ashley Company accounts for the investment as a minority,passive and classifies the investment as an available-for-sale investment,then Ashley will recognize what amount of 2010 income from the investment?

Coffee Corp.purchased 45% of the outstanding shares of Cream Corp.for $1,845,000.The investment allows Coffee to exert significant influence over the operations of Cream.During 2011 Cream recognized net income of $2,500,000 and paid $650,000 in dividends.Discuss how Coffee should account for its investment in Cream and how the information would appear in Coffee's balance sheet,income statement,and cash flow statement.

Held-to-maturity securities are accounted for at __________________________________________________.

When a company has a minority passive investment it will recognize changes in the market value of the investment as ____________________ gains and losses.

The term used to describe the amount of a company's annual interest cost that should be capitalized is known as:

Managers are typically faced with all of the following primary choices and estimates when allocating acquisition costs of tangible assets and intangible assets to the periods benefited except:

Carlson Company began constructing a building for its own use in January 2012.During 2012,Carlson incurred interest of $75,000 on specific construction debt and $16,750 on other borrowings.Interest computed on the weighted-average amount of accumulated expenditures for the building during 2012 as $55,000 Required: What amount of interest should Carlson capitalize?

Under the equity method the investor's share of investee income ____________________ the investment account and dividends ____________________ the investment account.

All of the following are difficulties encountered in determining fair values except: