Question : 161. Firms sometimes invest in the common stock of other entities : 1230458

161. Firms sometimes invest in the common stock of other entities in order to exert significant influence or control over the other entity. U.S. GAAP and IFRS assume that firms owning more than ______ can exert control, unless other information indicates the contrary. A. 20%B. 30%C. 40%D. 50%E. 60%

162. A firm that can exert significant influence over another entity accounts for its intercorporate investment using the A. lower of cost or market method.B. equity method. C. liability method.D. consolidation method.E. acquisition cost method.

163. A firm that can exert significant influence over another entity accounts for its intercorporate investment by A. using the equity method. B. recognizes its share of the net income or net loss of the investee, after eliminating any intercompany income items, and increases (in the case of net income) or decreases (in the case of net loss) its investment account in an equal amount. C. comparing the acquisition cost of the investment to determine whether it exceeds the investor’s interest in the net assets of the investee at the time of the acquisition, the investor must decide if the excess relates to assets or liabilities of the investee with a limited life. D. decreasing the investment account for dividends received.E. all of the above.

164. Which of the following is/are true? A. A firm that controls another entity prepares consolidated financial statements with that entity. B. The consolidated financial statements reflect the results of the legally separate entities as if they were a single entity.C. The consolidated financial statements eliminate intercompany balance sheet and income statement accounts and intercompany profit or loss on transactions between the entities. D. Consolidated balance sheets consolidate all of the assets and liabilities of the controlled entity and then show the claim of noncontrolling shareholders against consolidated net assets as part of shareholders’ equity. E. all of the above

165. Which of the following is/are true regarding the classification of redeemable preferred shares on the balance sheet? A. The classification of redeemable preferred shares on the balance sheet depends on the conditions for redemption. B. If only the issuing firm has the option to redeem, then the preferred shares are part of its shareholders’ equity. C. If the issuing firm must redeem the preferred shares (so-called “mandatory redemption”), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as a liability. D. If the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders’ equity under U.S. GAAP and as a liability under IFRS. E. all of the above

166. Which of the following is/are not true regarding the classification of redeemable preferred shares on the balance sheet? A. The classification of redeemable preferred shares on the balance sheet depends on the conditions for redemption. B. If only the issuing firm has the option to redeem, then the preferred shares are part of its liabilities.C. If the issuing firm must redeem the preferred shares (so-called “mandatory redemption”), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as a liability. D. If the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders’ equity under U.S. GAAP. E. If the preferred shareholders have the option to require redemption, then the preferred shares appear as a liability under IFRS.

167. Which of the following is/are not true regarding the classification of redeemable preferred shares on the balance sheet? A. The classification of redeemable preferred shares on the balance sheet depends on the conditions for redemption. B. If only the issuing firm has the option to redeem, then the preferred shares are part of its shareholders’ equity. C. If the issuing firm must redeem the preferred shares (so-called “mandatory redemption”), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as its shareholders’ equity.D. If the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders’ equity under U.S. GAAP. E. If the preferred shareholders have the option to require redemption, then the preferred shares appear as a liability under IFRS.

168. Which of the following is/are not true regarding the classification of redeemable preferred shares on the balance sheet? A. The classification of redeemable preferred shares on the balance sheet depends on the conditions for redemption. B. If only the issuing firm has the option to redeem, then the preferred shares are part of its shareholders’ equity. C. If the issuing firm must redeem the preferred shares (so-called “mandatory redemption”), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as its shareholders’ equity.D. If the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders’ equity under U.S. GAAP. E. If the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders’ equity under IFRS.

169. Which of the following is/are not true regarding the classification of redeemable preferred shares on the balance sheet? A. The classification of redeemable preferred shares on the balance sheet depends on the conditions for redemption. B. If only the issuing firm has the option to redeem, then the preferred shares are part of its shareholders’ equity. C. If the issuing firm must redeem the preferred shares (so-called “mandatory redemption”), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as its shareholders’ equity.D. If the preferred shareholders have the option to require redemption, then the preferred shares appear as a liability under U.S. GAAP. E. If the preferred shareholders have the option to require redemption, then the preferred shares appear as a liability under IFRS.

170. Regarding employee stock options, which of the following is/are true? A. Firms compute a fair-value-based measure of employee stock options on the date of the grant using an option-pricing model that incorporates information about the current market price, the exercise price, the expected time between grant and exercise, the expected volatility of the stock, the expected dividends, and the risk-free interest rate. B. Total compensation cost is the number of options the firm expects to vest times the value per option. C. Firms amortize total compensation cost over the requisite service period, which is the expected period of benefit. D. The requisite service period is usually the period between the grant date and the vesting date. E. all of the above