Equity

Question 1

Equity security reporting method for 50% to 100% ownership and has significant influence

Answer 1

Acquisition(Consolidation) method

Question 2

Equity security reporting method for 20% to 50% and has significant influence?

Answer 2

Equity Method

Question 3

Equity security reporting method fo 0% to 20% ownership and has not significant influence

Answer 3

FV(Cost) method

Question 4

Under the Equity Method, Net income increases the

Answer 4

Investment account on the BS and dividends decrease it

Question 5

Non-liquidating dividends are recorded as

Answer 5

dividend income and increases net income

Question 6

Non-liquidating dividends has not effect on the

Answer 6

BS

Question 7

Liquidating dividends does not increases net income and decreases the

Answer 7

investment account on the BS

Question 8

Large Stock Dividend when is more than

Answer 8

25% of total shares. We use the Par value

Question 9

Stock dividends increase the numbers of share outstanding and decreases RE but

Answer 9

has not effect on total’s shareholders equity.

Question 10

Stock-Split increases the numbers of shares outstanding but it has not impact on

Answer 10

Equity and RE

Question 11

Reverse-Stock Split decreases the numbers of share but has not impact on

Answer 11

Equity and RE

Question 12

The cost method to acquire treasury stock report the shares at their

Answer 12

reacquisition price.

Question 13

JE to record the acquisition of Treasury stock under the cost method will debit

Answer 13

treasury stock for the re-acquisition price and credit cash

Question 14

The Par-Value method to acquire Treasury stock will be considered

Answer 14

a constructive retirement

Question 15

JE to record the acquisition of TS under Par-value method

Answer 15

Debit treasury stock at the par value of the CS re-purchased and the related APIC is also debited.

Question 16

How do we account for the Re-issue of TS when the Re-issue price exceeds its costs?

Answer 16

the excess is credited to a Paid in capital account

Question 17

How do we account for the re-issue of TS when the reissue price is less than original cost under the Cost method?

Answer 17

The difference between the re-issue price and the original cost will be debited to paid-in capital or RE and any remaining deficiency is debited to RE

Question 18

How do we account for the re-issue of TS when the reissue price is less than original cost under the Par- Value method?

Answer 18

The difference is credited to a paid in capital account

Question 19

Under the Cost Method, we account for any “gain/loss” when we

Answer 19

reissue the stock

Question 20

Under the Par/legal value method we account for any “Gain/loss” when we

Answer 20

repurchase the treasury stock

Question 21

Common Stock is equals to the number of

Answer 21

Shares times the par value

Question 22

Net book value of “net identifiable assets” equals

Answer 22

Net assets

Question 23

Net Assets equals

Answer 23

Stockholders’ equity

Question 24

Assets - liabilities equals

Answer 24

Stockholders’ equity

Question 25

What decreases RE?

Answer 25

Net losses, cash dividends and TS transactions under the Par value method

Question 26

What increases RE?

Answer 26

Net income

Question 27

If the re-issue price of TS is greater than the re-purchase price, the Additional Paid in Capital account will be

Answer 27

Increase

Question 28

If the re-issue price of TS is less than the re-purchase price, the Additional Paid in Capital account will be

Answer 28

decreased and the excess of the price will decreased RE

Question 29

Acquisition costs are

Answer 29

expensed when incurred

Question 30

A contingent consideration during an acquisition is

Answer 30

part of the investment cost and it is measured at FV

Question 31

How to calculate a gain in an acquisition?

Answer 31

Figure it out the FV of the Net Assets Acquired and subtract it from the cost of the invesment

Question 32

All equity securities are carried at

Answer 32

FV unless the equity method is used due to having significant influence

Question 33

AFS and trading securities are not longer used for

Answer 33

equity securities

Question 34

How does Net assets impact equity?

Answer 34

If net assets increase, Equity increases
If net asset decrease, Equity decreases

Question 35

How does Liability impact Equity?

Answer 35

If Liability increases, it decreases Equity and if liability decreases, it increases Equity