101.If the equity method is being used, the Revenue from Share Investments account is
a.just another name for a Dividend Revenue account.
b.credited when dividends are declared by the investee.
c.credited when net income is reported by the investee.
d.debited when dividends are declared by the investee.
102.Under the equity method, the Share Investments account is credited when the
a.investee reports net income.
b.investee reports a net loss.
c.investment is originally acquired.
d.investee reports net income and when the investment is originally acquired.
103.On August 1, Dogwood Company buys 2,000 ordinary shares of XYZ for $61,200 cash. On December 1, the share investments are sold for $72,000 in cash. Which of the following are the correct journal entries to record for the purchase and sale of the shares?
a.Aug. 1Cash............................. 61,200
Share Investments 61,200
Dec. 1Cash 72,000
Share Investments 61,200
Gain on Sale of Share Investments 10,800
b.Aug. 1Share Investments................... 61,200
Cash 61,200
Dec. 1Cash 72,000
Share Investments 61,200
Gain on Sale of Share Investments10,800
c.Aug. 1Share Investments................... 61,200
Cash 61,200
Dec. 1Share Investments........................... 72,000
Cash 61,200
Loss on Sale of Share Investments 10,800
d.Aug. 1Cash............................. 61,200
Share Investments 61,200
Dec. 1Share Investments........................... 72,000
Cash 61,200
Gain on Sale of Share Investments 10,800
104.Lanier industries owns 30% of McCoy Company. For the current year, McCoy reports net income of $250,000 and declares and pays a $60,000 cash dividend. Which of the following correctly presents the journal entries to record Lanier's equity in McCoy's net income and the receipt of dividends from McCoy?
a.Dec. 31Share Investments................... 75,000
Revenue from Share Investments.......................... 75,000
Dec. 31Cash 18,000
Share Investments 18,000
b.Dec. 31Share Investments...................75,000
Revenue from Share Investments.......................... 75,000
Dec. 31Cash.................................60,000
Share Investments.............................. 60,000
c.Dec. 31Share Investments...................57,000
Revenue from Share Investments.......................... 57,000
d.Dec. 31Revenue from Share Investments........75,000
Share Investments 75,000
Dec. 31Share Investments...........................18,000
Cash 18,000
105.On January 1, 2014, Bartley Corp. paid $900,000 for 100,000 ordinary shares of Oak Company, which represents 40% of Oak's outstanding shares. Oak reported net income of $200,000 and paid cash dividends of $60,000 during 2014. Bartley should report the investment in Oak Company on its December 31, 2014, statement of financial position at:
a.$900,000
b.$844,000
c.$924,000
d.$956,000
106.Dobson Inc. earns €900,000 and pays cash dividends of €300,000 during 2014. Cornwell Corporation owns 70,000 of the 210,000 outstanding shares of Dobson.
What amount should Cornwell show in the investment account at December 31, 2014 if the beginning of the year balance in the account was €80,000?
a.€280,000
b.€200,000
c.€300,000
d.€400,000
107.Dobson Inc. earns €900,000 and pays cash dividends of €300,000 during 2014. Cornwell Corporation owns 70,000 of the 210,000 outstanding shares of Dobson.
How much revenue from investment should Cornwell report in 2014?
a.€100,000
b.€200,000
c.€300,000
d.€400,000
108.On January 1, 2014, Duvall Industries acquired a 25% interest in Florida Corporation through the purchase of 12,000 ordinary shares of Florida Corporation for $720,000. During 2014, Florida Corp. paid $180,000 in dividends and reported a net loss of $270,000. Duvall is able to exert significant influence on Florida. However, Duvall mistakenly records these transactions using the cost method rather than the equity method of accounting. Which of the following would show the correct presentation for Duvall's investment using the equity method?
Investment
Net
Account
Earnings (loss)
a. $270,000 ($90,000)
b. $607,500($67,500)
c. $652,500($67,500)
d. $652,500($22,500)
109.Consolidated financial statements are prepared when a company owns _________ of the ordinary shares of another company.
a.less than 20%
b.between 20% and 50%
c.less than 50%
d.more than 50%
110.The company whose shares are owned by the parent company is called the
a.controlled company.
b.subsidiary company.
c.investee company.
d.sibling company.