51.GAAP requires that intangibles other than goodwill be amortized over a period of:
a.100 years
b.twice the estimated useful life
c.one-half the estimated useful life
d.40 years or less
e.25 years or more
52.Which of the following is NOT true?
a.the source of financing for plant assets does not affect the way assets are reported on the balance sheet
b.intangible assets provide legal rights or benefits to a company
c.one of the four categories of assets on the balance sheet includes the value of management and employee skills
d.long-term investments are investments in the debt or equity securities of other companies
53.When a company owns 20% to 50% of the common stock of another company it is considered by GAAP to have __________ over that company.
a.controlling interest
b.voting majority
c.significant influence
d.pre-emptive rights
54.Machinery with a cost of $150,000 and a book value of $52,500 was sold for $15,000 cash plus a note receivable of $27,500. What was the net effect of this sale on the financial statement items listed below?
Assets Net Income
a.Increase Increase
b.Increase Decrease
c.Decrease Decrease
d.Decrease Increase
55.Long-term investments in the common stock of another company normally should be accounted for as a consolidated subsidiary if the investor owns an interest of
a.more than 50 percent
b.not less than 90 percent
c.not less than 20 percent
d.not more than 50 percent
56.A balance sheet reports an investment in common stock under the category of long-term assets. Which of the following MIGHT be the reason(s) why these shares are reported in that section of the balance sheet?
Management intends to They are not
hold them long-term marketable
a.Yes Yes
b.No Yes
c.Yes No
d.No No
57.Wittenauer Company has an investment in bonds, classified as trading, with the following information at December 31, 2007:
Face value=$100,000
Unamortized premium=3,388
Market value=102,500
What would Wittenauer report in the financial statements for this investment?
Balance sheet Income statement
a.investment = $102,500 unrealized holding loss = $888
b.investment = $103,388 unrealized holding gain = $888
c.investment = $100,000 unrealized holding loss = $2,500
d.investment = $102,500 unrealized holding gain = $2,500
58.Trumble Corporation purchased bonds having $200,000 face value that pays 5% cash interest per year. The purchase price was $197,000 and the firm intends to hold the bonds till maturity in 10 years. The cumulative amount of interest revenue that the firm will report on its income statements over the ten years is
a.$123,000
b.$100,000
c.$117,000
d.$103,000
59.A bond is purchased at a discount. What will happen to the net carrying value of the bond on the balance sheet as its maturity date approaches?
a.stays the same
b.increases
c.decreases
d.cannot be determined from the data given
60.Murray Company purchased a 5%, $5,000, 10-year bond for $4,800 at the date of issue. The interest revenue shown on Murray's income statements over the life of the bond will total
a.$2,500
b.$2,700
c.$2,300
d.$2,600
61.Depreciation and amortization
a.reduce net income and cash flow from operating activities
b.reduce net income but increase cash flow from operating activities
c.reduce net income but have no direct effect on cash flow from operating activities
d.have no direct effect on net income or cash flow from operating activities
62.Investing activities do not directly affect the:
a.balance sheet
b.income statement
c.statement of cash flows
d.price of the company’s stock
63.All of the following would be included in the investing activities section of the statement of cash flows except
a.sale of inventory
b.sale of property, plant and equipment
c.purchase of investments
d.purchase of plant and equipment