On January 1, 2018, a subsidiary buys 12 percent of the outstanding voting stock of its parent corporation.  The payment of $400,000 exceeded book value of the acquired shares by $80,000, attributable to a copyright with a 10-year useful life.  During the year, the parent reported separate company income of $1,000,000 (excluding investment income from the subsidiary), and paid $120,000 in dividends.  If the treasury stock approach is used, how is the Investment in Parent Stock reported in the consolidated balance sheet at December 31, 2018?

A. There is no effect on the consolidated balance sheet, because the effects have been eliminated.
B. Included in current assets.
C. Consolidated stockholders' equity is reduced by $400,000.
D. Consolidated stockholders' equity is reduced by $320,000.
E. Included in noncurrent assets.


Answer: C

Business

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Answer the following statement true (T) or false (F)

Business

The Walt Disney Company's decision to build a theme park in France provides an excellent vehicle to understanding SRC (Self-Reference Criterion). All of the statements listed below portray this meaning except:

A) Disney executives believed there is virtually unlimited demand for American cultural exports. B) French are sensitive about American cultural imperialism. C) Consuming wine with the midday meal is a long-established custom which was not realized by Disney executives. D) Disney executives were blinded by their prior success and ethnocentrism. E) The SRC can be a powerful negative force in global business.

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The book value per share for a corporation is

a. the market price of the stock. b. the cost of investments in stock of other corporations. c. based on the excess of total assets over total liabilities. d. the amount stockholders would receive if they sold their shares back to the corporation.

Business

The economic value of a tangible asset may decline below its book value but an impairment loss would not be recognized when the

a. undiscounted future cash flows exceed its book value. b. undiscounted future cash flows exceed its market value. c. discounted future cash flows exceed its book value. d. discounted future cash flows exceed its market value. e. discounted future cash flows exceed its liquidation value.

Business