29 Jun Question 1. The cash purchase of a c
Question
1. The cash purchase of a controlling interest in a firm on the statement of cash flows is considered
a. an operating activity.
b. a financing activity.
c. an investing activity.
d. as all of the preceding.
2. The cash purchase of a controlling interest in a firm requires disclosure on the statement of cash flows in the following as a(n)
a. financing activity only.
b. financing activity and in the schedule of noncash financing and investing activity.
c. investing activity only.
d. investing activity and in the schedule of noncash financing and investing activity.
3. In a noncash purchase of a controlling interest in a firm, disclosure is required on the statement of cash flows disclosure in the following as a(n)
a. financing activity only.
b. financing activity and in the schedule of noncash financing and investing activity.
c. investing activity only.
d. investing activity and in the schedule of noncash financing and investing activity.
4. Amortization of excesses in periods subsequent to the purchase would affect which sections of a cash flow statement?
a. operating activity
b. financing activity
c. investing activity
d. all of the above
5. The purchase of additional shares directly from a subsidiary by the parent results in disclosure in which section of a cash flow statement?
a. operating activities
b. financing activities
c. investing activities
d. not reflected on the statement of cash flows
Chapter 6
6. The purchase of additional shares from the noncontrolling interest of a subsidiary by the parent results in disclosure in which section of a cash flow statement?
a. operating activities
b. financing activities
c. investing activities
d. not reflected on the statement of cash flows
7. Dividends paid by a subsidiary have the following affect on the consolidated cash flow
a. all dividends to the parent and to noncontrolling stockholders appear on the statement.
b. only dividends to the parent appear on the statement.
c. only dividends to NCI appear on the statement.
d. neither dividends to the parent or to noncontrolling stockholders appear on the statement
8. Which of the following statements is true?
a. The consolidated statement of cash flows treats the purchase of intercompany bonds from parties outside the consolidated group as a retirement of consolidated debt, and includes the cash outflow under cash flows from financing activities.
b. The consolidated statement of cash flows treats the purchase of intercompany bonds from parties outside the consolidated group as a retirement of consolidated debt, and includes the cash outflow under cash flows from investing activities.
c. The consolidated statement of cash flows treats the intercompany interest payments and amortization of premiums and/or discounts on intercompany bonds under operating activities.
d. The consolidated statement of cash flows treats the intercompany interest payments and amortization of premiums and/or discounts on intercompany bonds under investing activities.
9. Assume investments in the stock of firms not included in the consolidated group result in the nonconsolidated firm reporting income of $200,000 and the firm paid dividends of $50,000. If the consolidated firm paid $10,000 more than book value for its 40% interest and regards the excess as attributable to goodwill, the operating activities, prepared using the indirect method, would reflect a net increase as a result of this investment of __________.
a. $80,000
b. $70,000
c. $59,000
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