1) Accounting for investments depends in part to the level of influence or control. What method is generally tied to influence deemed to be insignifcant? A. Cost Method B. Equity Method C. Full Disclosure D. Consolidation 2) Under the cost method of accounting for a stock investment, the differential A. is amortized B. is written off C. is not amortized or written off D. is written down if related to limited-life assets 3) Which of the following observations is consistent with the equity method of accounting? A. Its primary use is in reporting nonsubsidiary investments. B. It is used when the investor lacks the ability to exercise significant influence over the investee. C. It may be used in place of consolidation. D. Dividends declared by the investee are treated as income by the investor. 4) On January 1, 2007, Yang Corporation acquired 25 % of the outstanding shares of Spiel Corporation for $100,000 cash. Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 2007 and 2008. The fair value of shares held by Yang was $110,000 and $105,000 on December 31, 2007 and 2008, respectively. What amount will be reported by Yang as balance in investment in Spiel on December 31, 2008, if it used the equity method of accounting? A. $122,500 B. $118,750 C. $100,000 D. $111,250 5) On January 1, 2007, Yang Corporation acquired 25 % of the outstanding shares of Spiel Corporation for $100,000 cash. Spiel Company reported net income of $75,000 and paid dividends of $30,000 for both 2007 and 2008. The fair value of shares held by Yang was $110,000 and $105,000 on December 31, 2007 and 2008, respectively. What amount will be reported by Yang as income from its investment in Spiel for 2008, if it used the equity method of accounting? A. $26,250 B. $11,250 C. $18,750 D. $7,500 6) Bista Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods? A. Response D B. Response B C. Response C D. Response A 7) International Financial Reporting Standards (IFRS) were developed A. by the International Accounting Standards Board to replace GAAP B. by the Securities and Exchange Commission to replace GAAPby the Securities and Exchange Commission to replace GAAP C. by the International Accounting Standards Board to facilitate global convergence of accounting standards D. by the Securities and Exchange Commission to facilitate global convergence of accounting standards. 8) The principal objective of the IASB foundation is to A. enforce all GAAP standards B. bring about convergence of national accounting standards and International Financial Recording Standards (IFRS) C. overlay GAAP and International Financial Recording Standards (IFRS) to require dual reporting D. eliminate GAAP 9) Which of the following statements about the International Accounting Standards Board (IASB) is accurate? A. Throughout the 1970s, the competing standards issued by the IASB and the International Federation of Accountants (IFAC) discouraged early adopters. B. The IASB’s recommendations standards are primarily based on and grow out of the GAAP of the United States. C. The United States’ Financial Accounting Standards Board is collaborating with the IASB to bring about convergence based on high quality standards. D. The IASB’s standards have not been widely adopted in the European Union.