abilities be reported as 11) Which of the following situations would not require
ID: 2340058 • Letter: A
Question
abilities be reported as 11) Which of the following situations would not require that long-term li current liabilities on a classified balance sheet a) b) The long-term debt is callable by the creditor The company intended statements to refinance the debt and did so prior to issuance of the financial c) The creditor has the right to demand d) The long-term debt matures within the upcoming year payment due to a contractual violation 12) All else equal, a large increase in unearned revenue in the current period would be expected to produce what effect on revenue in a future period? a) No effect, because unearned revenue is a liability, so payment wi ll use assets rather than providing revenue. reduce net revenues in future periods. which reduces future revenue. Large increase, because unearned revenue becomes revenue when the seller has will b) Large decrease, because unearned revenue indicates collection problems that c) Large decrease, because unearned revenue implies that less revenue has been ear d) ned, satisfied its performance obligations. 13) On January 1, 2018, Athena Co. paid $1,200,000 for its investment in 50,000 shares of Ares Inc. Ares has 200,000 total shares of stock issued. The book value and fair value of Ares's identifiable pertains to Ares during 2018: net assets were both $4,000,000 at January 1, 2018. The following information et Income Dividends declared and paid Market price of common stock on 12/31/2018$22/share $ 300,000 90,000 What amount would Athena report in its year-end 2018 balance sheet for its investmenti Ares? a) $1,410,000. b) 1,252,500. c) $1,297,500 d) $1,290,000.Explanation / Answer
Solution 11:
The situation where "The company intended to refinance the debt and did so prior to issuance of financial statements" would not require that long term liabilities be reported as current liabilities on a classified balance sheet.
Hence option b is correct.
Solution 12:
A large increase in unearned revenue in the current period would be expected to produce "Large increase on revenue in future period because unearned revenue becomes revenue when the seller has satisfied its performance obligations.
Solution 13:
Percentage holding of Athena in Ares = 50000 / 200000 = 25%
Therefore Athena is having significant influence in Ares Inc.
Cost of investment = $1,200,000
Share of income in Ares for 2018 = $300,000 * 25% = $75,000
Dividend received = $90,000 * 25% = $22,500
Amount to be reported for investment by Athena in 2018 balance sheet = Cost of investment + Share of income - dividend received
= $1,200,000 + $75,000 - $22,500 = $1,252,500
Hence option B is correct.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.