Multiple Choice Question 1. Which statement is true regarding the U.S. GAAP impairment test for limited life intangibles? a. If

Question:

Multiple Choice Question
1. Which statement is true regarding the U.S. impairment test for limited life intangibles?
a. If the intangible passes step 1, there is always an impairment loss in step 2.
b. If the fair value of the intangible is less than its book value, there is always an impairment loss.
c. U.S. impairment is likely to be greater than IFRS impairment.
d. The impairment test for limited life intangibles is the same as the impairment test for indefinite life intangibles.
2. A parent uses the cost method to report its investment in a wholly-owned subsidiary, acquired on January 1, 2013. If it had used the complete equity method, the parent would have reported 2013 equity in net income of $500,000 and 2014 equity in net income of $550,000. The subsidiary's 2013 and 2014 dividends were $100,000 and $120,000, respectively. On the 2014 consolidation working paper, an adjusting entry is necessary to increase the investment and the parent's beginning retained earnings balance by
a. $ 400,000
b. $ 500,000
c. $ 830,000
d. $1,050,000
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...