REFERENCE: Ref.05_11 Pepe,Incorporated Acquired 60% of Devin Company on January 1,2009.On That

question 70

Multiple Choice

REFERENCE: Ref.05_11
Pepe,Incorporated acquired 60% of Devin Company on January 1,2009.On that date Devin sold equipment to Pepe for $45,000.The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years.Devin reported net income of $300,000 and $325,000 for 2009 and 2010,respectively.Pepe uses the equity method to account for its investment in Devin.
-What is the consolidated gain or loss on equipment for 2009?

• A)$0.
• B)$9,000 gain.
• C)$9,000 loss.
• D)$21,000 gain.
• E)$21,000 loss.

Understand the scope and limitations of the FASB’s conceptual framework project.

Identify the number and purpose of Statements of Financial Accounting Concepts issued.

Recognize the general and specific objectives of financial reporting according to the FASB.

Comprehend the role of accrual accounting in financial reporting.

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Definitions:

Neural Tube Defects

Birth defects of the brain, spine, or spinal cord that occur in the first month of pregnancy due to improper closure of the neural tube.

Folic Acid

A B vitamin essential for cell growth and metabolism, particularly important during pregnancy to prevent neural tube defects.

Pregnancy

The state of carrying a developing embryo or fetus within the female body, typically lasting about 40 weeks from the last menstrual period to childbirth.

Hyperglycemia

A condition characterized by an abnormally high level of glucose (sugar) in the blood, often associated with diabetes and can lead to serious health problems if not properly managed.