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NEW QUESTION: 1
Jason Bennett is an analyst for Valley Airlines (Valley), a U.S. firm. Valley owns a stake in Southwest Air Cargo (Southwest), also a U.S. firm. The two firms have had a long-standing relationship. The relationship has become even closer because several of Valley's top executives hold seats on Southwest's Board of Directors.
Valley acquired a 45% ownership stake in Southwest on December 31, 2007. Acquisition of the ownership stake cost $9 million and was paid in cash. Valley's stake in Southwest is such that management can account for the investment using either the equity method or the acquisition method. While Valley's management desires to fairly represent the firm's operating results, they have assigned Bennett to assess the impact of each method on reported financial statements.
Immediately prior to the acquisition. Valley's current asset balance and total equity were $96 million and
$80 million, respectively. Southwest's current assets and total equity were $32 million and $16 million, respectively.
While analyzing the use of the equity method versus the acquisition method, Bennett calculates the return on assets (ROA) ratio. He arrives at two conclusions:
Statement 1: Compared to the acquisition method, the equity method results in a higher ROA because of the higher net income under the equity method.
Statement 2: Compared to the acquisition method, the equity method results in a higher ROA because of the smaller level of total assets under the equity method.
In order to get a better picture of Valley's operating condition, Bennett is also considering the use of proportionate consolidation to account for Southwest. He makes the following statements regarding the acquisition method and a proportionate consolidation:
Statement 3: Both methods are widely accepted under the provisions of U.S. GAAP and International Financial Reporting Standards (IFRS).
Statement 4: Both methods report the same level of assets on the parent's balance sheet.
Statement 5: Both methods report all of Southwest's liabilities on the parent's balance sheet.
In addition. Valley has always wanted to pursue its goal of vertical integration by expanding its scope of operations to include the manufacturing of airline parts for its own airplanes. Therefore, it established a subsidiary, Mountain Air Parts (Mountain), in Switzerland on January 1,2008. Switzerland was chosen as the location for economic and geographical diversification reasons. Mountain will operate as a self- contained, independent subsidiary. Local management in Switzerland will make the majority of operating, financing, and investing decisions.
The Swiss franc (CHF) is the official currency in Switzerland. On January 1, 2008, the USD/CHF exchange rate was 0.77. At December 31, 2008, the exchange rate had changed to 0.85 USD/CHF. The average exchange rate in 2008 was 0.80 USD/CHF. In its first year of operations. Mountain paid no dividends and no taxes. Mountain uses the FIFO assumption for its flow of inventory.

Are Bennett's Statements 1 and 2 regarding ROA correct?
Statement 1 ;Statement 2
A. No ;Yes
B. Yes ;No
C. Yes ;Yes
Answer: A
Explanation:
Explanation/Reference:
Explanation:
ROA is calculated as net income / total assets. Both methods result in the same net income, so Statement
1 is incorrect. However, the acquisition method leads to higher reported total assets. Hence, the ROA is greater under the equity method and lower under the acquisition method (Statement 2 is correct). (Study Session 5, LOS 21.b)

NEW QUESTION: 2
Security is a state of well-being of information and infrastructures in which the possibilities of successful yet undetected theft, tampering, and/or disruption of information and services are kept low or tolerable. Which of the following are the elements of security? Each correct answer represents a complete solution. Choose all that apply.
A. Integrity
B. Confidentiality
C. Authenticity
D. Availability
Answer: A,B,C,D
Explanation:
Explanation/Reference:
Explanation: The elements of security are as follows: 1.Confidentiality: It is the concealment of information or resources. 2.Authenticity: It is the identification and assurance of the origin of information. 3.Integrity: It refers to the trustworthiness of data or resources in terms of preventing improper and unauthorized changes. 4.Availability: It refers to the ability to use the information or resources as desired.

NEW QUESTION: 3
Which of these is the incorrect explanation of the Toast class?
A. The display duration time of Toast can be chosen from 2 types, LENGTHJjDNG and LENGTH_SHORT.
B. Toast is a class included in the android widget package.
C. Toast is a simple class for display, and cannot be set with a custom XML-defined layout
D. Since Toast automatically closes after display, a dismiss () method is not provided.
Answer: C

NEW QUESTION: 4
Charlotte is creating a Web service. What role does WSDL play in a Web service?
A. WSDL allows communication via HTTP between applications.
B. WSDL executes the Web service on the target Web service.
C. WSDL defines the network services offered in a Web service.
D. WSDL controls the access levels of a Web service client.
Answer: C