Question 1

In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Buildings account?

Accepted Answer

A)  $2,000 increase. 
B)  $2,000 decrease. 
C)  $1,800 increase. 
D)  $1,800 decrease. 
E)  No change. 
A)  $2,000 increase. 
B)  $2,000 decrease. 
C)  $1,800 increase. 
D)  $1,800 decrease. 
E)  No change.

Question 2

Compute the noncontrolling interest in Demers at December 31, 2021.

Accepted Answer

A)  $107,800. 
B)  $140,000. 
C)  $ 80,000. 
D)  $ 50,000. 
E)  $160,800. 
A)  $107,800. 
B)  $140,000. 
C)  $ 80,000. 
D)  $ 50,000. 
E)  $160,800.

Question 3

Alonzo Co.acquired 60% of Beazley Corp.by paying $240,000 cash.There is no active trading market for Beazley Corp.At the time of the acquisition, the book value of Beazley's net assets was $300,000.
Required:
What amount should have been assigned to the noncontrolling interest immediately after the combination?

Accepted Answer

The answer of Alonzo Co.acquired 60% of Beazley Corp.by paying...

Question 4

In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Patent account?

Accepted Answer

A)  $7,000. 
B)  $6,300. 
C)  $11,000. 
D)  $9,900. 
E)  No adjustment is necessary. 
A)  $7,000. 
B)  $6,300. 
C)  $11,000. 
D)  $9,900. 
E)  No adjustment is necessary.

Question 5

For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except:

Accepted Answer

A)  Identifiable assets acquired, at fair value. 
B)  Liabilities assumed, at book value. 
C)  Non-controlling interest, at fair value. 
D)  Goodwill, or a gain from bargain purchase. 
E)  None of these choices is correct. 
A)  Identifiable assets acquired, at fair value. 
B)  Liabilities assumed, at book value. 
C)  Non-controlling interest, at fair value. 
D)  Goodwill, or a gain from bargain purchase. 
E)  None of these choices is correct.

Question 6

How does a parent company account for the sale of a portion of an investment in a subsidiary?

Accepted Answer

If control is maintained after the sale,

Question 7

Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?

Accepted Answer

A)  The parent recognizes a larger percent of subsidiary income. 
B)  A step acquisition resulting in control may result in a parent recognizing a gain on revaluation. 
C)  The book value of the subsidiary will increase. 
D)  The parent's percent ownership in subsidiary will increase. 
E)  Noncontrolling interest in subsidiary's net income will decrease. 
A)  The parent recognizes a larger percent of subsidiary income. 
B)  A step acquisition resulting in control may result in a parent recognizing a gain on revaluation. 
C)  The book value of the subsidiary will increase. 
D)  The parent's percent ownership in subsidiary will increase. 
E)  Noncontrolling interest in subsidiary's net income will decrease.

Question 8

Compute the noncontrolling interest in Demers at December 31, 2020.

Accepted Answer

A)  $107,000. 
B)  $126,000. 
C)  $109,200. 
D)  $149,600. 
E)  $148,200. 
A)  $107,000. 
B)  $126,000. 
C)  $109,200. 
D)  $149,600. 
E)  $148,200.

Question 9

In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

Accepted Answer

A)  Fair value based on stock trades of the acquired company. 
B)  Subsidiary cash flows discounted to present value. 
C)  Book value of subsidiary net assets. 
D)  Projections of residual income. 
E)  Consideration transferred by the parent company that implies a total subsidiary value. 
A)  Fair value based on stock trades of the acquired company. 
B)  Subsidiary cash flows discounted to present value. 
C)  Book value of subsidiary net assets. 
D)  Projections of residual income. 
E)  Consideration transferred by the parent company that implies a total subsidiary value.

Question 10

Compute Pell's investment in Demers at December 31, 2020.

Accepted Answer

A)  $676,000. 
B)  $629,000. 
C)  $580,000. 
D)  $604,000. 
E)  $572,000. 
A)  $676,000. 
B)  $629,000. 
C)  $580,000. 
D)  $604,000. 
E)  $572,000.

Question 11

What is the dollar amount of noncontrolling interest that should appear in a consolidated balance sheet prepared at the date of acquisition?

Accepted Answer

A)  $350,000. 
B)  $300,000. 
C)  $400,000. 
D)  $370,000. 
E)  $0. 
A)  $350,000. 
B)  $300,000. 
C)  $400,000. 
D)  $370,000. 
E)  $0.

Question 12

How much does Pell record as Income from Demers for the year ended December 31, 2020?

Accepted Answer

A)  $90,400. 
B)  $40,000. 
C)  $89,000. 
D)  $50,400. 
E)  $56,000. 
A)  $90,400. 
B)  $40,000. 
C)  $89,000. 
D)  $50,400. 
E)  $56,000.

Question 13

Kordel Inc.acquired 75% of the outstanding common stock of Raxston Corp.Raxston currently owes Kordel $500,000 for inventory acquired over the past few months.In preparing consolidated financial statements, what amount of Raxston's liability should be eliminated?

Accepted Answer

A)  $375,000 
B)  $125,000 
C)  $300,000 
D)  $500,000 
E)  $0. 
A)  $375,000 
B)  $125,000 
C)  $300,000 
D)  $500,000 
E)  $0.

Question 14

Compute Pell's investment in Demers at December 31, 2021.

Accepted Answer

A)  $592,400. 
B)  $500,000. 
C)  $625,000. 
D)  $676,000. 
E)  $620,000. 
A)  $592,400. 
B)  $500,000. 
C)  $625,000. 
D)  $676,000. 
E)  $620,000.

Question 15

The noncontrolling interest's share of the earnings of Harbor Corp.for 2019 is calculated to be

Accepted Answer

A)  $132,000. 
B)  $150,000. 
C)  $168,000. 
D)  $160,000. 
E)  $0. 
A)  $132,000. 
B)  $150,000. 
C)  $168,000. 
D)  $160,000. 
E)  $0.

Question 16

What is consolidated stockholders' equity at January 2, 2019?

Accepted Answer

A)  $112,000. 
B)  $133,000. 
C)  $168,000. 
D)  $182,000. 
E)  $203,000. 
A)  $112,000. 
B)  $133,000. 
C)  $168,000. 
D)  $182,000. 
E)  $203,000.

Question 17

What amount represents consolidated current assets at January 2, 2019?

Accepted Answer

A)  $127,000. 
B)  $129,800. 
C)  $143,800. 
D)  $148,000. 
E)  $135,400. 
A)  $127,000. 
B)  $129,800. 
C)  $143,800. 
D)  $148,000. 
E)  $135,400.

Exam 4: Consolidated Financial Statements and Outside Ownership

In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Buildings account?

Compute the noncontrolling interest in Demers at December 31, 2021.

In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Patent account?

For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except:

How does a parent company account for the sale of a portion of an investment in a subsidiary?

Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?

Compute the noncontrolling interest in Demers at December 31, 2020.

In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

Compute Pell's investment in Demers at December 31, 2020.

What is the dollar amount of noncontrolling interest that should appear in a consolidated balance sheet prepared at the date of acquisition?

How much does Pell record as Income from Demers for the year ended December 31, 2020?

Kordel Inc.acquired 75% of the outstanding common stock of Raxston Corp.Raxston currently owes Kordel $500,000 for inventory acquired over the past few months.In preparing consolidated financial statements, what amount of Raxston's liability should be eliminated?

Compute Pell's investment in Demers at December 31, 2021.

The noncontrolling interest's share of the earnings of Harbor Corp.for 2019 is calculated to be

What is consolidated stockholders' equity at January 2, 2019?

What amount represents consolidated current assets at January 2, 2019?

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

A: Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

A: Consolidations - Subsequent to the Date of Acquisition

A: Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

A: Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

A: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

A: Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

A: Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

A: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

A: Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

A: Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

A: Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

A: Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

A: Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

A: Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

A: Accounting for State and Local Governments, Part I

Accounting for State and Local Governments, Part II

A: Accounting for State and Local Governments, Part II

Accounting for Not-For-Profit Entities

A: Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

Filters