Exam 3: Consolidations - Subsequent to the Date of Acquisition

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Avery Company acquires Billings Company in a combination accounted for as an acquisition and adopts the equity method to account for Investment in Billings.At the end of four years, the Investment in Billings account on Avery's books is $198,984.What items constitute this balance?

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Question 1

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Since the equity method has been applied by Avery, the $198,984 is composed of four items:
(a.) The acquisition value of consideration transferred by the parent;
(b.) The annual accruals made by Avery to recognize income as it is earned by the subsidiary;
(c.) The reductions that are created by the subsidiary's payment of dividends;
(d.) The periodic amortization recognized by Avery in connection with the excess fair value allocations identified with its acquisition.

If Watkins pays $450,000 in cash for Glen, and Glen earns $50,000 in net income and pays $20,000 in dividends during 2017, what amount representing Glen would be reflected in consolidated net income for the year ended December 31, 2017?

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Question 2

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What will Beatty record as its Investment in Gataux on January 1, 2017?

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Question 3

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For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping is the easiest for the parent to use?

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Question 4

According to the FASB ASC regarding the testing procedures for Goodwill Impairment, the proper procedure for conducting impairment testing is:

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Question 5

Compute the December 31, 2020, consolidated revenues.

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Question 6

What will Harrison record as its Investment in Rhine on January 1, 2017?

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Question 7

Compute the December 31, 2020, consolidated equipment.

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Question 8

Using the acquisition method, how will Beatty record the stock contingency?

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Question 9

How much difference would there have been in Franel's income with regard to the effect of the investment, between using the equity method or using the partial equity method of internal recordkeeping?

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Question 10

Compute the amount of Hurley's equipment that would be reported in a December 31, 2018, consolidated balance sheet.

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Question 11

If Watkins pays $400,000 in cash for Glen, what amount would be represented as the subsidiary's Building in a consolidation at December 31, 2019, assuming the book value of the building at that date is still $200,000?

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Question 12

Which of the following is not a factor to be considered when determining the useful life of an intangible asset?

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Question 13

Racer Corp.acquired all of the common stock of Tangiers Co.in 2016.Tangiers maintained its incorporation.Which of Racer's account balances would vary between the equity method and the initial value method?

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Question 14

How much goodwill impairment should Pritchett report for 2018?

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Question 15

Under the partial equity method of accounting for an investment,

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Question 16

For recognized intangible assets that are considered to possess indefinite lives, what is the accounting treatment for purposes of income recognition?

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Question 17

In Cale's accounting records, what amount would appear on December 31, 2017 for equity in subsidiary earnings?

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Question 18

If Goehler applies the partial equity method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2018?

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Question 19

Assume the initial value method is used.In the year subsequent to acquisition, what additional worksheet entry must be made for consolidation purposes that is not required for the equity method?

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Question 20

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Exam 3: Consolidations - Subsequent to the Date of Acquisition

Avery Company acquires Billings Company in a combination accounted for as an acquisition and adopts the equity method to account for Investment in Billings.At the end of four years, the Investment in Billings account on Avery's books is $198,984.What items constitute this balance?

If Watkins pays $450,000 in cash for Glen, and Glen earns $50,000 in net income and pays $20,000 in dividends during 2017, what amount representing Glen would be reflected in consolidated net income for the year ended December 31, 2017?

What will Beatty record as its Investment in Gataux on January 1, 2017?

For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping is the easiest for the parent to use?

According to the FASB ASC regarding the testing procedures for Goodwill Impairment, the proper procedure for conducting impairment testing is:

Compute the December 31, 2020, consolidated revenues.

What will Harrison record as its Investment in Rhine on January 1, 2017?

Compute the December 31, 2020, consolidated equipment.

Using the acquisition method, how will Beatty record the stock contingency?

How much difference would there have been in Franel's income with regard to the effect of the investment, between using the equity method or using the partial equity method of internal recordkeeping?

Compute the amount of Hurley's equipment that would be reported in a December 31, 2018, consolidated balance sheet.

If Watkins pays $400,000 in cash for Glen, what amount would be represented as the subsidiary's Building in a consolidation at December 31, 2019, assuming the book value of the building at that date is still $200,000?

Which of the following is not a factor to be considered when determining the useful life of an intangible asset?

Racer Corp.acquired all of the common stock of Tangiers Co.in 2016.Tangiers maintained its incorporation.Which of Racer's account balances would vary between the equity method and the initial value method?

How much goodwill impairment should Pritchett report for 2018?

Under the partial equity method of accounting for an investment,

For recognized intangible assets that are considered to possess indefinite lives, what is the accounting treatment for purposes of income recognition?

In Cale's accounting records, what amount would appear on December 31, 2017 for equity in subsidiary earnings?

If Goehler applies the partial equity method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2018?

Assume the initial value method is used.In the year subsequent to acquisition, what additional worksheet entry must be made for consolidation purposes that is not required for the equity method?

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

A: Consolidation of Financial Information

A: Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

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

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