Exam 3: Consolidations - Subsequent to the Date of Acquisition

One company acquires another company in a combination accounted for under the acquisition method.The acquiring company decides to apply the equity method in accounting for the combination.What is one reason the acquiring company might have made this decision?

With respect to the recognition of goodwill in a business combination, which of the following statements is true?

If Watkins pays $300,000 in cash for Glen, at what amount would the subsidiary's Building be represented in a January 2, 2017 consolidation?

Which of Pritchett's reporting units require both steps to test for goodwill impairment?

When consolidating parent and subsidiary financial statements, which of the following statements is true?

What balance would Jaynes' Investment in Aaron Co.account have shown on December 31, 2018, when the equity method was applied for this acquisition?

Matthews Co.acquired all of the common stock of Jackson Co.on January 1, 2017.As of that date, Jackson had the following trial balance: During 2017, Jackson reported net income of $96,000 while paying dividends of $12,000.During 2018, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co.acquired the common stock of Jackson Co.for $588,000 in cash.As of January 1, 2017, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000.Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years. Matthews decided to use the equity method for this investment. Required: (A.) Prepare consolidation worksheet entries for December 31, 2017. (B.) Prepare consolidation worksheet entries for December 31, 2018.

For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping gives the most accurate portrayal of the accounting results for the entire business combination?

What should an entity evaluate when making an initial impairment assessment of an intangible asset (other than goodwill)?

If Watkins pays $450,000 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?

Yules Co.acquired Noel Co.and applied the acquisition method.Yules decided to use the partial equity method to account for the investment.The current balance in the investment account is $416,000.Describe in words how this balance was derived.

When a company applies the initial value method in accounting for its investment in a subsidiary and the subsidiary reports income less than dividends paid, what entry would be made for a consolidation worksheet in the second year?

On January 1, 2016, Rand Corp.issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc.Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share.Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000.Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill. Following are the individual financial records for these two companies for the year ended December 31, 2019. Required: Prepare a consolidation worksheet for this business combination.

Assume the equity method is applied.How much equity income will Kaye report on its internal accounting records as a result of Fiore's operations?

What is the balance in Cale's investment in subsidiary account at the end of 2017?

Compute the December 31, 2020 consolidated retained earnings.

Under the initial value method, when accounting for an investment in a subsidiary,

Compute the amount of Hurley's long-term liabilities that would be reported in a December 31, 2017, consolidated balance sheet.

Compute the December 31, 2020, consolidated land.

When is a goodwill impairment loss recognized?