Question 1

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

Accepted Answer

A)  $1,000. 
B)  $1,250. 
C)  $ 875. 
D)  $1,125. 
E)  $ 750. 
A)  $1,000. 
B)  $1,250. 
C)  $ 875. 
D)  $1,125. 
E)  $ 750.

Question 2

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

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 3

On January 1, 2017, Jumper Co.acquired all of the common stock of Cable Corp.for $540,000.Annual amortization associated with the acquisition amounted to $1,800.During 2017, Cable recognized net income of $54,000 and paid dividends of $24,000.Cable's net income and dividends for 2018 were $86,000 and $24,000, respectively.
Required:
Assuming that Jumper decided to use the partial equity method, prepare a schedule to show the balance in the investment account at the end of 2018.

Accepted Answer

The answer of On January 1, 2017, Jumper Co.acquired all...

Question 4

A business combination results in $90,000 of goodwill.Several years later a worksheet is being produced to consolidate the two companies.Describe in words at what amount goodwill will be reported at this date.

Accepted Answer

The $90,000 attributed to good

Question 5

On the consolidated financial statements for 2017, what amount should have been shown for Equity in Subsidiary Earnings?

Accepted Answer

A)  $432,000. 
B)  $ -0- 
C)  $408,000. 
D)  $120,000. 
E)  $288,000. 
A)  $432,000. 
B)  $ -0- 
C)  $408,000. 
D)  $120,000. 
E)  $288,000.

Question 6

Assume the partial equity method is used.In the years following acquisition, what additional worksheet entry must be made for consolidation purposes, but is not required for the equity method?

Accepted Answer

A)  Entry A. 
B)  Entry B. 
C)  Entry C. 
D)  Entry D. 
E)  Entry E. 
A)  Entry A. 
B)  Entry B. 
C)  Entry C. 
D)  Entry D. 
E)  Entry E.

Question 7

An impairment model is used

Accepted Answer

A)  To assess whether asset write-downs are appropriate for indefinite-lived assets. 
B)  To calculate the fair value of intangible assets. 
C)  To calculate the amortization of indefinite-lived assets over their useful lives. 
D)  To determine whether the fair value of assets should be recognized. 
E)  To determine the likelihood that the fair value of an assumed liability will increase. 
A)  To assess whether asset write-downs are appropriate for indefinite-lived assets. 
B)  To calculate the fair value of intangible assets. 
C)  To calculate the amortization of indefinite-lived assets over their useful lives. 
D)  To determine whether the fair value of assets should be recognized. 
E)  To determine the likelihood that the fair value of an assumed liability will increase.

Question 8

On April 1, 2018, Beatty stock closes with a market value of $8.98 per share.How many shares of stock, rounded to the next whole number, must it issue to the former owners of Gateax?

Accepted Answer

A)  682 
B)  2,000 
C)  2,228 
D)  2,884 
E)  6,000 
A)  682 
B)  2,000 
C)  2,228 
D)  2,884 
E)  6,000

Question 9

On the consolidated financial statements for 2017, what amount should have been shown for consolidated dividends?

Accepted Answer

A)  $ 900,000. 
B)  $1,020,000. 
C)  $ 876,000. 
D)  $ 996,000. 
E)  $ 948,000. 
A)  $ 900,000. 
B)  $1,020,000. 
C)  $ 876,000. 
D)  $ 996,000. 
E)  $ 948,000.

Question 10

Compute the amount of Hurley's inventory that would be reported in a January 1, 2017, consolidated balance sheet.

Accepted Answer

A)  $800. 
B)  $100. 
C)  $900. 
D)  $150. 
E)  $ 0. 
A)  $800. 
B)  $100. 
C)  $900. 
D)  $150. 
E)  $ 0.

Question 11

How is the goodwill impairment process simplified for private companies?

Accepted Answer

The goodwill impairment process is simpl

Question 12

For each of the following situations, select the best answer that applies to consolidating financial information subsequent to the acquisition date:
(A) Initial value method.
(B) Partial equity method.
(C) Equity method.
(D) Initial value method and partial equity method but not equity method.
(E) Partial equity method and equity method but not initial value method.
(F) Initial value method, partial equity method, and equity method.
 .Method(s) available to the parent for internal record-keeping.
_____2.Easiest internal record-keeping method to apply.
_____3.Income of the subsidiary is recorded by the parent when earned.
_____4.Designed to create a parallel between the parent's investment accounts and changes in
the underlying equity of the acquired company.
_____5.For years subsequent to acquisition, requires the *C entry.
_____6.Uses the cash basis for income recognition.
_____7.Investment account remains at initially recorded amount.
_____8.Dividends received by the parent from the subsidiary reduce the parent's investment
account.
_____9.Often referred to in accounting as a single-line consolidation.
 .Increases the investment account for subsidiary earnings, but does not decrease the
subsidiary account for equity adjustments such as amortizations.

Accepted Answer

(1) F; (2) A; (3) E;

Question 13

How does the partial equity method differ from the equity method?

Accepted Answer

A)  In the total assets reported on the consolidated balance sheet. 
B)  In the treatment of dividends. 
C)  In the total liabilities reported on the consolidated balance sheet. 
D)  Under the partial equity method, subsidiary income does not increase the balance in the parent's investment account. 
E)  Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary. 
A)  In the total assets reported on the consolidated balance sheet. 
B)  In the treatment of dividends. 
C)  In the total liabilities reported on the consolidated balance sheet. 
D)  Under the partial equity method, subsidiary income does not increase the balance in the parent's investment account. 
E)  Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary.

Question 14

If the parent's net income reflected use of the initial value method, what were the consolidated retained earnings on December 31, 2018?

Accepted Answer

The answer of If the parent's net income reflected use...

Question 15

Which of the following is not an example of an intangible asset?

Accepted Answer

A)  Customer list 
B)  Database 
C)  Lease agreement 
D)  Broken equipment 
E)  Trademark 
A)  Customer list 
B)  Database 
C)  Lease agreement 
D)  Broken equipment 
E)  Trademark

Question 16

Hoyt Corporation agreed to the following terms in order to acquire the net assets of Brown Company on January 1, 2018: (1.) To issue 400 shares of common stock ($10 par) with a fair value of $45 per share.
(2)) To assume Brown's liabilities which have a book value of $1,600 and a fair value of $1,500.
On the date of acquisition, the consideration transferred for Hoyt's acquisition of Brown would be

Accepted Answer

A)  $18,000. 
B)  $16,500. 
C)  $20,000. 
D)  $18,500. 
E)  $19,500. 
A)  $18,000. 
B)  $16,500. 
C)  $20,000. 
D)  $18,500. 
E)  $19,500.

Question 17

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

Accepted Answer

A)  $1,080,000. 
B)  $1,104,000. 
C)  $1,100,000. 
D)  $1,468,000. 
E)  $1,475,000. 
A)  $1,080,000. 
B)  $1,104,000. 
C)  $1,100,000. 
D)  $1,468,000. 
E)  $1,475,000.

Question 18

Which of the following is false regarding contingent consideration in business combinations?

Accepted Answer

A)  Contingent consideration payable in cash is reported under liabilities. 
B)  Contingent consideration payable in stock shares is reported under stockholders' equity. 
C)  Contingent consideration is recorded because of its substantial probability of eventual payment. 
D)  The contingent consideration fair value is recognized as part of the acquisition regardless of whether eventual payment is based on future performance of the target firm or future stock price of the acquirer. 
E)  Contingent consideration is reflected in the acquirer's balance sheet at the present value of the potential expected future payment. 
A)  Contingent consideration payable in cash is reported under liabilities. 
B)  Contingent consideration payable in stock shares is reported under stockholders' equity. 
C)  Contingent consideration is recorded because of its substantial probability of eventual payment. 
D)  The contingent consideration fair value is recognized as part of the acquisition regardless of whether eventual payment is based on future performance of the target firm or future stock price of the acquirer. 
E)  Contingent consideration is reflected in the acquirer's balance sheet at the present value of the potential expected future payment.

Question 19

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

Accepted Answer

A)  $1,560. 
B)  $1,260. 
C)  $1,440. 
D)  $1,160. 
E)  $1,140. 
A)  $1,560. 
B)  $1,260. 
C)  $1,440. 
D)  $1,160. 
E)  $1,140.

Question 20

Compute the December 31, 2020, consolidated buildings.

Accepted Answer

A)  $1,037,500. 
B)  $1,007,500. 
C)  $1,000,000. 
D)  $1,022,500. 
E)  $1,012,500. 
A)  $1,037,500. 
B)  $1,007,500. 
C)  $1,000,000. 
D)  $1,022,500. 
E)  $1,012,500.

Exam 3: Consolidations - Subsequent to the Date of Acquisition

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

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

A business combination results in $90,000 of goodwill.Several years later a worksheet is being produced to consolidate the two companies.Describe in words at what amount goodwill will be reported at this date.

On the consolidated financial statements for 2017, what amount should have been shown for Equity in Subsidiary Earnings?

Assume the partial equity method is used.In the years following acquisition, what additional worksheet entry must be made for consolidation purposes, but is not required for the equity method?

An impairment model is used

On April 1, 2018, Beatty stock closes with a market value of $8.98 per share.How many shares of stock, rounded to the next whole number, must it issue to the former owners of Gateax?

On the consolidated financial statements for 2017, what amount should have been shown for consolidated dividends?

Compute the amount of Hurley's inventory that would be reported in a January 1, 2017, consolidated balance sheet.

How is the goodwill impairment process simplified for private companies?

How does the partial equity method differ from the equity method?

If the parent's net income reflected use of the initial value method, what were the consolidated retained earnings on December 31, 2018?

Which of the following is not an example of an intangible asset?

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

Which of the following is false regarding contingent consideration in business combinations?

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

Compute the December 31, 2020, consolidated buildings.

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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