Question 1

What is Ryan's percent ownership in Chase after the acquisition of the treasury shares (rounded)?

Accepted Answer

A)  80%. 
B)  95%. 
C)  64%. 
D)  76%. 
E)  69%. 
A)  80%. 
B)  95%. 
C)  64%. 
D)  76%. 
E)  69%.

Question 2

In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true?

Accepted Answer

A)  Parent company earnings per share equals consolidated earnings per share when the equity method is used. 
B)  Parent company earnings per share is equal to consolidated earnings per share when the initial value method is used. 
C)  Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value exceeds book value. 
D)  Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value is less than book value. 
E)  Preferred dividends are not deducted from net income for consolidated earnings per share. 
A)  Parent company earnings per share equals consolidated earnings per share when the equity method is used. 
B)  Parent company earnings per share is equal to consolidated earnings per share when the initial value method is used. 
C)  Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value exceeds book value. 
D)  Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value is less than book value. 
E)  Preferred dividends are not deducted from net income for consolidated earnings per share.

Question 3

On January 1, 2018, Riley Corp.acquired some of the outstanding bonds of one of its subsidiaries.The bonds had a carrying value of $421,620, and Riley paid $401,937 for them.How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2018?

Accepted Answer

A)  The difference is added to the carrying value of the debt. 
B)  The difference is deducted from the carrying value of the debt. 
C)  The difference is treated as a loss from the extinguishment of the debt. 
D)  The difference is treated as a gain from the extinguishment of the debt. 
E)  The difference does not influence the consolidated financial statements. 
A)  The difference is added to the carrying value of the debt. 
B)  The difference is deducted from the carrying value of the debt. 
C)  The difference is treated as a loss from the extinguishment of the debt. 
D)  The difference is treated as a gain from the extinguishment of the debt. 
E)  The difference does not influence the consolidated financial statements.

Question 4

Describe how this transaction would affect Panton's books.

Accepted Answer

The investment account and APIC will be

Question 5

What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2019?

Accepted Answer

The answer of What consolidation entry would be recorded in...

Question 6

During 2018, the subsidiary paid dividends of $14,000.
Required:
Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018.Either the direct method or the indirect method may be used.

Accepted Answer

The answer of During 2018, the subsidiary paid dividends of...

Question 7

What is the adjusted book value of Chase Company after the issuance of the shares?

Accepted Answer

A)  $608,000. 
B)  $720,000. 
C)  $680,000. 
D)  $760,000. 
E)  $400,000. 
A)  $608,000. 
B)  $720,000. 
C)  $680,000. 
D)  $760,000. 
E)  $400,000.

Question 8

What is the new percent ownership Ryan owns in Chase?

Accepted Answer

A)  80.0%. 
B)  87.5%. 
C)  90.0%. 
D)  75.0%. 
E)  82.5%. 
A)  80.0%. 
B)  87.5%. 
C)  90.0%. 
D)  75.0%. 
E)  82.5%.

Question 9

Tray Co.reported current earnings of $560,000 while paying $56,000 in cash dividends.Sparrish Co.earned $140,000 in net income and distributed $14,000 in dividends.Tray held a 70% interest in Sparrish for several years, an investment that it originally acquired by transferring consideration equal to the book value of the underlying net assets.Tray used the initial value method to account for these shares. On January 1, 2018, Sparrish acquired in the open market $70,000 of Tray's 8% bonds.The bonds had originally been issued several years ago at a price that would yield a 10% effective interest rate.On the date of the bond purchase, the book value of the bonds payable was $67,600.Sparrish paid $65,200 based on a 12% effective interest rate over the remaining life of the bonds.
What is the noncontrolling interest's share of the subsidiary's net income?

Accepted Answer

A)  $42,000. 
B)  $37,800. 
C)  $39,600. 
D)  $40,070. 
E)  $44,080. 
A)  $42,000. 
B)  $37,800. 
C)  $39,600. 
D)  $40,070. 
E)  $44,080.

Question 10

Parent Corporation loaned money to its subsidiary with a five-year note at the market interest rate.How would the note be accounted for in the consolidation process?

Accepted Answer

The note would be eliminated i

Question 11

Prepare all consolidation entries for 2018.

Accepted Answer

The answer of Prepare all consolidation entries for 2018....

Question 12

What would differ between a statement of cash flows for a consolidated company and an unconsolidated company using the indirect method?

Accepted Answer

A)  Parent's dividends would be subtracted as a financing activity. 
B)  Gain on sale of land would be deducted from net income. 
C)  Noncontrolling interest in net income of subsidiary would be added to net income. 
D)  Proceeds from the sale of long-term investments would be added to investing activities. 
E)  Loss on sale of equipment would be added to net income. 
A)  Parent's dividends would be subtracted as a financing activity. 
B)  Gain on sale of land would be deducted from net income. 
C)  Noncontrolling interest in net income of subsidiary would be added to net income. 
D)  Proceeds from the sale of long-term investments would be added to investing activities. 
E)  Loss on sale of equipment would be added to net income.

Question 13

What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2020?

Accepted Answer

The answer of What consolidation entry would be recorded in...

Question 14

Parent Corporation had just purchased some of its subsidiary's outstanding bonds on the open market.What items related to these bonds will have to be accounted for in the consolidation process?

Accepted Answer

For each period that the parent owns the

Question 15

Wolff Corporation owns 70 percent of the outstanding stock of Donald, Inc.During the current year, Donald made $75,000 in sales to Wolff.How does this transfer affect the consolidated statement of cash flows?

Accepted Answer

A)  Included as a decrease in the investing section. 
B)  Included as an increase in the operating section. 
C)  Included as a decrease in the operating section. 
D)  Included as an increase in the investing section. 
E)  Not reported in the consolidated statement of cash flows. 
A)  Included as a decrease in the investing section. 
B)  Included as an increase in the operating section. 
C)  Included as a decrease in the operating section. 
D)  Included as an increase in the investing section. 
E)  Not reported in the consolidated statement of cash flows.

Question 16

Stevens Company has had bonds payable of $10,000 outstanding for several years.On January 1, 2018, when there was an unamortized discount of $2,000 and a remaining life of 5 years, its 80% owned subsidiary, Matthews Company, purchased the bonds in the open market for $11,000.The bonds pay 6% interest annually on December 31.The companies use the straight-line method to amortize interest revenue and expense.Compute the consolidated gain or loss on a consolidated income statement for 2018.

Accepted Answer

A)  $1,000 gain. 
B)  $1,000 loss. 
C)  $2,000 loss. 
D)  $3,000 loss. 
E)  $3,000 gain. 
A)  $1,000 gain. 
B)  $1,000 loss. 
C)  $2,000 loss. 
D)  $3,000 loss. 
E)  $3,000 gain.

Question 17

How does the existence of a noncontrolling interest affect the preparation of a consolidated statement of cash flows?

Accepted Answer

The noncontrolling interest's share of t

Question 18

A variable interest entity can take all of the following forms except a(n):

Accepted Answer

A)  Trust. 
B)  Partnership. 
C)  Joint venture. 
D)  Corporation. 
E)  Estate. 
A)  Trust. 
B)  Partnership. 
C)  Joint venture. 
D)  Corporation. 
E)  Estate.

Question 19

Danbers Co.owned seventy-five percent of the common stock of Renz Corp.How does the issuance of a five percent stock dividend by Renz affect Danbers and the consolidation process?

Accepted Answer

A stock dividend would not inf

Question 20

Keenan Company has had bonds payable of $20,000 outstanding for several years.On January 1, 2018, there was an unamortized premium of $2,000 with a remaining life of 10 years, Keenan's parent, Ross, Inc., purchased the bonds in the open market for $19,000.Keenan is a 90% owned subsidiary of Ross.The bonds pay 8% interest annually on December 31.The companies use the straight-line method to amortize interest revenue and expense.Compute the consolidated gain or loss on a consolidated income statement for 2018.

Accepted Answer

A)  $3,000 gain. 
B)  $3,000 loss. 
C)  $1,000 gain. 
D)  $1,000 loss. 
E)  $2,000 gain. 
A)  $3,000 gain. 
B)  $3,000 loss. 
C)  $1,000 gain. 
D)  $1,000 loss. 
E)  $2,000 gain.

Exam 6: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

What is Ryan's percent ownership in Chase after the acquisition of the treasury shares (rounded)?

In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true?

Describe how this transaction would affect Panton's books.

What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2019?

During 2018, the subsidiary paid dividends of $14,000. Required: Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018.Either the direct method or the indirect method may be used.

What is the adjusted book value of Chase Company after the issuance of the shares?

What is the new percent ownership Ryan owns in Chase?

Parent Corporation loaned money to its subsidiary with a five-year note at the market interest rate.How would the note be accounted for in the consolidation process?

Prepare all consolidation entries for 2018.

What would differ between a statement of cash flows for a consolidated company and an unconsolidated company using the indirect method?

What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2020?

Parent Corporation had just purchased some of its subsidiary's outstanding bonds on the open market.What items related to these bonds will have to be accounted for in the consolidation process?

Wolff Corporation owns 70 percent of the outstanding stock of Donald, Inc.During the current year, Donald made $75,000 in sales to Wolff.How does this transfer affect the consolidated statement of cash flows?

How does the existence of a noncontrolling interest affect the preparation of a consolidated statement of cash flows?

A variable interest entity can take all of the following forms except a(n):

Danbers Co.owned seventy-five percent of the common stock of Renz Corp.How does the issuance of a five percent stock dividend by Renz affect Danbers and the consolidation process?

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

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

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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