Question 1

-What is the net income attributable to the noncontrolling interest in Sigma for 2018?

Accepted Answer

A)  $55,240. 
B)  $56,420. 
C)  $57,280. 
D)  $59,420. 
E)  $60,000. 
A)  $55,240. 
B)  $56,420. 
C)  $57,280. 
D)  $59,420. 
E)  $60,000.

Question 2

In a tax-free business combination,

Accepted Answer

A)  The income tax basis for acquired assets and liabilities is adjusted to current fair value. 
B)  Any goodwill created by the combination may be amortized in calculating taxable income. 
C)  The subsidiary's assets and liabilities are assigned an income tax basis of zero dollars, so that they will have no future income tax consequences. 
D)  Any goodwill created by the combination must be deducted in total in calculating taxable income. 
E)  The subsidiary's cost basis for assets are retained for income tax calculations. 
A)  The income tax basis for acquired assets and liabilities is adjusted to current fair value. 
B)  Any goodwill created by the combination may be amortized in calculating taxable income. 
C)  The subsidiary's assets and liabilities are assigned an income tax basis of zero dollars, so that they will have no future income tax consequences. 
D)  Any goodwill created by the combination must be deducted in total in calculating taxable income. 
E)  The subsidiary's cost basis for assets are retained for income tax calculations.

Question 3

Strong Company has had poor operating results in recent years and has a $160,000 net operating loss carryforward.Leader Corp.pays $700,000 to acquire Strong and is optimistic about its future profitability potential.The book value and fair value of Strong's identifiable net assets is $500,000 at date of acquisition.Strong's tax rate is 30% and Leader's tax rate is 40%.What is goodwill resulting from this business acquisition?

Accepted Answer

A)  $ 40,000. 
B)  $ 88,000. 
C)  $104,000. 
D)  $152,000. 
E)  $248,000. 
A)  $ 40,000. 
B)  $ 88,000. 
C)  $104,000. 
D)  $152,000. 
E)  $248,000.

Question 4

On January 1, 2018, Youder Inc.bought 120,000 shares of Nopple Co.for $384,000, giving Youder 30% ownership and the ability to apply significant influence to the operating and financing decisions of Nopple.Youder anticipated holding this investment for an indefinite time.In making this acquisition, Youder paid an amount equal to the book value for these shares.The fair value of each asset and liability was the same as its book value.Dividends and income for Nopple for 2018 were as follows:
Dividends declared and paid: $ .40 per share
Income before income tax provision: $400,000
Required:
Assume a 40% income tax rate.Prepare all necessary journal entries for Youder for 2018 beginning at acquisition and ending at tax accrual.

Accepted Answer

Entry One - To record the acquisition of

Question 5

-The accrual-based net income of Maroon Corp.is calculated to be

Accepted Answer

A)  $481,600. 
B)  $472,700. 
C)  $488,900. 
D)  $502,300. 
E)  $358,800. 
A)  $481,600. 
B)  $472,700. 
C)  $488,900. 
D)  $502,300. 
E)  $358,800.

Question 6

-What is the total net income attributable to the noncontrolling interests for 2018?

Accepted Answer

A)  $ 0. 
B)  $ 9,600. 
C)  $10,000. 
D)  $19,200. 
E)  $20,000. 
A)  $ 0. 
B)  $ 9,600. 
C)  $10,000. 
D)  $19,200. 
E)  $20,000.

Question 7

In a father-son-grandson combination, which of the following statements is true?

Accepted Answer

A)  Companies that are solely in subsidiary positions must have their accrual-based net income computed first in the consolidation process. 
B)  Father-son-grandson configurations never require consolidation unless one company owns 100% of at least one other member of the combined group. 
C)  The order of the computation of accrual-based net income is not important in the consolidation process. 
D)  The parent must have its accrual-based net income computed first in the consolidation process. 
E)  None of these answer choices are correct. 
A)  Companies that are solely in subsidiary positions must have their accrual-based net income computed first in the consolidation process. 
B)  Father-son-grandson configurations never require consolidation unless one company owns 100% of at least one other member of the combined group. 
C)  The order of the computation of accrual-based net income is not important in the consolidation process. 
D)  The parent must have its accrual-based net income computed first in the consolidation process. 
E)  None of these answer choices are correct.

Question 8

What ownership pattern is referred to as mutual ownership? Describe briefly or illustrate with a diagram.

Accepted Answer

Mutual ownership exists when a

Question 9

Hardford Corp. held 80% of Inglestone Inc., which, in turn, owned 80% of Jade Co. Excess amortization expense was not required by any of these acquisitions. Separate net income figures (without investment income) as well as upstream intra-entity gross profits (before deferral) included in the income for the current year follow:
  
-Which of the following statements is true regarding a subsidiary's investment in the parent company's stock?

Accepted Answer

A)  The treasury stock approach focuses on the parent's control over its subsidiary. 
B)  For consolidation, both the parent and subsidiary must defer gross profit on remaining inventory from intra-entity transfers. 
C)  In consolidation, the parent's retained earnings will not be reduced by the dividends it paid to the subsidiary. 
D)  This corporate combination is known as mutual ownership. 
E)  All of these answer choices are true statements. 
A)  The treasury stock approach focuses on the parent's control over its subsidiary. 
B)  For consolidation, both the parent and subsidiary must defer gross profit on remaining inventory from intra-entity transfers. 
C)  In consolidation, the parent's retained earnings will not be reduced by the dividends it paid to the subsidiary. 
D)  This corporate combination is known as mutual ownership. 
E)  All of these answer choices are true statements.

Question 10

-What is Beta's accrual-based net income for 2018?

Accepted Answer

A)  $200,000. 
B)  $276,800. 
C)  $280,000. 
D)  $296,000. 
E)  $300,000. 
A)  $200,000. 
B)  $276,800. 
C)  $280,000. 
D)  $296,000. 
E)  $300,000.

Question 11

How is the amortization of goodwill treated for income tax purposes? How does the amortization of goodwill affect deferred income taxes?

Accepted Answer

In a business combination, goodwill is t

Question 12

Required:
Determine the total amount of goodwill for the January 1, 2017 acquisition of Curle Co.and for the acquisition of Lance Co.on the same date.

Accepted Answer

The answer of Required:
Determine the total amount of goodwill for...

Question 13

-The accrual-based net income of West Corp.is calculated to be

Accepted Answer

A)  $ 734,000. 
B)  $1,261,000. 
C)  $1,123,900. 
D)  $1,140,700. 
E)  $1,149,700. 
A)  $ 734,000. 
B)  $1,261,000. 
C)  $1,123,900. 
D)  $1,140,700. 
E)  $1,149,700.

Question 14

Explain how the treasury stock approach treats shares of the parent's common stock that are owned by the subsidiary and the rationale behind the approach.

Accepted Answer

According to the treasury stock approach

Question 15

-What is Alpha's accrual-based net income for 2018?

Accepted Answer

A)  $564,000. 
B)  $564,800. 
C)  $572,200. 
D)  $580,000. 
E)  $600,000. 
A)  $564,000. 
B)  $564,800. 
C)  $572,200. 
D)  $580,000. 
E)  $600,000.

Question 16

B Co.owned 70% of the voting common stock of C Corp.; C Corp.owned 20% of B Co.There were no excess-value allocations at the dates the investments were acquired.For 2018, B Co.and C Corp.reported net income (not including the investment) of $600,000 and $300,000, respectively.B Co.and C Corp.declared dividends of $80,000 and $60,000, respectively.
Required:
Prepare a schedule showing net income attributable to B Co.'s controlling interest for 2018 using the treasury stock approach.

Accepted Answer

The answer of B Co.owned 70% of the voting common...

Question 17

Which of the following statements is true concerning connecting affiliations and mutual ownerships?

Accepted Answer

A)  In a mutual ownership, at least two companies in the consolidated group own portions of a third company. 
B)  There are at least four companies in a connecting affiliation. 
C)  In a connecting affiliation, at least one subsidiary owns stock in the parent company. 
D)  In a mutual ownership, the subsidiary owns a portion of the parent's stock. 
E)  There are only two companies in a connecting affiliation. 
A)  In a mutual ownership, at least two companies in the consolidated group own portions of a third company. 
B)  There are at least four companies in a connecting affiliation. 
C)  In a connecting affiliation, at least one subsidiary owns stock in the parent company. 
D)  In a mutual ownership, the subsidiary owns a portion of the parent's stock. 
E)  There are only two companies in a connecting affiliation.

Question 18

-For West Corp.and consolidated subsidiaries, what total amount would be reported for the net income attributable to the noncontrolling interest?

Accepted Answer

A)  $165,300. 
B)  $199,300. 
C)  $191,000. 
D)  $228,000. 
E)  $153,000. 
A)  $165,300. 
B)  $199,300. 
C)  $191,000. 
D)  $228,000. 
E)  $153,000.

Question 19

Why might a consolidated group file separate income tax returns?

Accepted Answer

A)  There are no intra-entity transfers. 
B)  There are no deferred intra-entity gross profits in ending inventory. 
C)  One of the companies is a foreign company. 
D)  Parent owns 68 percent of one company and 82 percent of another. 
E)  All of these answer choices are correct. 
A)  There are no intra-entity transfers. 
B)  There are no deferred intra-entity gross profits in ending inventory. 
C)  One of the companies is a foreign company. 
D)  Parent owns 68 percent of one company and 82 percent of another. 
E)  All of these answer choices are correct.

Question 20

-Compute the net income attributable to the noncontrolling interest for 2018.

Accepted Answer

A)  $11,000. 
B)  $10,800. 
C)  $ 9,000. 
D)  $ 8,200. 
E)  $ 7,200. 
A)  $11,000. 
B)  $10,800. 
C)  $ 9,000. 
D)  $ 8,200. 
E)  $ 7,200.

Exam 7: Consolidated Financial Statements - Ownership Patterns and Income Taxes

-What is the net income attributable to the noncontrolling interest in Sigma for 2018?

In a tax-free business combination,

-The accrual-based net income of Maroon Corp.is calculated to be

-What is the total net income attributable to the noncontrolling interests for 2018?

In a father-son-grandson combination, which of the following statements is true?

What ownership pattern is referred to as mutual ownership? Describe briefly or illustrate with a diagram.

-What is Beta's accrual-based net income for 2018?

How is the amortization of goodwill treated for income tax purposes? How does the amortization of goodwill affect deferred income taxes?

Required: Determine the total amount of goodwill for the January 1, 2017 acquisition of Curle Co.and for the acquisition of Lance Co.on the same date.

-The accrual-based net income of West Corp.is calculated to be

Explain how the treasury stock approach treats shares of the parent's common stock that are owned by the subsidiary and the rationale behind the approach.

-What is Alpha's accrual-based net income for 2018?

Which of the following statements is true concerning connecting affiliations and mutual ownerships?

-For West Corp.and consolidated subsidiaries, what total amount would be reported for the net income attributable to the noncontrolling interest?

Why might a consolidated group file separate income tax returns?

-Compute the net income attributable to the noncontrolling interest for 2018.

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

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

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