Question 1

Required:
Under the treasury stock approach, what is the net income attributable to the noncontrolling interest?

Accepted Answer

The answer of Required:
Under the treasury stock approach, what is...

Question 2

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:
  
-The net income attributable to the noncontrolling interest of Inglestone Inc.is calculated to be

Accepted Answer

A)  $106,950. 
B)  $102,640. 
C)  $114,530. 
D)  $106,960. 
E)  $103,680. 
A)  $106,950. 
B)  $102,640. 
C)  $114,530. 
D)  $106,960. 
E)  $103,680.

Question 3

-Which of the following statements is true?

Accepted Answer

A)  Alpha and Beta must file a consolidated income tax return, but must exclude Gamma from the consolidated return. 
B)  Alpha, Beta, and Gamma must file a consolidated income tax return. 
C)  Alpha, Beta, and Gamma must file separate income tax returns because the ownership of Beta is less than 100%. 
D)  Alpha, Beta, and Gamma will probably not file a consolidated income tax return. 
E)  Alpha, Beta, and Gamma may file separate income tax returns or a consolidated income tax return. 
A)  Alpha and Beta must file a consolidated income tax return, but must exclude Gamma from the consolidated return. 
B)  Alpha, Beta, and Gamma must file a consolidated income tax return. 
C)  Alpha, Beta, and Gamma must file separate income tax returns because the ownership of Beta is less than 100%. 
D)  Alpha, Beta, and Gamma will probably not file a consolidated income tax return. 
E)  Alpha, Beta, and Gamma may file separate income tax returns or a consolidated income tax return.

Question 4

What term is used to describe a parent and subsidiaries that are eligible to file a consolidated income tax return?

Accepted Answer

The term affiliated

Question 5

What are the essential criteria for including a subsidiary within an affiliated group?

Accepted Answer

A subsidiary may be included in an affil

Question 6

Dog Corporation acquires all of Cat, Inc.for $400,000 cash.On that date, Cat has net assets with fair value of $350,000 but a book value and tax basis of $325,000.The tax rate is 30 percent.Prior to this date, neither Dog nor Cat has reported any deferred income tax assets or liabilities.What amount of goodwill should be recognized on the date of the acquisition?

Accepted Answer

A)  $ 0. 
B)  $50,000. 
C)  $65,000. 
D)  $66,400. 
E)  $57,500. 
A)  $ 0. 
B)  $50,000. 
C)  $65,000. 
D)  $66,400. 
E)  $57,500.

Question 7

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 goodwill?

Accepted Answer

A)  For accounting purposes, goodwill may be amortized over a period not to exceed 40 years. 
B)  For accounting purposes, goodwill may be amortized over a period not to exceed 20 years. 
C)  For tax purposes, goodwill amortization cannot be deductible. 
D)  For tax purposes, goodwill amortization may be deductible over a 20-year period. 
E)  For tax purposes, goodwill amortization may be deductible over a 15-year period. 
A)  For accounting purposes, goodwill may be amortized over a period not to exceed 40 years. 
B)  For accounting purposes, goodwill may be amortized over a period not to exceed 20 years. 
C)  For tax purposes, goodwill amortization cannot be deductible. 
D)  For tax purposes, goodwill amortization may be deductible over a 20-year period. 
E)  For tax purposes, goodwill amortization may be deductible over a 15-year period.

Question 8

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 the subsidiary's investment in its parent's common stock?

Accepted Answer

A)  All of the parent company's common stock is eliminated. 
B)  The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to treasury stock. 
C)  The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to retained earnings. 
D)  The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to additional paid-in capital. 
E)  The investment in parent company's common stock is not eliminated in consolidation. 
A)  All of the parent company's common stock is eliminated. 
B)  The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to treasury stock. 
C)  The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to retained earnings. 
D)  The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to additional paid-in capital. 
E)  The investment in parent company's common stock is not eliminated in consolidation.

Question 9

White Company owns 60% of Cody Company. Separate tax returns are required. For 2017, White's operating income (excluding taxes and any income from Cody) was $300,000 while Cody reported a pretax income of $125,000. During the period, Cody declared total dividends of $25,000; $15,000 (60%) to White and $10,000 to the noncontrolling interest. White declared dividends of $180,000. The income tax rate for both companies is 30%.
-Compute the income tax liability of Cody for 2018.

Accepted Answer

A)  $33,000. 
B)  $34,500. 
C)  $37,500. 
D)  $30,000. 
E)  $22,500. 
A)  $33,000. 
B)  $34,500. 
C)  $37,500. 
D)  $30,000. 
E)  $22,500.

Question 10

What percentage of Tayle's income is attributed to Buckette's ownership interest?

Accepted Answer

A)  100%. 
B)  75%. 
C)  61%. 
D)  40%. 
E)  74%. 
A)  100%. 
B)  75%. 
C)  61%. 
D)  40%. 
E)  74%.

Question 11

-The accrual-based net income of Eckston Inc.is calculated to be

Accepted Answer

A)  $234,000. 
B)  $211,000. 
C)  $221,000. 
D)  $224,000. 
E)  $246,000. 
A)  $234,000. 
B)  $211,000. 
C)  $221,000. 
D)  $224,000. 
E)  $246,000.

Question 12

Required:
Determine net income attributable to the noncontrolling interest in Curle for the year 2018.

Accepted Answer

The answer of Required:
Determine net income attributable to the noncontrolling...

Question 13

On January 1, 2018, a subsidiary buys 12 percent of the outstanding voting stock of its parent corporation.The payment of $400,000 exceeded book value of the acquired shares by $80,000, attributable to a copyright with a 10-year useful life.During the year, the parent reported separate company income of $1,000,000 (excluding investment income from the subsidiary), and paid $120,000 in dividends.If the treasury stock approach is used, how is the Investment in Parent Stock reported in the consolidated balance sheet at December 31, 2018?

Accepted Answer

A)  Consolidated stockholders' equity is reduced by $400,000. 
B)  Consolidated stockholders' equity is reduced by $320,000. 
C)  Included in current assets. 
D)  Included in noncurrent assets. 
E)  There is no effect on the consolidated balance sheet, because the effects have been eliminated. 
A)  Consolidated stockholders' equity is reduced by $400,000. 
B)  Consolidated stockholders' equity is reduced by $320,000. 
C)  Included in current assets. 
D)  Included in noncurrent assets. 
E)  There is no effect on the consolidated balance sheet, because the effects have been eliminated.

Question 14

How would the 10% Investment in Prescott owned by Bell be presented in the consolidated balance sheet?

Accepted Answer

A)  The 10% investment would be eliminated and no amount would be shown in the consolidated balance sheet. 
B)  The 10% investment would be reclassified in Bell's balance sheet as Treasury Stock before the consolidation process begins. 
C)  The 10% investment would be eliminated and the same dollar amount would appear as treasury stock in the consolidated balance sheet. 
D)  The 10% investment would be included as part of Additional Paid-In Capital because it is less than 20% and therefore indicates no significant influence is present. 
E)  Prescott would treat the shares owned by Bell as if they had been repurchased on the open market, and a treasury stock account would be set up on Prescott's books recording the shares at their fair value on the date of combination. 
A)  The 10% investment would be eliminated and no amount would be shown in the consolidated balance sheet. 
B)  The 10% investment would be reclassified in Bell's balance sheet as Treasury Stock before the consolidation process begins. 
C)  The 10% investment would be eliminated and the same dollar amount would appear as treasury stock in the consolidated balance sheet. 
D)  The 10% investment would be included as part of Additional Paid-In Capital because it is less than 20% and therefore indicates no significant influence is present. 
E)  Prescott would treat the shares owned by Bell as if they had been repurchased on the open market, and a treasury stock account would be set up on Prescott's books recording the shares at their fair value on the date of combination.

Question 15

-What is the amount of taxable income reported on the consolidated income tax return?

Accepted Answer

A)  $720,000. 
B)  $625,000. 
C)  $621,000. 
D)  $665,000. 
E)  $655,000. 
A)  $720,000. 
B)  $625,000. 
C)  $621,000. 
D)  $665,000. 
E)  $655,000.

Question 16

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

Accepted Answer

A)  $1,091,520. 
B)  $1,115,520. 
C)  $1,168,000. 
D)  $1,168,520. 
E)  $1,200,000. 
A)  $1,091,520. 
B)  $1,115,520. 
C)  $1,168,000. 
D)  $1,168,520. 
E)  $1,200,000.

Question 17

-What is the net income attributable to the noncontrolling interest in Pi 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 18

When Buckette prepares consolidated financial statements, it should include

Accepted Answer

A)  Shuvelle but not Tayle. 
B)  Tayle but not Shuvelle. 
C)  Either Shuvelle or Tayle. 
D)  Shuvelle and Tayle. 
E)  Neither Shuvelle nor Tayle. 
A)  Shuvelle but not Tayle. 
B)  Tayle but not Shuvelle. 
C)  Either Shuvelle or Tayle. 
D)  Shuvelle and Tayle. 
E)  Neither Shuvelle nor Tayle.

Question 19

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

Accepted Answer

A)  $152,000. 
B)  $ 16,000. 
C)  $192,000. 
D)  $200,000. 
E)  $208,000. 
A)  $152,000. 
B)  $ 16,000. 
C)  $192,000. 
D)  $200,000. 
E)  $208,000.

Question 20

D Corp.had investments, direct and indirect, in several subsidiaries: -E Co.is a domestic firm in which D Corp.owned a 90% interest
-F Co.is a domestic firm in which D Corp.owned 60% and E Co.owned 30%
-G Co.is a domestic firm wholly owned by E Co.
-H Co.is a foreign subsidiary in which D Corp.owned a 90% interest
-I Co.is a domestic firm in which D Corp.owned 50% and G Co.owned 25%
Which of these subsidiaries may be included in a consolidated income tax return?

Accepted Answer

A)  E, F, G, H, and I. 
B)  E, G, H, and I. 
C)  E and F. 
D)  E, F, G, and H. 
E)  E, F, and G. 
A)  E, F, G, H, and I. 
B)  E, G, H, and I. 
C)  E and F. 
D)  E, F, G, and H. 
E)  E, F, and G.

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

Required: Under the treasury stock approach, what is the net income attributable to the noncontrolling interest?

-Which of the following statements is true?

What term is used to describe a parent and subsidiaries that are eligible to file a consolidated income tax return?

What are the essential criteria for including a subsidiary within an affiliated group?

What percentage of Tayle's income is attributed to Buckette's ownership interest?

-The accrual-based net income of Eckston Inc.is calculated to be

Required: Determine net income attributable to the noncontrolling interest in Curle for the year 2018.

How would the 10% Investment in Prescott owned by Bell be presented in the consolidated balance sheet?

-What is the amount of taxable income reported on the consolidated income tax return?

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

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

When Buckette prepares consolidated financial statements, it should include

-What is Pi's accrual-based net income 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

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