Question 1

What is pre-acquisition income?

Accepted Answer

When a company acquires control of a sub

Question 2

Determine the value assigned to the noncontrolling interest as of the date of the acquisition.

Accepted Answer

The answer of Determine the value assigned to the noncontrolling...

Question 3

MacHeath Inc.bought 60% of the outstanding common stock of Nomes Inc.in an acquisition that resulted in the recognition of goodwill.Nomes owned a piece of land that cost $250,000 but was worth $600,000 at the date of acquisition.What value would be attributed to this land in a consolidated balance sheet at the date of acquisition?

Accepted Answer

A)  $250,000. 
B)  $150,000. 
C)  $600,000. 
D)  $360,000. 
E)  $460,000. 
A)  $250,000. 
B)  $150,000. 
C)  $600,000. 
D)  $360,000. 
E)  $460,000.

Question 4

Compute the noncontrolling interest in Demers at December 31, 2019.

Accepted Answer

A)  $135,600. 
B)  $ 80,000. 
C)  $117,000. 
D)  $100,000. 
E)  $110,600. 
A)  $135,600. 
B)  $ 80,000. 
C)  $117,000. 
D)  $100,000. 
E)  $110,600.

Question 5

In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Land account?

Accepted Answer

A)  $7,000 increase. 
B)  $7,000 decrease. 
C)  $6,300 increase. 
D)  $6,300 decrease. 
E)  No adjustment is necessary. 
A)  $7,000 increase. 
B)  $7,000 decrease. 
C)  $6,300 increase. 
D)  $6,300 decrease. 
E)  No adjustment is necessary.

Question 6

Compute Pell's income from Demers for the year ended December 31, 2019.

Accepted Answer

A)  $74,400. 
B)  $73,000. 
C)  $42,400. 
D)  $41,000. 
E)  $80,000. 
A)  $74,400. 
B)  $73,000. 
C)  $42,400. 
D)  $41,000. 
E)  $80,000.

Question 7

Compute Pell's investment account balance in Demers at December 31, 2020.

Accepted Answer

A)  $577,200. 
B)  $604,000. 
C)  $592,800. 
D)  $632,800. 
E)  $572,000. 
A)  $577,200. 
B)  $604,000. 
C)  $592,800. 
D)  $632,800. 
E)  $572,000.

Question 8

What amount of consolidated net income for 2020 is attributable to Royce's controlling interest?

Accepted Answer

A)  $686,000. 
B)  $560,000. 
C)  $644,000. 
D)  $635,600. 
E)  $691,600. 
A)  $686,000. 
B)  $560,000. 
C)  $644,000. 
D)  $635,600. 
E)  $691,600.

Question 9

One company buys a controlling interest in another company on April 1 during a company's calendar year of operations.How should the pre-acquisition subsidiary revenues and expenses be handled in the consolidated balances for the year of acquisition?

Accepted Answer

Only post-acquisition revenues

Question 10

Jax Company used the acquisition method when it acquired its investment in Saxton Company.Jax now sells some of its shares of Saxton such that neither control nor significant influence exists.Which of the following statements is true?

Accepted Answer

A)  The difference between selling price and acquisition value is recorded as a realized gain or loss. 
B)  The difference between selling price and acquisition value is recorded as an unrealized gain or loss. 
C)  The difference between selling price and carrying value is recorded as a realized gain or loss. 
D)  The difference between selling price and carrying value is recorded as an unrealized gain or loss. 
E)  The difference between selling price and carrying value is recorded as an adjustment to retained earnings. 
A)  The difference between selling price and acquisition value is recorded as a realized gain or loss. 
B)  The difference between selling price and acquisition value is recorded as an unrealized gain or loss. 
C)  The difference between selling price and carrying value is recorded as a realized gain or loss. 
D)  The difference between selling price and carrying value is recorded as an unrealized gain or loss. 
E)  The difference between selling price and carrying value is recorded as an adjustment to retained earnings.

Question 11

At what amount would consolidated goodwill be reported for 2020?

Accepted Answer

A)  $150,000 
B)  $200,000. 
C)  $ 50,000. 
D)  $ 0. 
E)  $135,000. 
A)  $150,000 
B)  $200,000. 
C)  $ 50,000. 
D)  $ 0. 
E)  $135,000.

Question 12

Compute the noncontrolling interest in the net income of Demers at December 31, 2019.

Accepted Answer

A)  $12,000. 
B)  $10,600. 
C)  $18,600. 
D)  $20,000. 
E)  $14,400. 
A)  $12,000. 
B)  $10,600. 
C)  $18,600. 
D)  $20,000. 
E)  $14,400.

Question 13

How much does Pell record as income from Demers for the year ended December 31, 2021?

Accepted Answer

A)  $ 98,400. 
B)  $ 56,000. 
C)  $104,000. 
D)  $ 97,000. 
E)  $ 50,400. 
A)  $ 98,400. 
B)  $ 56,000. 
C)  $104,000. 
D)  $ 97,000. 
E)  $ 50,400.

Question 14

The following account balances are for the year ending December 31, 2020 for both companies.
   Required:
Prepare a consolidation worksheet for this business combination.Assume goodwill has been reviewed and there is no goodwill impairment.

Accepted Answer

Consolidation Worksheet for Jo

Question 15

Determine the amount of the noncontrolling interest as of the date of the acquisition.

Accepted Answer

Implied value of Club Corp. ($

Question 16

Select True (T) or False (F) for each of the following statements:
_____ 1.A parent will recognize a gain or loss if it sells a portion of its investment in a subsidiary and maintains control after the sale.
_____ 2.A parent sells a portion of its investment in a subsidiary and no longer maintains control.This sale of shares represents a remeasurement event for the investee.
_____ 3.International financial reporting standards (IFRS) allow an option to value the noncontrolling interest with goodwill or to value the noncontrolling interest without goodwill.
_____ 4.Consolidated net income represents the combined net income of the parent and subsidiary after subtracting the noncontrolling interest in the net income of the subsidiary.
_____ 5.The total acquisition-date fair value of an acquired firm is the sum of the fair value of the controlling interest and the fair value of the noncontrolling interest.
_____ 6.When control of a subsidiary is acquired on a date other than the first day of a fiscal year, excess amortization expenses are pro-rated to include only the post-acquisition period.
_____ 7.For a mid-year acquisition following an equity method investment of the same company, the consolidated income statement will report consolidated revenues and expenses for the entire year.
_____ 8.In a step acquisition where the parent previously held a noncontrolling interest in the acquired firm, the parent remeasures the prior interest to fair value.
_____ 9.When a parent has control over a subsidiary with less than 100 percent ownership, and thereafter increases its ownership, the parent remeasures the prior interest to fair value.

Accepted Answer

(1) F; (2) F; (3) T;

Question 17

Compute the noncontrolling interest in the net income of Demers at December 31, 2021.

Accepted Answer

A)  $20,400. 
B)  $24,600. 
C)  $26,000. 
D)  $14,000. 
E)  $12,600. 
A)  $20,400. 
B)  $24,600. 
C)  $26,000. 
D)  $14,000. 
E)  $12,600.

Question 18

What amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor?

Accepted Answer

A)  $ 582,000 
B)  $1,050,000 
C)  $1,358,000 
D)  $1,808,000 
E)  $2,140,000 
A)  $ 582,000 
B)  $1,050,000 
C)  $1,358,000 
D)  $1,808,000 
E)  $2,140,000

Question 19

What is the consolidated balance of the Equipment account at December 31, 2020?

Accepted Answer

A)  $644,400. 
B)  $784,000. 
C)  $719,600. 
D)  $770,000. 
E)  $775,600. 
A)  $644,400. 
B)  $784,000. 
C)  $719,600. 
D)  $770,000. 
E)  $775,600.

Question 20

What is the amount of excess land allocation attributed to the noncontrolling interest at the acquisition date?

Accepted Answer

A)  $ 0. 
B)  $30,000. 
C)  $22,500. 
D)  $ 7,500. 
E)  $17,500. 
A)  $ 0. 
B)  $30,000. 
C)  $22,500. 
D)  $ 7,500. 
E)  $17,500.

Exam 4: A: Consolidated Financial Statements and Outside Ownership

What is pre-acquisition income?

Determine the value assigned to the noncontrolling interest as of the date of the acquisition.

Compute the noncontrolling interest in Demers at December 31, 2019.

In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Land account?

Compute Pell's income from Demers for the year ended December 31, 2019.

Compute Pell's investment account balance in Demers at December 31, 2020.

What amount of consolidated net income for 2020 is attributable to Royce's controlling interest?

One company buys a controlling interest in another company on April 1 during a company's calendar year of operations.How should the pre-acquisition subsidiary revenues and expenses be handled in the consolidated balances for the year of acquisition?

Jax Company used the acquisition method when it acquired its investment in Saxton Company.Jax now sells some of its shares of Saxton such that neither control nor significant influence exists.Which of the following statements is true?

At what amount would consolidated goodwill be reported for 2020?

Compute the noncontrolling interest in the net income of Demers at December 31, 2019.

How much does Pell record as income from Demers for the year ended December 31, 2021?

The following account balances are for the year ending December 31, 2020 for both companies. Required: Prepare a consolidation worksheet for this business combination.Assume goodwill has been reviewed and there is no goodwill impairment.

Determine the amount of the noncontrolling interest as of the date of the acquisition.

Compute the noncontrolling interest in the net income of Demers at December 31, 2021.

What amount of consolidated net income for 2019 should be allocated to Femur's controlling interest in Harbor?

What is the consolidated balance of the Equipment account at December 31, 2020?

What is the amount of excess land allocation attributed to the noncontrolling interest at the acquisition date?

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

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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