Question 1

Using the acquisition method, determine the amount of goodwill associated with Caldwell's purchase of Club.

Accepted Answer

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Question 2

The noncontrolling interest's share of the earnings of Harbor Corp.for 2019 is calculated to be

Accepted Answer

A)  $132,000. 
B)  $150,000. 
C)  $168,000. 
D)  $160,000. 
E)  $0. 
A)  $132,000. 
B)  $150,000. 
C)  $168,000. 
D)  $160,000. 
E)  $0.

Question 3

Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?

Accepted Answer

A)  The parent recognizes a larger percent of subsidiary income. 
B)  A step acquisition resulting in control may result in a parent recognizing a gain on revaluation. 
C)  The book value of the subsidiary will increase. 
D)  The parent's percent ownership in subsidiary will increase. 
E)  Noncontrolling interest in subsidiary's net income will decrease. 
A)  The parent recognizes a larger percent of subsidiary income. 
B)  A step acquisition resulting in control may result in a parent recognizing a gain on revaluation. 
C)  The book value of the subsidiary will increase. 
D)  The parent's percent ownership in subsidiary will increase. 
E)  Noncontrolling interest in subsidiary's net income will decrease.

Question 4

Compute the noncontrolling interest in Demers at December 31, 2020.

Accepted Answer

A)  $107,000. 
B)  $126,000. 
C)  $109,200. 
D)  $149,600. 
E)  $148,200. 
A)  $107,000. 
B)  $126,000. 
C)  $109,200. 
D)  $149,600. 
E)  $148,200.

Question 5

Compute Pell's Investment in Demers account balance at December 31, 2019.

Accepted Answer

A)  $580,000. 
B)  $574,400. 
C)  $548,000. 
D)  $542,400. 
E)  $541,000. 
A)  $580,000. 
B)  $574,400. 
C)  $548,000. 
D)  $542,400. 
E)  $541,000.

Question 6

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?

Accepted Answer

A)  Pre-acquisition earnings are deducted from consolidated revenues and expenses. 
B)  Pre-acquisition earnings are added to consolidated revenues and expenses. 
C)  Pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity. 
D)  Pre-acquisition earnings are added to the beginning consolidated stockholders' equity. 
E)  Pre-acquisition earnings are ignored in the consolidated income statement. 
A)  Pre-acquisition earnings are deducted from consolidated revenues and expenses. 
B)  Pre-acquisition earnings are added to consolidated revenues and expenses. 
C)  Pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity. 
D)  Pre-acquisition earnings are added to the beginning consolidated stockholders' equity. 
E)  Pre-acquisition earnings are ignored in the consolidated income statement.

Question 7

What amount of goodwill should be attributed to the noncontrolling interest at the date of acquisition?

Accepted Answer

A)  $ 0. 
B)  $ 20,000. 
C)  $ 30,000. 
D)  $100,000. 
E)  $120,000. 
A)  $ 0. 
B)  $ 20,000. 
C)  $ 30,000. 
D)  $100,000. 
E)  $120,000.

Question 8

Pennant Corp.owns 70% of the common stock of Scarvens Co.Scarvens' revenues for 2020 totaled $200,000.
Required:
What amount of Scarvens' revenues would be included in the consolidated revenues under the acquisition method of accounting for business combinations?

Accepted Answer

The answer of Pennant Corp.owns 70% of the common stock...

Question 9

What is the dollar amount of fair value over book value differences attributed to Perch at the date of acquisition?

Accepted Answer

A)  $120,000. 
B)  $150,000. 
C)  $280,000. 
D)  $350,000. 
E)  $370,000. 
A)  $120,000. 
B)  $150,000. 
C)  $280,000. 
D)  $350,000. 
E)  $370,000.

Question 10

Determine the amount of goodwill to be recognized in this acquisition.

Accepted Answer

The answer of Determine the amount of goodwill to be...

Question 11

What is the amount of the noncontrolling interest's share of Kailey's income for 2019?

Accepted Answer

A)  $22,000. 
B)  $24,000. 
C)  $48,000. 
D)  $66,000. 
E)  $72,000. 
A)  $22,000. 
B)  $24,000. 
C)  $48,000. 
D)  $66,000. 
E)  $72,000.

Question 12

Which of the following methods is not used to value a noncontrolling interest under circumstances where a control premium is applied to determine the appropriate value for such interest?

Accepted Answer

A)  Valuation models based on subsidiary discounted cash flows. 
B)  Valuation models based on subsidiary residual income projections. 
C)  Comparison with comparable investments. 
D)  The application of a safe harbor discount rate. 
E)  Fair value based on market trades. 
A)  Valuation models based on subsidiary discounted cash flows. 
B)  Valuation models based on subsidiary residual income projections. 
C)  Comparison with comparable investments. 
D)  The application of a safe harbor discount rate. 
E)  Fair value based on market trades.

Question 13

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

Accepted Answer

A)  $4,000 increase. 
B)  $4,000 decrease. 
C)  $3,600 increase. 
D)  $3,600 decrease. 
E)  No adjustment is necessary. 
A)  $4,000 increase. 
B)  $4,000 decrease. 
C)  $3,600 increase. 
D)  $3,600 decrease. 
E)  No adjustment is necessary.

Question 14

In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

Accepted Answer

A)  Fair value based on stock trades of the acquired company. 
B)  Subsidiary cash flows discounted to present value. 
C)  Book value of subsidiary net assets. 
D)  Projections of residual income. 
E)  Consideration transferred by the parent company that implies a total subsidiary value. 
A)  Fair value based on stock trades of the acquired company. 
B)  Subsidiary cash flows discounted to present value. 
C)  Book value of subsidiary net assets. 
D)  Projections of residual income. 
E)  Consideration transferred by the parent company that implies a total subsidiary value.

Question 15

What is consolidated stockholders' equity at January 2, 2019?

Accepted Answer

A)  $112,000. 
B)  $133,000. 
C)  $168,000. 
D)  $182,000. 
E)  $203,000. 
A)  $112,000. 
B)  $133,000. 
C)  $168,000. 
D)  $182,000. 
E)  $203,000.

Question 16

Kordel Inc.acquired 75% of the outstanding common stock of Raxston Corp.Raxston currently owes Kordel $500,000 for inventory acquired over the past few months.In preparing consolidated financial statements, what amount of Raxston's liability should be eliminated?

Accepted Answer

A)  $375,000 
B)  $125,000 
C)  $300,000 
D)  $500,000 
E)  $0. 
A)  $375,000 
B)  $125,000 
C)  $300,000 
D)  $500,000 
E)  $0.

Question 17

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

Accepted Answer

A)  $48,000. 
B)  $56,000. 
C)  $98,400. 
D)  $97,000. 
E)  $50,400. 
A)  $48,000. 
B)  $56,000. 
C)  $98,400. 
D)  $97,000. 
E)  $50,400.

Question 18

Why is it important to know if the parent paid a premium to acquire control of a subsidiary?

Accepted Answer

It is necessary to ascertain the subsidi

Question 19

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

Accepted Answer

A)  $ 0. 
B)  $30,000. 
C)  $22,500. 
D)  $25,000. 
E)  $17,500. 
A)  $ 0. 
B)  $30,000. 
C)  $22,500. 
D)  $25,000. 
E)  $17,500.

Question 20

How much does Pell record as income from Demers for the year ended December 31, 2020?

Accepted Answer

A)  $90,400. 
B)  $89,000. 
C)  $50,400. 
D)  $96,000. 
E)  $56,000. 
A)  $90,400. 
B)  $89,000. 
C)  $50,400. 
D)  $96,000. 
E)  $56,000.

Exam 4: A: Consolidated Financial Statements and Outside Ownership

Using the acquisition method, determine the amount of goodwill associated with Caldwell's purchase of Club.

The noncontrolling interest's share of the earnings of Harbor Corp.for 2019 is calculated to be

Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?

Compute the noncontrolling interest in Demers at December 31, 2020.

Compute Pell's Investment in Demers account balance at December 31, 2019.

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?

What amount of goodwill should be attributed to the noncontrolling interest at the date of acquisition?

Pennant Corp.owns 70% of the common stock of Scarvens Co.Scarvens' revenues for 2020 totaled $200,000. Required: What amount of Scarvens' revenues would be included in the consolidated revenues under the acquisition method of accounting for business combinations?

What is the dollar amount of fair value over book value differences attributed to Perch at the date of acquisition?

Determine the amount of goodwill to be recognized in this acquisition.

What is the amount of the noncontrolling interest's share of Kailey's income for 2019?

Which of the following methods is not used to value a noncontrolling interest under circumstances where a control premium is applied to determine the appropriate value for such interest?

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

In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

What is consolidated stockholders' equity at January 2, 2019?

Kordel Inc.acquired 75% of the outstanding common stock of Raxston Corp.Raxston currently owes Kordel $500,000 for inventory acquired over the past few months.In preparing consolidated financial statements, what amount of Raxston's liability should be eliminated?

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

Why is it important to know if the parent paid a premium to acquire control of a subsidiary?

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

How much does Pell record as income from Demers for the year ended December 31, 2020?

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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