Question 1

Compute the amount of Hurley's equipment that would be reported in a December 31, 2017, consolidated balance sheet.

Accepted Answer

A)  $1,000. 
B)  $1,250. 
C)  $ 875. 
D)  $1,125. 
E)  $ 750. 
A)  $1,000. 
B)  $1,250. 
C)  $ 875. 
D)  $1,125. 
E)  $ 750.

Question 2

With respect to identifiable intangible assets other than goodwill, which of the following is true?

Accepted Answer

A)  If the value of the identified asset meets a de minimis exception, the entity may elect to treat it as goodwill. 
B)  An identifiable intangible asset with an indefinite useful life must be assessed for impairment once every three years. 
C)  If the average fair value of the asset is less than the average carrying amount of the asset with respect to, and determined for, the preceding three-year period, the asset is considered impaired and the entity may recognize a loss. 
D)  A quantitative evaluation of value is required each year regardless of circumstances. 
E)  If a qualitative assessment of the asset performed by an entity indicates impairment is likely, a quantitative assessment must be performed to determine whether there has been a loss in fair value. 
A)  If the value of the identified asset meets a de minimis exception, the entity may elect to treat it as goodwill. 
B)  An identifiable intangible asset with an indefinite useful life must be assessed for impairment once every three years. 
C)  If the average fair value of the asset is less than the average carrying amount of the asset with respect to, and determined for, the preceding three-year period, the asset is considered impaired and the entity may recognize a loss. 
D)  A quantitative evaluation of value is required each year regardless of circumstances. 
E)  If a qualitative assessment of the asset performed by an entity indicates impairment is likely, a quantitative assessment must be performed to determine whether there has been a loss in fair value.

Question 3

Compute the December 31, 2020, consolidated buildings.

Accepted Answer

A)  $1,037,500. 
B)  $1,007,500. 
C)  $1,000,000. 
D)  $1,022,500. 
E)  $1,012,500. 
A)  $1,037,500. 
B)  $1,007,500. 
C)  $1,000,000. 
D)  $1,022,500. 
E)  $1,012,500.

Question 4

For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping is the easiest for the parent to use?

Accepted Answer

The initia

Question 5

On the consolidated financial statements for 2017, what amount should have been shown for Equity in Subsidiary Earnings?

Accepted Answer

A)  $432,000. 
B)  $ -0- 
C)  $408,000. 
D)  $120,000. 
E)  $288,000. 
A)  $432,000. 
B)  $ -0- 
C)  $408,000. 
D)  $120,000. 
E)  $288,000.

Question 6

An impairment model is used

Accepted Answer

A)  To assess whether asset write-downs are appropriate for indefinite-lived assets. 
B)  To calculate the fair value of intangible assets. 
C)  To calculate the amortization of indefinite-lived assets over their useful lives. 
D)  To determine whether the fair value of assets should be recognized. 
E)  To determine the likelihood that the fair value of an assumed liability will increase. 
A)  To assess whether asset write-downs are appropriate for indefinite-lived assets. 
B)  To calculate the fair value of intangible assets. 
C)  To calculate the amortization of indefinite-lived assets over their useful lives. 
D)  To determine whether the fair value of assets should be recognized. 
E)  To determine the likelihood that the fair value of an assumed liability will increase.

Question 7

Which one of the following varies between the equity, initial value, and partial equity methods of accounting for an investment?

Accepted Answer

A)  The amount of consolidated net income. 
B)  Total assets on the consolidated balance sheet. 
C)  Total liabilities on the consolidated balance sheet. 
D)  The balance in the investment account on the parent's books. 
E)  The amount of consolidated cost of goods sold. 
A)  The amount of consolidated net income. 
B)  Total assets on the consolidated balance sheet. 
C)  Total liabilities on the consolidated balance sheet. 
D)  The balance in the investment account on the parent's books. 
E)  The amount of consolidated cost of goods sold.

Question 8

What is the balance in Cale's investment in subsidiary account at the end of 2017?

Accepted Answer

A)  $1,099,000. 
B)  $1,020,000. 
C)  $1,096,200. 
D)  $1,098,000. 
E)  $1,144,400. 
A)  $1,099,000. 
B)  $1,020,000. 
C)  $1,096,200. 
D)  $1,098,000. 
E)  $1,144,400.

Question 9

When a company applies the initial value method in accounting for its investment in a subsidiary, and the subsidiary reports income in excess of dividends paid, what entry would be made for a consolidation worksheet for the second year?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 10

Assume the equity method is applied.How much equity income will Kaye report on its internal accounting records as a result of Fiore's operations?

Accepted Answer

A)  $400 
B)  $300 
C)  $380 
D)  $280 
E)  $480 
A)  $400 
B)  $300 
C)  $380 
D)  $280 
E)  $480

Question 11

One company acquires another company in a combination accounted for under the acquisition method.The acquiring company decides to apply the equity method in accounting for the combination.What is one reason the acquiring company might have made this decision?

Accepted Answer

A)  It is the only method allowed by the SEC. 
B)  It is relatively easy to apply. 
C)  It is the only internal reporting method allowed by generally accepted accounting principles. 
D)  Operating results on the parent's financial records reflect consolidated totals. 
E)  When the equity method is used, no worksheet entries are required in the consolidation process. 
A)  It is the only method allowed by the SEC. 
B)  It is relatively easy to apply. 
C)  It is the only internal reporting method allowed by generally accepted accounting principles. 
D)  Operating results on the parent's financial records reflect consolidated totals. 
E)  When the equity method is used, no worksheet entries are required in the consolidation process.

Question 12

Which of the following is not a factor to be considered when determining the useful life of an intangible asset?

Accepted Answer

A)  Legal, regulatory or contractual provisions. 
B)  The effects of obsolescence. 
C)  The expected use of the asset by the organization. 
D)  The fair value of the asset. 
E)  The level of maintenance expenditures that will be required to obtain expected future benefits. 
A)  Legal, regulatory or contractual provisions. 
B)  The effects of obsolescence. 
C)  The expected use of the asset by the organization. 
D)  The fair value of the asset. 
E)  The level of maintenance expenditures that will be required to obtain expected future benefits.

Question 13

On January 1, 2017, Jumper Co.acquired all of the common stock of Cable Corp.for $540,000.Annual amortization associated with the acquisition amounted to $1,800.During 2017, Cable recognized net income of $54,000 and paid dividends of $24,000.Cable's net income and dividends for 2018 were $86,000 and $24,000, respectively.
Required:
Assuming that Jumper decided to use the partial equity method, prepare a schedule to show the balance in the investment account at the end of 2018.

Accepted Answer

The answer of On January 1, 2017, Jumper Co.acquired all...

Question 14

For each of the following situations, select the best answer that applies to consolidating financial information subsequent to the acquisition date:
(A) Initial value method.
(B) Partial equity method.
(C) Equity method.
(D) Initial value method and partial equity method but not equity method.
(E) Partial equity method and equity method but not initial value method.
(F) Initial value method, partial equity method, and equity method.
 .Method(s) available to the parent for internal record-keeping.
_____2.Easiest internal record-keeping method to apply.
_____3.Income of the subsidiary is recorded by the parent when earned.
_____4.Designed to create a parallel between the parent's investment accounts and changes in
the underlying equity of the acquired company.
_____5.For years subsequent to acquisition, requires the *C entry.
_____6.Uses the cash basis for income recognition.
_____7.Investment account remains at initially recorded amount.
_____8.Dividends received by the parent from the subsidiary reduce the parent's investment
account.
_____9.Often referred to in accounting as a single-line consolidation.
 .Increases the investment account for subsidiary earnings, but does not decrease the
subsidiary account for equity adjustments such as amortizations.

Accepted Answer

(1) F; (2) A; (3) E;

Question 15

Racer Corp.acquired all of the common stock of Tangiers Co.in 2016.Tangiers maintained its incorporation.Which of Racer's account balances would vary between the equity method and the initial value method?

Accepted Answer

A)  Goodwill, Investment in Tangiers Co., and Retained Earnings. 
B)  Expenses, Investment in Tangiers Co., and Equity in Subsidiary Earnings. 
C)  Investment in Tangiers Co., Equity in Subsidiary Earnings, and Retained Earnings. 
D)  Common Stock, Goodwill, and Investment in Tangiers Co. 
E)  Expenses, Goodwill, and Investment in Tangiers Co. 
A)  Goodwill, Investment in Tangiers Co., and Retained Earnings. 
B)  Expenses, Investment in Tangiers Co., and Equity in Subsidiary Earnings. 
C)  Investment in Tangiers Co., Equity in Subsidiary Earnings, and Retained Earnings. 
D)  Common Stock, Goodwill, and Investment in Tangiers Co. 
E)  Expenses, Goodwill, and Investment in Tangiers Co.

Question 16

For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping gives the most accurate portrayal of the accounting results for the entire business combination?

Accepted Answer

The equity method gi

Question 17

For an acquisition when the subsidiary maintains its incorporation, under the partial equity method, what adjustments are made to the balance of the investment account?

Accepted Answer

The balance of the investment account is

Question 18

Compute the December 31, 2020, consolidated common stock.

Accepted Answer

A)  $450,000. 
B)  $530,000. 
C)  $555,000. 
D)  $635,000. 
E)  $525,000. 
A)  $450,000. 
B)  $530,000. 
C)  $555,000. 
D)  $635,000. 
E)  $525,000.

Question 19

At the end of 2017, the consolidation entry to eliminate Cale's accrual of Kaltop's earnings would include a credit to Investment in Kaltop Co.for

Accepted Answer

A)  $124,400. 
B)  $126,000. 
C)  $127,000. 
D)  $ 76,400. 
E)  $ 0. 
A)  $124,400. 
B)  $126,000. 
C)  $127,000. 
D)  $ 76,400. 
E)  $ 0.

Question 20

Matthews Co.acquired all of the common stock of Jackson Co.on January 1, 2017.As of that date, Jackson had the following trial balance:
During 2017, Jackson reported net income of $96,000 while paying dividends of $12,000.During 2018, Jackson reported net income of $132,000 while paying dividends of $36,000.
Assume that Matthews Co.acquired the common stock of Jackson Co.for $588,000 in cash.As of January 1, 2017, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000.Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years.
Matthews decided to use the equity method for this investment.
Required:
(A.) Prepare consolidation worksheet entries for December 31, 2017.
(B.) Prepare consolidation worksheet entries for December 31, 2018.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& B. Conso

Exam 3: A: Consolidations - Subsequent to the Date of Acquisition

Compute the amount of Hurley's equipment that would be reported in a December 31, 2017, consolidated balance sheet.

With respect to identifiable intangible assets other than goodwill, which of the following is true?

Compute the December 31, 2020, consolidated buildings.

For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping is the easiest for the parent to use?

On the consolidated financial statements for 2017, what amount should have been shown for Equity in Subsidiary Earnings?

An impairment model is used

Which one of the following varies between the equity, initial value, and partial equity methods of accounting for an investment?

What is the balance in Cale's investment in subsidiary account at the end of 2017?

When a company applies the initial value method in accounting for its investment in a subsidiary, and the subsidiary reports income in excess of dividends paid, what entry would be made for a consolidation worksheet for the second year?

Assume the equity method is applied.How much equity income will Kaye report on its internal accounting records as a result of Fiore's operations?

One company acquires another company in a combination accounted for under the acquisition method.The acquiring company decides to apply the equity method in accounting for the combination.What is one reason the acquiring company might have made this decision?

Which of the following is not a factor to be considered when determining the useful life of an intangible asset?

Racer Corp.acquired all of the common stock of Tangiers Co.in 2016.Tangiers maintained its incorporation.Which of Racer's account balances would vary between the equity method and the initial value method?

For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping gives the most accurate portrayal of the accounting results for the entire business combination?

For an acquisition when the subsidiary maintains its incorporation, under the partial equity method, what adjustments are made to the balance of the investment account?

Compute the December 31, 2020, consolidated common stock.

At the end of 2017, the consolidation entry to eliminate Cale's accrual of Kaltop's earnings would include a credit to Investment in Kaltop Co.for

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

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

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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