Exam 17: Understanding and Analyzing Consolidated Financial Statements

Research suggests that investors are not fooled by companies that choose the least conservative accounting policies to increase net income.

The following information is available for the Scarcina Company: What is the debt-to-equity ratio at December 31,2009?

On January 1,2010,a parent company purchased 90 percent of the stock in a subsidiary.On January 1,2010,no goodwill was recorded and the book value of the subsidiary's assets equals the market value of the subsidiary's assets.On December 31,2010,the two companies report the following data: What is the consolidated net income for the year ended December 31,2010?

An investor in securities accounted for by the equity method has the following information available at December 31,2012: How does the investor report the change in market value on the securities at December 31,2012?

The existence of a parent company and a subsidiary requires special accounting procedures.

The following data is available for Donald Company: Required: Compute the following ratios: A)current ratio B)average collection period in days C)return on stockholders' equity D)price-earnings ratio E)dividend yield

The balance sheet for Jimmy Company is given below: If a common-size balance sheet was prepared,what would Jimmy Company report for accounts receivable?

On January 1,2012,a parent company acquired all of the stock of a subsidiary.The following data is available: The acquisition by the parent company represents a 100 percent interest in the subsidiary.On January 1,2012,the fair value of the subsidiary's assets and liabilities are equal to their book value.The parent company paid $450 for the 100 percent interest in the subsidiary.What amount of goodwill is implied in the purchase?

The balance sheet for Sesame Company at December 31,2009 is given below: Current Assets: Long-term Assets: Current Liabilities: Stockholders' Equity: Required: Prepare a common-size balance sheet.

Liquidity ratios focus on whether there are sufficient current assets to satisfy current liabilities as they come due.

The following information is available for Flanders Company: What is the current ratio?

Presented below is the balance sheet of Hal Company at January 1,2015: The balance sheet of Monty Company at January 1,2015 is below: On January 1,2015,Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.What is the balance in the Investment in Hal Company account on the consolidated balance sheet immediately after the acquisition of Hal Company's stock? (Assume elimination entries are completed.)

Presented below is the balance sheet of Hal Company at January 1,2015: The balance sheet of Monty Company at January 1,2015 is below: On January 1,2015,Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.What is the amount of Total Stockholders' Equity on the consolidated balance sheet immediately after the acquisition of Hal Company's stock? (Assume elimination entries are completed.)

The balance sheet for Robert Company is given below: If a common-size balance sheet was prepared,what would Robert Company report for inventory?

________ are profitability ratios.

Burt Company purchased common stock in RR Company for $500,000.In the current year,RR Company reported net income of $48,000 and paid a dividend of $32,000.At the end of the year,the market value of the investment in RR Company was $525,000. Required: A)Assume Burt Company owns 10% of the shares of RR Company.Burt Company considers the investment to be available-for-sale securities.Show the effects of the transactions above on the accounts of Burt Company using the balance sheet equation. B)Assume Burt Company owns 25% of the shares of RR Company.Show the effects of the transactions above on the accounts of Burt Company using the balance sheet equation.

The account "Noncontrolling Interests" as reported on a balance sheet shows ________.

The income statement for Manny Company for the year ended December 31,2010 is given below: Required: Prepare a common-size income statement.

When a company owns less than 20 percent of the common stock of another company,the market value method of accounting for investments in equity securities is used.

The section of the annual report that explains major changes in the income statement,changes in liquidity and capital resources and the impact of inflation is called the ________.