Exam 17: Understanding and Analyzing Consolidated Financial Statements

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 the book value.The parent company paid $250 for the 100 percent interest in the subsidiary.On January 1,2012,what are the total assets on the consolidated balance sheet? (Assume elimination entries are completed.)

Jeff Company purchased common stock in Gonzalez Company.Jeff Company treats the investment as available-for-sale securities.During the current year,Gonzalez Company earned $4,000,000 and paid dividends of $1,000,000.Assume that Jeff Company owns 10% of the outstanding shares of Gonzalez Company.Gonzalez Company's dividend will affect Jeff Company by ________.

If an investor uses the equity method to account for a long-term equity investment,then the investor records income when the investee pays a dividend.

Dividends received from trading securities are reported by the investor as ________.

Elway Company acquired 80 percent of the outstanding stock of Warner Company for $152 cash.(No goodwill is associated with the acquisition.)Elway Company's assets prior to the acquisition were $700.Warner Company's assets prior to the acquisition were $400.What are the total assets on the consolidated balance sheet prepared immediately after the acquisition of Warner Company's stock? (Assume elimination entries are completed.)

An efficient capital market is one in which an order to trade can be placed and executed in short period of time.

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 Liabilities on the consolidated balance sheet immediately after the acquisition of Hal Company's stock? (Assume elimination entries are completed.)

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 the book value.The parent company paid $250 for the 100 percent interest in the subsidiary.On January 1,2012,what is the total stockholders' equity on the consolidated balance sheet? (Assume elimination entries are completed.)

Fisher Company acquired 80 percent of the outstanding shares of Gibbs Company for $152 in cash.(No goodwill was present at the time of acquisition.)The net income for the current year for Fisher Company is $100.The net income for the current year for Gibbs Company is $20.There were no intercompany sales.What is the net income on the consolidated income statement for the current year?

Vince Company purchased common stock in Gill Company.During the current year,Gill Company earned $4,000,000 and paid dividends of $1,000,000.Assume that Vince Company owns 40 percent of the outstanding shares of Gill Company.Gill Company's net income will affect Vince Company by ________.

Rocky Company acquired 40% of the voting stock of Boulder Company for $40 million.At the end of Year 1,Boulder Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Rocky Company's investment in Boulder Company is $44 million.What accounts on Rocky Company's books would be affected by the net income of Boulder Company?

Rocky Company acquired 40% of the voting stock of Boulder Company for $40 million.At the end of Year 1,Boulder Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Rocky Company's investment in Boulder Company is $44 million.The ________ method should be used by Rocky Company to account for the investment.

The following information is available for Guess Company: Required: Compute the following ratios: A)Current ratio B)Gross profit rate C)Return on sales D)Return on stockholders' equity

At the date of acquisition by a parent company,the fair value of a subsidiary's fixed assets were larger than their book value.When preparing consolidated financial statements,the fixed assets of the subsidiary are ________ and depreciation expense is ________.

Company A acquired 100 percent of the outstanding common stock of Company B.At the date of acquisition,no goodwill was involved and the book value of the assets and liabilities of Company B equal their fair values.Immediately after the acquisition,an elimination entry is prepared in order to prepare consolidated financial statements.What accounts are affected by the elimination entry?

On January 1,2010,a parent company purchased 100 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?

Dividends received from available-for-sale securities are reported by the investor as ________.

Orlando Company acquired all of the shares of Tampa Company for $100 cash.At the time of the acquisition,the fair values of Tampa Company's assets were $200.At the time of acquisition,the fair values of Tampa Company's liabilities were $120.On the date of acquisition,what is the amount of goodwill on the consolidated balance sheet?

Jeff Company purchased common stock in Garcia Company.Jeff Company treats the investment as available-for-sale securities.During the current year,Garcia Company earned $4,000,000 and paid dividends of $1,000,000.Assume that Jeff Company owns 10% of the outstanding shares of Garcia Company.Garcia Company's net income will affect Jeff Company by ________.

The Barnum Company reports the following information: What is the gross profit percentage for the year ended December 31,2012?