Exam 3: The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

On January 1, 20X8, Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date. Wilhelm uses the equity method in accounting for its ownership of Kaiser. On December 31, 20X9, the trial balances of the two companies are as follows: -Based on the preceding information,what amount would be reported as total liabilities in the consolidated balance sheet at December 31,20X9?

ASC 805 is related to the Consolidation of Variable Interest Entities.Describe what a Variable Interest Entity is and discuss why the FASB has difficulty in prescribing when these entities are consolidated?

Pepper Company acquired 60 percent of the common stock of Safton Corporation on December 31,20X9.On the date of acquisition,Pepper held land with a book value of $200,000 and a fair value of $350,000; Safton held land with a book value of $150,000 and fair value of $300,000.At what amount would land be reported in a consolidated balance sheet prepared immediately after the combination?

Silver Company owns 60 percent of the common stock of Gold Corporation.During the year,Silver reported sales of $500,000,and Gold reported sales of $200,000,including sales to Silver of $50,000.The amount of sales that should be reported in the consolidated income statement for the year is

On January 3, 20X9, Redding Company acquired 80 percent of Frazer Corporation's common stock for $344,000 in cash. At the acquisition date, the book values and fair values of Frazer's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Frazer. The stockholders' equity accounts of the two companies at the acquisition date are: Noncontrolling interest was assigned income of $11,000 in Redding's consolidated income statement for 20X9. -Based on the preceding information,what will be the amount of net income reported by Frazer Corporation in 20X9?

On January 2, 20X2, Kentucky Company acquired 70% of Bluegrass Corporation's common stock for $420,000 cash. At the acquisition date, the book values and fair values of Bluegrass' assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 30% of the total book value of Bluegrass. The stockholders' equity accounts of the two companies at the acquisition date are as follows: Noncontrolling interest was assigned income of $15,000 in Kentucky's consolidated income statement for 20X2. -Based on the preceding information,what will be the amount of net income reported by Bluegrass Corporation in 20X2?

For a less-than-wholly-owned subsidiary,goodwill under the parent theory:

On January 1, 20X9, Heathcliff Corporation acquired 80 percent of Garfield Corporation's voting common stock. Garfield's buildings and equipment had a book value of $300,000 and a fair value of $350,000 at the time of acquisition. -Based on the preceding information,what will be the amount at which Garfield's buildings and equipment will be reported in consolidated statements using the current accounting practice?

Small-Town Retail owns 70 percent of Supplier Corporation's common stock. For the current financial year, Small-Town and Supplier reported sales of $450,000 and $300,000 and expenses of $290,000 and $240,000, respectively. -Based on the preceding information,what is the amount of net income to be reported in the consolidated income statement for the year under the entity theory approach?

Which of the following usually does not represent a variable interest?