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

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 income to controlling interest in the consolidated financial statements for 20X9?

Quid Corporation acquired 75 percent of Pro Company's common stock on December 31,20X6.Goodwill (attributable to Quid's acquisition of Pro shares)of $300,000 was reported in the consolidated financial statements at December 31,20X6.Parent company approach was used in determining this amount.What is the amount of goodwill to be reported under proprietary theory approach?

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

All of the following statements accurately describe Special Purpose Entities (SPEs)except for:

In which of the following cases would consolidation be inappropriate?

Blue Company owns 80 percent of the common stock of White Corporation.During the year,Blue reported sales of $1,000,000,and White reported sales of $500,000,including sales to Blue of $80,000.The amount of sales that should be reported in the consolidated income statement for the year is:

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 retained earnings in the consolidated balance sheet prepared at December 31,20X9?

On January 3,20X9,Jane Company acquired 75 percent of Miller Company's outstanding common stock for cash.The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Miller Company's net assets at the date of acquisition.Selected balance sheet data at December 31,20X9,are as follows: -Based on the preceding information,what amount will Jane Company report as common stock outstanding in its consolidated balance sheet at December 31,20X9?

On January 1,20X8,Gregory Corporation acquired 90 percent of Nova 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 Nova at that date.Gregory uses the equity method in accounting for its ownership of Nova.On December 31,20X9,the trial balances of the two companies are as follows: Required: 1)Give all eliminating entries required on December 31,20X8,to prepare consolidated financial statements. 2)Prepare a three-part consolidation worksheet as of December 31,20X8.

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 parent company theory approach?

On January 1,20X8,Gregory Corporation acquired 90 percent of Nova 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 Nova at that date.Gregory uses the equity method in accounting for its ownership of Nova.On December 31,20X8,the trial balances of the two companies are as follows: Required: 1)Provide all eliminating entries required as of December 31,20X8,to prepare consolidated financial statements. 2)Prepare a three-part consolidation worksheet.

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?

On December 31,20X9,Rudd Company acquired 80 percent of the common stock of Wilton Company.At the time,Rudd held land with a book value of $100,000 and a fair value of $260,000;Wilton held land with a book value of $50,000 and fair value of $600,000.Using the parent company theory,at what amount would land be reported in a consolidated balance sheet prepared immediately after the combination?

Parent Company acquired 90% of Son Inc.on January 31,20X2 in exchange for cash.The book value of Son's individual assets and liabilities approximated their acquisition-date fair values.On the date of acquisition,Son reported the following: During the year Son Inc.reported $310,000 in net income and declared $15,000 in dividends.Parent Company reported $520,000 in net income and declared $25,000 in dividends.Parent accounts for their investment using the equity method. Required: 1)What journal entry will Parent make on the date of acquisition to record the investment in Son Inc? 2)If Parent were to prepare a consolidated balance sheet on the acquisition date (January 31,20X2),what is the basic elimination entry Parent would use in the consolidation worksheet? 3)What is Parent's balance in "Investment in Son Inc." prior to consolidation on December 31,20X2? 4)What is the basic elimination entry Parent would use in the consolidation worksheet on December 31,20X2?

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 amount will be assigned to the noncontrolling interest on January 3,20X9,in the consolidated balance sheet?

On January 3,20X9,Jane Company acquired 75 percent of Miller Company's outstanding common stock for cash.The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Miller Company's net assets at the date of acquisition.Selected balance sheet data at December 31,20X9,are as follows: -Based on the preceding information,what amount should be reported as noncontrolling interest in net assets in Jane Company's December 31,20X9,consolidated balance sheet?

Under FASB 141R,consolidation follows largely which theory approach?

When a primary beneficiary's consolidation of a variable interest entity (VIE)is appropriate,the amounts of the VIE to be consolidated are: I.Book values for assets and liabilities transferred by the primary beneficiary. II.Fair values when the primary beneficiary relationship became established.

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 assets in the consolidated balance sheet at December 31,20X9?