Deck 4: Consolidated Financial Statements and Outside Ownership

Question 1

LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.What is the amount of the noncontrolling interest's share of Dean's income for 2022?

A)$15,900.
B)$19,875.
C)$46,375.
D)$47,700.
E)$54,000.

Answer 1

B

Question 2

When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What is the amount of excess land allocation attributed to the controlling interest at the acquisition date?

A)$0.
B)$12,500.
C)$40,000.
D)$50,000.
E)$60,000.

Answer 2

C

Question 3

LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.What is the amount of Dean's net income attributable to the controlling interest for 2022?

A)$19,875.
B)$46,375.
C)$66,250.
D)$111,300.
E)$126,000.

Answer 3

B

Question 4

Daniels Inc. acquired 85% of the outstanding common stock of Noyce Corp.in 2021. Noyce currently owes Daniels $400,000 for inventory acquired during 2022. In preparing consolidated financial statements for 2022, what amount of Noyce's liability should be eliminated?

A)$0.
B)$60,000.
C)$300,000.
D)$340,000.
E)$400,000.

Question 5

Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace's net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What amount of goodwill should be attributed to Dodd at the date of acquisition?

A)$0.
B)$75,000.
C)$150,000.
D)$225,000.
E)$300,000.

Question 6

Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2022. During 2022, Sogers had revenues of $2,700,000 and expenses of $2,100,000. The amortization of fair value allocations totaled $65,000 in 2022. Not including its investment in Sogers, Renz Co. had its own revenues of $4,800,000 and expenses of $3,600,000 for the year 2022.What amount of consolidated net income for 2022 should be allocated to Renz's controlling interest in Sogers?

A)$1,200,000
B)$1,388,000
C)$1,440,000
D)$1,492,000
E)$1,628,000

Question 7

When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What amount should have been reported for the land in a consolidated balance sheet at the acquisition date?

A)$40,000.
B)$50,000.
C)$75,000.
D)$100,000.
E)$125,000.

Question 8

Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace's net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the dollar amount of noncontrolling interest that should appear in a consolidated balance sheet prepared at the date of acquisition?

A)$75,000.
B)$450,000.
C)$475,000.
D)$525,000.
E)$600,000.

Question 9

Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace's net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the dollar amount of fair value over book value differences for identifiable net assets attributed to Dodd at the date of acquisition?

A)$0.
B)$150,000.
C)$200,000.
D)$375,000.
E)$500,000.

Question 10

Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2022. During 2022, Sogers had revenues of $2,700,000 and expenses of $2,100,000. The amortization of fair value allocations totaled $65,000 in 2022. Not including its investment in Sogers, Renz Co. had its own revenues of $4,800,000 and expenses of $3,600,000 for the year 2022.The noncontrolling interest's share of the earnings of Sogers Corp. for 2022 is calculated to be

A)$0.
B)$107,000.
C)$120,000.
D)$133,000.
E)$240,000.

Question 11

Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace's net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the total amount of goodwill recognized at the date of acquisition?

A)$0.
B)$100,000.
C)$200,000.
D)$300,000.
E)$700,000.

Question 12

Which of the following methods is not used to value a noncontrolling interest under circumstances where a control premium is applied to determine the appropriate value for such interest?

A)Valuation models based on subsidiary discounted cash flows.
B)Valuation models based on subsidiary residual income projections.
C)Comparison with comparable investments.
D)The application of a safe harbor discount rate.
E)Fair value based on market trades.

Question 13

LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.What is the effect of including Dean in consolidated net income for 2022?

A)$8,750.
B)$66,250.
C)$75,000.
D)$126,000.
E)$159,000.

Question 14

Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2022. During 2022, Sogers had revenues of $2,700,000 and expenses of $2,100,000. The amortization of fair value allocations totaled $65,000 in 2022. Not including its investment in Sogers, Renz Co. had its own revenues of $4,800,000 and expenses of $3,600,000 for the year 2022.What amount would Renz Co. report as consolidated net income for 2022?

A)$600,000.
B)$1,200,000.
C)$1,735,000.
D)$1,800,000.
E)$1,865,000.

Question 15

Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace's net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What amount of goodwill should be attributed to the noncontrolling interest at the date of acquisition?

A)$0.
B)$25,000.
C)$50,000.
D)$75,000.
E)$175,000.

Question 16

When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What is the amount of excess land allocation attributed to the noncontrolling interest at the acquisition date?

A)$0.
B)$10,000.
C)$15,000.
D)$40,000.
E)$50,000.

Question 17

LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.In consolidation, the total amount of expenses related to Dean, and to LaFevor's acquisition of Dean, for 2022 is determined to be

A)$180,000.
B)$234,000.
C)$325,000.
D)$333,750.
E)$546,000.

Question 18

Dunne Inc. bought 65% of the outstanding common stock of Hardy Inc. in an acquisition that resulted in the recognition of goodwill. Hardy owned a piece of land that cost $375,000 but was worth $700,000 at the date of acquisition. What value would be attributed to this land in a consolidated balance sheet at the date of acquisition?

A)$245,000.
B)$325,000.
C)$375,000.
D)$455,000.
E)$700,000.

Question 19

When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What is the total amount of excess land allocation at the acquisition date?

A)$0.
B)$40,000.
C)$50,000.
D)$60,000.
E)$75,000.

Question 20

Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace's net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the dollar amount of Wallace Corp.'s net assets that would be represented in a consolidated balance sheet prepared at the date of acquisition?

A)$1,575,000.
B)$1,800,000.
C)$1,900,000.
D)$2,100,000.
E)$2,400,000.

Question 21

Scott Co. acquired 70% of Gregg Co. for $525,000 on December 31, 2019 when Gregg's book value was $580,000. The Gregg stock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life)that was undervalued in the financial records by $170,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid. What is the noncontrolling interest's share of the subsidiary's net income for the year ended December 31, 2020 and what is the ending balance of the noncontrolling interest in the subsidiary at December 31, 2020?

A)$48,000 and $262,800.
B)$48,000 and $273,000.
C)$42,900 and $267,900.
D)$42,900 and $262,800.
E)$48,000 and $267,900.

Question 22

All of the following statements regarding the sale of subsidiary shares are true except which of the following?

A)The use of specific identification based on serial number is acceptable.
B)The use of the FIFO assumption is acceptable.
C)The use of the averaging assumption is acceptable.
D)The use of specific LIFO assumption is acceptable.
E)The parent company must determine whether consolidation is still appropriate for the remaining shares owned.

Question 23

In a step acquisition, which of the following statements is false?

A)The acquisition method views a step acquisition essentially the same as a single step acquisition.
B)Income from subsidiary is computed by applying a partial year for a new purchase acquired during the year.
C)Income from subsidiary is computed for the entire year for a new purchase acquired during the year.
D)Obtaining control through a step acquisition is a significant measurement event.
E)Pre-acquisition earnings are not included in the consolidated income statement.

Question 24

When a parent uses the acquisition method for business combinations and sells shares of its subsidiary, which of the following statements is false?

A)If majority control is still maintained, consolidated financial statements are still required.
B)If majority control is not maintained but significant influence exists, the equity method to account for the investment is still used but consolidated financial statements are not required.
C)If majority control is not maintained but significant influence exists, the equity method is still used to account for the investment and consolidated financial statements are still required.
D)If majority control is not maintained and significant influence no longer exists, a prospective change in accounting principle to the fair value method is required.
E)A gain or loss calculation must be prepared if control is lost.

Question 25

Brady, Inc., a calendar-year corporation, acquires 75% of Austin Company on September 1, 2019, and an additional 10% on January 1, 2020. Total annual amortization of $8,000 relates to the first acquisition. Austin reports the following figures for 2020: Without regard for this investment, Brady independently earns $375,000 in net income during 2020.All net income is earned evenly throughout the year.What is the controlling interest in consolidated net income for 2020?

A)$464,250.
B)$474,450.
C)$481,250.
D)$492,000.
E)$500,000.

Question 26

Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?

A)The parent recognizes a larger percent of subsidiary income.
B)A step acquisition resulting in control may result in a parent recognizing a gain on revaluation.
C)The book value of the subsidiary will increase.
D)The parent's percent ownership in subsidiary will increase.
E)Noncontrolling interest in subsidiary's net income will decrease.

Question 27

Which of the following statements is true regarding the sale of subsidiary shares when using the acquisition method for accounting for business combinations?

A)If control continues, the difference between selling price and acquisition value is recorded as a realized gain or loss.
B)If control continues, the difference between selling price and acquisition value is an unrealized gain or loss.
C)If control continues, the difference between selling price and carrying value is recorded as an adjustment to additional paid-in capital.
D)If control continues, the difference between selling price and carrying value is recorded as a realized gain or loss.
E)If control continues, the difference between selling price and carrying value is recorded as an adjustment to retained earnings.

Question 28

On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows: On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What is consolidated stockholders' equity at January 2, 2019?

A)$112,000.
B)$133,000.
C)$168,000.
D)$182,000.
E)$203,000.

Question 29

When a parent uses the equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is false at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

A)Parent company net income equals controlling interest in consolidated net income.
B)Parent company retained earnings equals consolidated retained earnings.
C)Parent company total assets equals consolidated total assets.
D)Parent company dividends equals consolidated dividends.
E)Goodwill is not recorded on the parent's books.

Question 30

When a parent uses the partial equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

A)Parent company net income equals consolidated net income.
B)Parent company retained earnings equals consolidated retained earnings.
C)Parent company total assets equals consolidated total assets.
D)Parent company dividends equal consolidated dividends.
E)Goodwill is recorded on the parent's books.

Question 31

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?

A)Pre-acquisition earnings are deducted from consolidated retained earnings.
B)Pre-acquisition earnings are added to consolidated revenues and expenses.
C)Pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity.
D)Pre-acquisition earnings are added to the beginning consolidated stockholders' equity.
E)Pre-acquisition earnings are excluded from the consolidated income statement.

Question 32

When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true?

A)Income from subsidiary is not recognized until there is an entire year of consolidated operations.
B)Income from subsidiary is recognized from date of acquisition to year-end.
C)Excess cost over acquisition value is recognized at the beginning of the fiscal year.
D)No goodwill can be recognized.
E)Income from subsidiary is recognized for the entire year.

Question 33

On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows: On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What is the amount attributable to consolidated noncurrent assets at January 2, 2019?

A)$195,000.
B)$192,200.
C)$186,600.
D)$181,000.
E)$169,800.

Question 34

Scott Co. acquired 70% of Gregg Co. for $525,000 on December 31, 2019 when Gregg's book value was $580,000. The Gregg stock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life)that was undervalued in the financial records by $170,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid. What amount of consolidated net income for 2020 is attributable to Scott's controlling interest?

A)$580,000.
B)$668,200.
C)$680,100.
D)$692,000.
E)$723,000.

Question 35

Jax Company used the acquisition method when it acquired its investment in Saxton Company. Jax now sells some of its shares of Saxton such that neither control nor significant influence exists. Which of the following statements is true?

A)The difference between selling price and acquisition value is recorded as a realized gain or loss.
B)The difference between selling price and acquisition value is recorded as an unrealized gain or loss.
C)The difference between selling price and carrying value is recorded as a realized gain or loss.
D)The difference between selling price and carrying value is recorded as an unrealized gain or loss.
E)The difference between selling price and carrying value is recorded as an adjustment to retained earnings.

Question 36

On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows: On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What amount represents consolidated current assets at January 2, 2019?

A)$127,000.
B)$129,800.
C)$143,800.
D)$148,000.
E)$135,400.

Question 37

When a parent uses the initial value method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

A)Parent company net income equals consolidated net income.
B)Parent company retained earnings equals consolidated retained earnings.
C)Parent company total assets equals consolidated total assets.
D)Parent company dividends equal consolidated dividends.
E)Goodwill is recorded on the parent's books.

Question 38

In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

A)Fair value based on stock trades of the acquired company.
B)Subsidiary cash flows discounted to present value.
C)Book value of subsidiary net assets.
D)Projections of residual income.
E)Consideration transferred by the parent company that implies a total subsidiary value.

Question 39

On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows: On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What are the total consolidated current liabilities at January 2, 2019?

A)$53,200.
B)$56,000.
C)$64,400.
D)$42,000.
E)$70,000.

Question 40

Scott Co. acquired 70% of Gregg Co. for $525,000 on December 31, 2019 when Gregg's book value was $580,000. The Gregg stock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life)that was undervalued in the financial records by $170,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid. What is the consolidated balance of the Equipment account at December 31, 2020?

A)$814,000.
B)$821,000.
C)$831,000.
D)$797,000.
E)$661,000.

Question 41

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Patent account?

A)$7,000.
B)$6,300.
C)$11,000.
D)$9,900.
E)No adjustment is necessary.

Question 42

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Buildings account?

A)$1,620 increase.
B)$1,620 decrease.
C)$1,800 increase.
D)$1,800 decrease.
E)No adjustment is necessary.

Question 43

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute Pell's investment account balance in Demers at December 31, 2020.

A)$577,200.
B)$604,000.
C)$592,800.
D)$632,800.
E)$572,000.

Question 44

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Equipment account?

A)$4,000 increase.
B)$4,000 decrease.
C)$3,600 increase.
D)$3,600 decrease.
E)No adjustment is necessary.

Question 45

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Buildings account?

A)$1,440 increase.
B)$1,440 decrease.
C)$1,600 increase.
D)$1,600 decrease.
E)No adjustment is necessary.

Question 46

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Buildings account?

A)$2,000 increase.
B)$2,000 decrease.
C)$1,800 increase.
D)$1,800 decrease.
E)No change.

Question 47

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute Pell's equity income from Demers for the year ended December 31, 2020.

A)$90,400.
B)$89,000.
C)$50,400.
D)$56,000.
E)$96,000.

Question 48

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Land account?

A)$7,000 increase.
B)$7,000 decrease.
C)$6,300 increase.
D)$6,300 decrease.
E)No adjustment is necessary.

Question 49

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute Pell's equity income from Demers for the year ended December 31, 2019.

A)$74,400.
B)$73,000.
C)$42,400.
D)$41,000.
E)$80,000.

Question 50

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute Pell's Investment in Demers account balance at December 31, 2019.

A)$580,000.
B)$574,400.
C)$548,000.
D)$542,400.
E)$541,000.

Question 51

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Equipment account?

A)$3,000 increase.
B)$3,000 decrease.
C)$2,700 increase.
D)$2,700 decrease.
E)No adjustment is necessary.

Question 52

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.The acquisition value attributable to the noncontrolling interest at January 1, 2019 is:

A)$23,400.
B)$24,000.
C)$24,900.
D)$26,000.
E)$20,000.

Question 53

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Land account?

A)$7,000 decrease.
B)$7,000 increase.
C)$6,300 increase.
D)$6,300 decrease.
E)No adjustment is necessary.

Question 54

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Land account?

A)$8,000 decrease.
B)$7,000 increase.
C)$6,300 increase.
D)$6,300 decrease.
E)No adjustment is necessary.

Question 55

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Equipment account?

A)$2,000 increase.
B)$2,000 decrease.
C)$1,800 increase.
D)$1,800 decrease.
E)No adjustment is necessary.

Question 56

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2019.

A)$20,000.
B)$12,000.
C)$18,600.
D)$10,600.
E)$14,400.

Question 57

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what net adjustment is necessary for Hogan's Patent account?

A)$5,600.
B)$8,800.
C)$7,000.
D)$7,700.
E)No adjustment is necessary.

Question 58

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute Pell's investment account balance in Demers at December 31, 2021.

A)$639,000.
B)$643,200.
C)$763,200.
D)$676,000.
E)$620,000.

Question 59

McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what net adjustment is necessary for Hogan's Patent account?

A)$4,200.
B)$5,500.
C)$8,000.
D)$6,600.
E)No adjustment is necessary.

Question 60

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute Pell's equity income from Demers for the year ended December 31, 2021.

A)$50,400.
B)$56,000.
C)$98,400.
D)$97,000.
E)$104,000.

Question 61

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2021?

A)$48,000.
B)$56,000.
C)$98,400.
D)$97,000.
E)$50,400.

Question 62

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2020.

A)$18,400.
B)$14,400.
C)$22,600.
D)$24,000.
E)$12,600.

Question 63

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2020.

A)$107,000.
B)$126,000.
C)$109,200.
D)$149,600.
E)$148,200.

Question 64

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.What is the consolidated balance of the Equity in Demers Earnings account at December 31, 2021.

A)$0.
B)$56,000.
C)$98,400.
D)$97,000.
E)$104,000.

Question 65

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2021.

A)$20,400.
B)$24,600.
C)$26,000.
D)$14,000.
E)$12,600.

Question 66

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute Pell's Investment in Demers at December 31, 2021.

A)$592,400.
B)$500,000.
C)$625,000.
D)$676,000.
E)$620,000.

Question 67

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute the noncontrolling interest in Demers at December 31, 2019.

A)$135,600.
B)$80,000.
C)$117,000.
D)$100,000.
E)$110,600.

Question 68

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2020?

A)$90,400.
B)$40,000.
C)$89,000.
D)$50,400.
E)$56,000.

Question 69

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2019.

A)$12,000.
B)$10,600.
C)$18,600.
D)$20,000.
E)$14,400.

Question 70

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute Pell's Investment in Demers at December 31, 2019.

A)$500,000.
B)$574,400.
C)$625,000.
D)$542,400.
E)$532,000.

Question 71

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute the noncontrolling interest in Demers at December 31, 2020.

A)$126,000.
B)$106,000.
C)$109,200.
D)$149,600.
E)$148,200.

Question 72

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2021.

A)$24,600.
B)$14,000.
C)$26,000.
D)$20,400.
E)$12,600.

Question 73

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2021.

A)$107,800.
B)$140,000.
C)$165,200.
D)$160,800.
E)$146,800.

Question 74

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2020.

A)$18,400.
B)$14,000.
C)$22,600.
D)$24,000.
E)$12,600.

Question 75

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute the noncontrolling interest in Demers at December 31, 2021.

A)$107,800.
B)$140,000.
C)$80,000.
D)$50,000.
E)$160,800.

Question 76

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2019?

A)$32,000.
B)$74,400.
C)$73,000.
D)$42,400.
E)$41,000.

Question 77

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the partial equity method is applied.Compute Pell's Investment in Demers at December 31, 2019.

A)$625,000.
B)$574,400.
C)$548,000.
D)$542,400.
E)$532,000.

Question 78

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the initial value method is applied.Compute Pell's Investment in Demers at December 31, 2020.

A)$625,000.
B)$664,800.
C)$592,400.
D)$500,000.
E)$572,000.

Question 79

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2019.

A)$135,600.
B)$137,000.
C)$112,000.
D)$100,000.
E)$118,600.

Question 80

Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows: Assume the equity method is applied.What is the consolidated balance of the Investment in Demers account at December 31, 2021.

A)$639,000.
B)$643,200.
C)$763,200.
D)$0.
E)$620,000.