Deck 5: Consolidated Financial Statements: Outside Interests

Question 1

A company pays $70 million in cash to acquire 70% of the voting stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $25 million, and the book value of the acquired company is $20 million. There are no revaluations of the acquired company's identifiable net assets. Goodwill to the noncontrolling interest, following U.S. GAAP, is:

A) $0
B) $19 million
C) $22.5 million
D) $15 million

Answer 1

$19 million

Question 2

A company pays $95,000 in cash and stock to acquire 80% of the voting stock of another company. The fair value of the noncontrolling interest is $21,250. The book value of the acquired company is $66,250, and no revaluations of acquired identifiable net assets are necessary. What percentage of total goodwill is allocated to the controlling interest, following U.S. GAAP?

A) 84%
B) 86%
C) 80%
D) 82%

Answer 2

84%

Question 3

Pratt Company buys 65% of the voting stock of Sully Corporation at a 40% premium over the market price of Sully's stock. Which statement is most likely to be true concerning the goodwill resulting from this acquisition?

A) Goodwill is allocated 60% to Pratt and 40% to the noncontrolling interest in Sully.
B) All goodwill is allocated to the noncontrolling interest in Sully.
C) Goodwill is allocated 65% to Pratt and 35% to the noncontrolling interest in Sully.
D) The goodwill allocation to Pratt is more than 65% of the total goodwill.

Answer 3

The goodwill allocation to Pratt is more than 65% of the total goodwill.

Question 4

A company pays $40,000 in cash and stock to acquire 65% of the voting stock of another company. The fair value of the 35% noncontrolling interest in the acquired company is $22,000. The book value of the acquired company is $25,000. At the date of acquisition, the acquired company's plant assets are overvalued by $6,000 and it has previously unreported identifiable intangible assets valued at $10,000. What is the total amount of goodwill recognized for this acquisition, following U.S. GAAP?

A) $37,000
B) $11,000
C) $33,000
D) $21,000

Question 5

Use the following information to answer Questions bellow
A parent acquired 90% of the voting stock of a subsidiary for $20,000. The fair value of the noncontrolling interest was $2,000. The subsidiary's book value at the date of acquisition was $1,000. Following is revaluation information for the subsidiary's identifiable net assets at the date of acquisition:
$$\begin{array} { | l | c | } \hline & \text { Fair Value - Book Value } \\\hline \text { Inventories } & \$ \{ 400 \} \\\hline \text { Equipment } & \{ 10,000 \} \\\hline \text { Identifiable intangibles } & 16,000 \\\hline\end{array}$$

-What is total consolidated goodwill at the date of acquisition, following U.S. GAAP?

A) $14,400
B) $13,400
C) $15,400
D) $16,400

Question 6

Use the following information to answer Questions bellow
A parent acquired 90% of the voting stock of a subsidiary for $20,000. The fair value of the noncontrolling interest was $2,000. The subsidiary's book value at the date of acquisition was $1,000. Following is revaluation information for the subsidiary's identifiable net assets at the date of acquisition:
$$\begin{array} { | l | c | } \hline & \text { Fair Value - Book Value } \\\hline \text { Inventories } & \$ \{ 400 \} \\\hline \text { Equipment } & \{ 10,000 \} \\\hline \text { Identifiable intangibles } & 16,000 \\\hline\end{array}$$

-What is the amount of consolidated goodwill attributed to the noncontrolling interest at the date of acquisition, following U.S. GAAP?

A) $0
B) $1,340
C) $1,540
D) $1,440

Question 7

Use the following information to answer bellow Questions
A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $19,000, and the book value of the acquired company is $15,000. The subsidiary's net assets are reported at amounts approximating fair value at the date of acquisition, except that its plant assets are overvalued by $25,000, its reported license agreements are undervalued by $30,000, and it has previously unreported identifiable intangible assets with a fair value of $50,000.

-What is the total reported goodwill on this acquisition, following U.S. GAAP?

A) $102,000
B) $119,000
C) $ 50,000
D) $ 69,000

Question 8

Use the following information to answer bellow Questions
A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $19,000, and the book value of the acquired company is $15,000. The subsidiary's net assets are reported at amounts approximating fair value at the date of acquisition, except that its plant assets are overvalued by $25,000, its reported license agreements are undervalued by $30,000, and it has previously unreported identifiable intangible assets with a fair value of $50,000.

-What is the goodwill to the noncontrolling interest, following U.S. GAAP?

A) $ 7,500
B) $10,350
C) $ 8,500
D) $0

Question 9

Use the following information to answer bellow Questions
A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $19,000, and the book value of the acquired company is $15,000. The subsidiary's net assets are reported at amounts approximating fair value at the date of acquisition, except that its plant assets are overvalued by $25,000, its reported license agreements are undervalued by $30,000, and it has previously unreported identifiable intangible assets with a fair value of $50,000.

-At what value does the noncontrolling interest appear on the date-of-acquisition consolidated balance sheet, following U.S. GAAP?

A) $18,000
B) $10,500
C) $ 2,250
D) $19,000

Question 10

Use the following information to answer bellow Questions
A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $19,000, and the book value of the acquired company is $15,000. The subsidiary's net assets are reported at amounts approximating fair value at the date of acquisition, except that its plant assets are overvalued by $25,000, its reported license agreements are undervalued by $30,000, and it has previously unreported identifiable intangible assets with a fair value of $50,000.

-At what amount is goodwill valued at the date of acquisition, following the alternative method allowed by IFRS?

A) $69,000
B) $50,000
C) $60,500
D) $0

Question 11

Use the following information to answer bellow Questions
A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $19,000, and the book value of the acquired company is $15,000. The subsidiary's net assets are reported at amounts approximating fair value at the date of acquisition, except that its plant assets are overvalued by $25,000, its reported license agreements are undervalued by $30,000, and it has previously unreported identifiable intangible assets with a fair value of $50,000.

-At what amount is the noncontrolling interest valued at the date of acquisition, following the alternative method allowed by IFRS?

A) $18,000
B) $10,500
C) $ 2,250
D) $19,000

Question 12

How is the noncontrolling interest in a subsidiary valued at the date of acquisition, following U.S. GAAP?

A) Fair value at the date of acquisition
B) The noncontrolling interest's share of the fair value of the subsidiary's identifiable net assets at the date of acquisition
C) The noncontrolling interest's share of the book value of the subsidiary at the date of acquisition
D) The noncontrolling interest's share of the book value of the subsidiary at the date of acquisition plus its share of date-of-acquisition goodwill

Question 13

Following U.S. GAAP, a 20% noncontrolling interest in a subsidiary is reported on the consolidated balance sheet at the date of acquisition at what amount?

A) 20% of the subsidiary's book value
B) 20% of the fair value of the subsidiary's identifiable net assets
C) 20% of the acquisition price paid by the parent
D) The fair value of the noncontrolling interest

Question 14

What is the preferred way to value the noncontrolling interest in a subsidiary at the date of acquisition, per U.S. GAAP?

A) Level 3 measurement of the expected present value of future dividends paid to the noncontrolling interest
B) The stock price of noncontrolling shares in an active market
C) The appraised market value of the noncontrolling interest's share of the subsidiary's assets less liabilities
D) The stock price of noncontrolling shares in an active market, discounted for lack of control

Question 15

Noncontrolling interest is reported on the consolidated balance sheet as:

A) A noncurrent tangible asset account
B) An identifiable intangible asset account
C) A noncurrent liability account
D) An equity account

Question 16

Noncontrolling interest is reported in the equity section of the consolidated balance sheet:

A) In separate lines representing the noncontrolling interest's share of the consolidated entity's shareholders' equity accounts (capital stock, retained earnings, etc.)
B) In two separate lines representing the noncontrolling interest's share of (1) the consolidated entity's stock accounts and (2) retained earnings and accumulated other comprehensive income accounts
C) As one line as a component of consolidated shareholders' equity
D) As one line, as a contra to total consolidated shareholders' equity

Question 17

A parent acquires 80% of the stock of its subsidiary. Following U.S. GAAP, on the consolidated balance sheet less than 20% of the total goodwill will likely be allocated to the noncontrolling interest because:

A) U.S. GAAP allows companies the option of only recognizing the parent's share of goodwill.
B) The price per share of the noncontrolling interest's stock reflects a premium over the price per share paid by the parent.
C) U.S. GAAP does not allow goodwill to be allocated to the noncontrolling interest.
D) The parent usually pays a higher price per share because it acquires a controlling interest.

Question 18

A parent owns 75% of a subsidiary's voting stock. On the consolidated balance sheet at the date of acquisition, at what value are consolidated plant assets reported?

A) The parent's book value of plant assets plus 75% of the subsidiary's fair value of plant assets.
B) The parent's fair value of plant assets plus the subsidiary's fair value of plant assets.
C) The parent's book value of plant assets plus the subsidiary's fair value of plant assets.
D) The parent's book value of plant assets plus 75% of the subsidiary's book value of plant assets.

Question 19

Purus Corporation has a financial relationship with Swift Financial Inc. Although Purus owns none of Swift's voting stock, analysis determines that Swift is a variable interest entity and Purus is its primary beneficiary. How is the noncontrolling interest in Swift reported on Purus' consolidated balance sheet at the date Purus first consolidates it, assuming Swift and Purus were already under common control?

A) In the equity section of the consolidated balance sheet, at Swift's book value.
B) As an investment account in the asset section of Purus' consolidated balance sheet, at Swift's book value.
C) In the equity section of the consolidated balance sheet, at Swift's fair value.
D) As an investment account in the asset section of Purus' consolidated balance sheet, at Swift's fair value.

Question 20

Purus Corporation has a financial relationship with Swift Financial Inc. Although Purus owns none of Swift's voting stock, analysis determines that Swift is a variable interest entity and Purus is its primary beneficiary. How is the noncontrolling interest in Swift reported on Purus' consolidated balance sheet at the date Purus first consolidates it, assuming Purus and Swift were not previously under common control?

A) In the equity section of the consolidated balance sheet, at Swift's book value.
B) As an investment account in the asset section of Purus' consolidated balance sheet, at Swift's book value.
C) In the equity section of the consolidated balance sheet, at Swift's fair value.
D) As an investment account in the asset section of Purus' consolidated balance sheet, at Swift's fair value.

Question 21

Seaton Company is a variable interest entity. Pracker Company has no equity ownership in Seaton, but is its primary beneficiary. Pracker and Seaton were not previously under common control. Which statement is true at the date Pracker becomes Seaton's primary beneficiary?

A) Pracker does not consolidate Seaton.
B) There is no consolidated noncontrolling interest.
C) Consolidated noncontrolling interest equals the book value of Seaton's net assets.
D) Consolidated noncontrolling interest equals the fair value of Seaton's net assets.

Question 22

Seaton Company is a variable interest entity. Pracker Company has no equity ownership in Seaton, but is its primary beneficiary. Pracker and Seaton were previously under common control. Which statement is true at the date Pracker becomes Seaton's primary beneficiary?

A) Pracker does not consolidate Seaton.
B) There is no consolidated noncontrolling interest.
C) Consolidated noncontrolling interest equals the book value of Seaton's net assets.
D) Consolidated noncontrolling interest equals the fair value of Seaton's net assets.

Question 23

A subsidiary has a 20% noncontrolling interest. At the date of acquisition, eliminating entry (E) recognizes what part of the noncontrolling interest?

A) The noncontrolling interest's share of the subsidiary's book value
B) The fair value of the noncontrolling interest
C) The noncontrolling interest's share of the revaluations of the subsidiary's identifiable net assets
D) The noncontrolling interest's share of the subsidiary's fair value

Question 24

A subsidiary has a 20% noncontrolling interest. At the date of acquisition, eliminating entry (R) recognizes what part of the noncontrolling interest?

A) The noncontrolling interest's share of the subsidiary's book value
B) The noncontrolling interest's share of the revaluations of the subsidiary's net assets
C) The noncontrolling interest's share of the revaluations of the subsidiary's identifiable net assets
D) The noncontrolling interest's share of the subsidiary's fair value

Question 25

Use the following information to answer bellow Questions
Protec Company acquired 75% of Sussex Company's voting stock for $30,000 in cash. The noncontrolling interest had an estimated fair value of $9,500. Some of Sussex's identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
$$\begin{array} { | l | r | r | } \hline & \text { Book Value } & \text { Fair Value } \\\hline \text { Property, net } & \$ 2,000 & \$ 7,000 \\\hline \text { Identifiable int angibles } & 0 & 20,000 \\\hline\end{array}$$ Sussex's total shareholders' equity at the date of acquisition was as follows:
$$\begin{array} { l r } \text { Capital stock } & \$ 1,000 \\\text { Retained earnings } & 3,000 \\\text { Accumulated other comprehensive income } & 100 \\\text { Total } & \$ 4,100\end{array}$$

-On a date-of-acquisition consolidation working paper, eliminating entry (E) credits Investment in Sussex in the amount of

A) $ 4,100
B) $ 3,075
C) $ 7,500
D) $21,825

Question 26

Use the following information to answer bellow Questions
Protec Company acquired 75% of Sussex Company's voting stock for $30,000 in cash. The noncontrolling interest had an estimated fair value of $9,500. Some of Sussex's identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
$$\begin{array} { | l | r | r | } \hline & \text { Book Value } & \text { Fair Value } \\\hline \text { Property, net } & \$ 2,000 & \$ 7,000 \\\hline \text { Identifiable int angibles } & 0 & 20,000 \\\hline\end{array}$$ Sussex's total shareholders' equity at the date of acquisition was as follows:
$$\begin{array} { l r } \text { Capital stock } & \$ 1,000 \\\text { Retained earnings } & 3,000 \\\text { Accumulated other comprehensive income } & 100 \\\text { Total } & \$ 4,100\end{array}$$

-On a date-of-acquisition consolidation working paper, eliminating entry (R) credits Investment in Sussex in the amount of

A) $18,750
B) $25,000
C) $26,925
D) $29,150

Question 27

Use the following information to answer bellow Questions
Polypipe Company acquired 80% of Svedex Company's voting stock for $95,000 in cash. The noncontrolling interest had an estimated fair value of $20,000. Some of Svedex's identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
$$\begin{array} { | l | r | r | } \hline & \text { Book Value } & { \text { Fair Value } } \\\hline \text { Property, net } & \$ 6,000 & \$ 4,000 \\\hline \text { Licensing ag reements } & 1,000 & 25,000 \\\hline\end{array}$$ Svedex's total shareholders' equity at the date of acquisition was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 5,000 \\\text { Retained deficit } & (400) \\\text { Treasury stock } & \underline{(\$ 50)} \\\text { Total } & \$ 4,550\end{array}$


-Total goodwill from this acquisition is:

A) $84,450
B) $68,450
C) $87,550
D) $88,450

Question 28

Use the following information to answer bellow Questions
Polypipe Company acquired 80% of Svedex Company's voting stock for $95,000 in cash. The noncontrolling interest had an estimated fair value of $20,000. Some of Svedex's identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
$$\begin{array} { | l | r | r | } \hline & \text { Book Value } & { \text { Fair Value } } \\\hline \text { Property, net } & \$ 6,000 & \$ 4,000 \\\hline \text { Licensing ag reements } & 1,000 & 25,000 \\\hline\end{array}$$ Svedex's total shareholders' equity at the date of acquisition was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 5,000 \\\text { Retained deficit } & (400) \\\text { Treasury stock } & \underline{(\$ 50)} \\\text { Total } & \$ 4,550\end{array}$


-Goodwill allocated to the noncontrolling interest in Svedex is:

A) $0
B) $14,690
C) $10,690
D) $13,790

Question 29

Date-of-acquisition eliminating entries for questions are:
[E]
$\begin{array} { | l | l | r | r | } \hline \text { Capital stock } & & 5,000 & \\\hline & \text { Retained deficit } & & 400 \\\hline & \text { Treasury stock } & & 50 \\\hline & \text { Investment in Svedex } & & 3,640 \\\hline & \text { Noncontrolling interest in Svedex } & & 910 \\\hline\end{array}$

[R]
$\begin{array} { | l | l | r | r | } \hline \text { Licensing agreements } & & 24,000 & \\\hline \text { Goodwill } & & 88,450 & \\\hline & \text { Property, net } & & 2,000 \\\hline & \text { Investment in Syedex } & & 91,360 \\\hline & \text { Noncontrolling interest in Syedex } & & 19,090 \\\hline\end{array}$ Use the following information to answer questions 31 and 32:
Pomery Company has a financial relationship with Styro Inc., a separate legal entity, but does not own any of Styro's voting stock. On January 1, 2021, Pomery determines that Styro is a variable interest entity and that Pomery is Styro's prime beneficiary. Sparkle's shareholders' equity on January 1, 2021 is as follows:
Styro's net assets are reported at values approximating fair value, except that its receivables are overvalued by $3,000 and its warranty obligations are undervalued by $1,000. The fair value of Styro at January 1, 2021 is $15,000. Pomery and Styro were not under common control prior to January 1, 2021.

-On a date-of-acquisition consolidation working paper, eliminating entry (E) credits Investment in Svedex in the amount of

A) $4,360
B) $3,640
C) $4,000
D) $3,980

Question 30

Date-of-acquisition eliminating entries for questions are:
[E]
$\begin{array} { | l | l | r | r | } \hline \text { Capital stock } & & 5,000 & \\\hline & \text { Retained deficit } & & 400 \\\hline & \text { Treasury stock } & & 50 \\\hline & \text { Investment in Svedex } & & 3,640 \\\hline & \text { Noncontrolling interest in Svedex } & & 910 \\\hline\end{array}$

[R]
$\begin{array} { | l | l | r | r | } \hline \text { Licensing agreements } & & 24,000 & \\\hline \text { Goodwill } & & 88,450 & \\\hline & \text { Property, net } & & 2,000 \\\hline & \text { Investment in Syedex } & & 91,360 \\\hline & \text { Noncontrolling interest in Syedex } & & 19,090 \\\hline\end{array}$ Use the following information to answer questions 31 and 32:
Pomery Company has a financial relationship with Styro Inc., a separate legal entity, but does not own any of Styro's voting stock. On January 1, 2021, Pomery determines that Styro is a variable interest entity and that Pomery is Styro's prime beneficiary. Sparkle's shareholders' equity on January 1, 2021 is as follows:
Styro's net assets are reported at values approximating fair value, except that its receivables are overvalued by $3,000 and its warranty obligations are undervalued by $1,000. The fair value of Styro at January 1, 2021 is $15,000. Pomery and Styro were not under common control prior to January 1, 2021.

-On a date-of-acquisition consolidation working paper, eliminating entry (R) credits the noncontrolling interest in Svedex in the amount of

A) $20,000
B) $15,450
C) $19,090
D) $18,600

Question 31

On a January 1, 2021 consolidation working paper, eliminating entry (E) credits the noncontrolling interest in Styro by:

A) $ 9,000
B) $0
C) $ 5,000
D) $13,000

Question 32

On a January 1, 2021 consolidation working paper, eliminating entry (R) has what effect on the noncontrolling interest in Styro?

A) Debit of $4,000
B) No effect
C) Credit of $6,000
D) Credit of $4,000

Question 33

Use the following information to answer bellow questions:
Posit Company has a financial relationship with Sparkle Inc., a separate legal entity, but does not own any of Sparkle's voting stock. On January 1, 2020, Posit determines that Sparkle is a variable interest entity and that Posit is Sparkle's prime beneficiary. Sparkle's shareholders' equity on January 1, 2020 is as follows:
Capital stock $3,000
Retained deficit (500)
Total $2,500
Sparkle's net assets are reported at values approximating fair value, but it has previously unreported identifiable intangible assets valued at $7,000. The fair value of Sparkle at January 1, 2020 is $16,000.

-Assume Posit and Sparkle were already under common control. On a January 1, 2020 consolidated balance sheet, goodwill is reported at:

A) $16,000
B) $10,000
C) $13,500
D) $0

Question 34

Use the following information to answer bellow questions:
Posit Company has a financial relationship with Sparkle Inc., a separate legal entity, but does not own any of Sparkle's voting stock. On January 1, 2020, Posit determines that Sparkle is a variable interest entity and that Posit is Sparkle's prime beneficiary. Sparkle's shareholders' equity on January 1, 2020 is as follows:
Capital stock $3,000
Retained deficit (500)
Total $2,500
Sparkle's net assets are reported at values approximating fair value, but it has previously unreported identifiable intangible assets valued at $7,000. The fair value of Sparkle at January 1, 2020 is $16,000.

-Assume Posit and Sparkle were already under common control. On a January 1, 2020 consolidated balance sheet, the noncontrolling interest in Sparkle is reported at:

A) $0
B) $ 2,500
C) $16,000
D) $ 8,000

Question 35

Use the following information to answer bellow questions:
Posit Company has a financial relationship with Sparkle Inc., a separate legal entity, but does not own any of Sparkle's voting stock. On January 1, 2020, Posit determines that Sparkle is a variable interest entity and that Posit is Sparkle's prime beneficiary. Sparkle's shareholders' equity on January 1, 2020 is as follows:
Capital stock $3,000
Retained deficit (500)
Total $2,500
Sparkle's net assets are reported at values approximating fair value, but it has previously unreported identifiable intangible assets valued at $7,000. The fair value of Sparkle at January 1, 2020 is $16,000.

-Assume Posit and Sparkle were not already under common control. On a January 1, 2020 consolidated balance sheet, goodwill is reported at:

A) $16,000
B) $ 9,500
C) $ 7,000
D) $ 6,500

Question 36

Use the following information to answer bellow questions:
Posit Company has a financial relationship with Sparkle Inc., a separate legal entity, but does not own any of Sparkle's voting stock. On January 1, 2020, Posit determines that Sparkle is a variable interest entity and that Posit is Sparkle's prime beneficiary. Sparkle's shareholders' equity on January 1, 2020 is as follows:
Capital stock $3,000
Retained deficit (500)
Total $2,500
Sparkle's net assets are reported at values approximating fair value, but it has previously unreported identifiable intangible assets valued at $7,000. The fair value of Sparkle at January 1, 2020 is $16,000.

-Assume Posit and Sparkle were not already under common control. On a January 1, 2020 consolidation working paper, eliminating entry (E) credits noncontrolling interest in Sparkle by:

A) $0
B) $ 2,500
C) $ 3,000
D) $16,000

Question 37

Use the following information to answer bellow questions:
Posit Company has a financial relationship with Sparkle Inc., a separate legal entity, but does not own any of Sparkle's voting stock. On January 1, 2020, Posit determines that Sparkle is a variable interest entity and that Posit is Sparkle's prime beneficiary. Sparkle's shareholders' equity on January 1, 2020 is as follows:
Capital stock $3,000
Retained deficit (500)
Total $2,500
Sparkle's net assets are reported at values approximating fair value, but it has previously unreported identifiable intangible assets valued at $7,000. The fair value of Sparkle at January 1, 2020 is $16,000.

-Assume Posit and Sparkle were not already under common control. On a January 1, 2020 consolidation working paper, eliminating entry (R) credits noncontrolling interest in Sparkle by:

A) $0
B) $ 7,000
C) $13,500
D) $16,000

Question 38

A consolidated balance sheet of a parent and its 90%-owned subsidiary reports retained earnings equal to:

A) Accumulated income attributable to the parent less accumulated dividends declared by the parent
B) Accumulated consolidated income less accumulated dividends declared by the parent
C) Accumulated separate income of the parent less accumulated dividends declared by the parent
D) Accumulated consolidated income less accumulated dividends declared by the parent and the subsidiary

Question 39

The consolidated financial statements of a parent and its 80%-owned subsidiary reports income to the noncontrolling interest

A) On the consolidated balance sheet, as a liability.
B) On the consolidated balance sheet, as one of the equity accounts.
C) On the consolidated income statement, as a deduction from consolidated income.
D) On the consolidated income statement, as an expense.

Question 40

A parent owns less than 100% of the voting stock of its subsidiary. On its consolidated income statement, the earnings per share number is calculated using which of the following amounts in the numerator?

A) Consolidated net income
B) Consolidated net income less consolidated dividends
C) Consolidated net income plus noncontrolling interest in net income
D) Consolidated net income less noncontrolling interest in net income

Question 41

Use the following information to answer bellow Questions
Provided are the consolidated trial balances of a parent and its less-than-wholly-owned subsidiary.
$$\begin{array} { | l | r | } \hline \text { Account } & \text { Dr (C) } \\\hline \text { Current assets } & \$ 4,000 \\\hline \text { Property, net } & 95,000 \\\hline \text { Intangible assets, net } & 15,000 \\\hline \text { Goodwill } & 100,000 \\\hline \text { Liabilities } & ( 180,140 ) \\\hline \text { Capital stod } & ( 10,000 ) \\\hline \text { Redained earnings, beginning } & ( 16,000 ) \\\hline \text { Accumulated other comprehen sive income, beginning } & ( 500 ) \\\hline \text { Noncontrolling interest } & ( 2,000 ) \\\hline \text { Dividends } & 500 \\\hline \text { Sales reverue } & ( 390,000 ) \\\hline \text { Cost of sales and operating expenses } & 385,000 \\\hline \text { Other comprehen sive income } & ( 1,000 ) \\\hline \text { Noncontrolling interest in net income } & 150 \\\hline \text { Noncontrolling interest in other comprehensive loss } & ( 10 ) \\\hline \text { Total } &\$\quad 0 \\\hline\end{array}$$

-On the consolidated statement of income and comprehensive income, consolidated net income for the year is:

A) $6,000
B) $4,850
C) $5,150
D) $5,000

Question 42

Use the following information to answer bellow Questions
Provided are the consolidated trial balances of a parent and its less-than-wholly-owned subsidiary.
$$\begin{array} { | l | r | } \hline \text { Account } & \text { Dr (C) } \\\hline \text { Current assets } & \$ 4,000 \\\hline \text { Property, net } & 95,000 \\\hline \text { Intangible assets, net } & 15,000 \\\hline \text { Goodwill } & 100,000 \\\hline \text { Liabilities } & ( 180,140 ) \\\hline \text { Capital stod } & ( 10,000 ) \\\hline \text { Redained earnings, beginning } & ( 16,000 ) \\\hline \text { Accumulated other comprehen sive income, beginning } & ( 500 ) \\\hline \text { Noncontrolling interest } & ( 2,000 ) \\\hline \text { Dividends } & 500 \\\hline \text { Sales reverue } & ( 390,000 ) \\\hline \text { Cost of sales and operating expenses } & 385,000 \\\hline \text { Other comprehen sive income } & ( 1,000 ) \\\hline \text { Noncontrolling interest in net income } & 150 \\\hline \text { Noncontrolling interest in other comprehensive loss } & ( 10 ) \\\hline \text { Total } &\$\quad 0 \\\hline\end{array}$$

-On the consolidated balance sheet, consolidated retained earnings at the end of the year is:

A) $20,350
B) $16,000
C) $20,500
D) $20,850

Question 43

Use the following information to answer bellow Questions
Provided are the consolidated trial balances of a parent and its less-than-wholly-owned subsidiary.
$$\begin{array} { | l | r | } \hline \text { Account } & \text { Dr (C) } \\\hline \text { Current assets } & \$ 4,000 \\\hline \text { Property, net } & 95,000 \\\hline \text { Intangible assets, net } & 15,000 \\\hline \text { Goodwill } & 100,000 \\\hline \text { Liabilities } & ( 180,140 ) \\\hline \text { Capital stod } & ( 10,000 ) \\\hline \text { Redained earnings, beginning } & ( 16,000 ) \\\hline \text { Accumulated other comprehen sive income, beginning } & ( 500 ) \\\hline \text { Noncontrolling interest } & ( 2,000 ) \\\hline \text { Dividends } & 500 \\\hline \text { Sales reverue } & ( 390,000 ) \\\hline \text { Cost of sales and operating expenses } & 385,000 \\\hline \text { Other comprehen sive income } & ( 1,000 ) \\\hline \text { Noncontrolling interest in net income } & 150 \\\hline \text { Noncontrolling interest in other comprehensive loss } & ( 10 ) \\\hline \text { Total } &\$\quad 0 \\\hline\end{array}$$

-On the consolidated balance sheet, consolidated accumulated other comprehensive income at the end of the year is:

A) $ 500
B) $1,510
C) $1,490
D) $1,500

Question 44

Use the following information to answer bellow Questions
Provided are the consolidated trial balances of a parent and its less-than-wholly-owned subsidiary.
$$\begin{array} { | l | r | } \hline \text { Account } & \text { Dr (C) } \\\hline \text { Current assets } & \$ 4,000 \\\hline \text { Property, net } & 95,000 \\\hline \text { Intangible assets, net } & 15,000 \\\hline \text { Goodwill } & 100,000 \\\hline \text { Liabilities } & ( 180,140 ) \\\hline \text { Capital stod } & ( 10,000 ) \\\hline \text { Redained earnings, beginning } & ( 16,000 ) \\\hline \text { Accumulated other comprehen sive income, beginning } & ( 500 ) \\\hline \text { Noncontrolling interest } & ( 2,000 ) \\\hline \text { Dividends } & 500 \\\hline \text { Sales reverue } & ( 390,000 ) \\\hline \text { Cost of sales and operating expenses } & 385,000 \\\hline \text { Other comprehen sive income } & ( 1,000 ) \\\hline \text { Noncontrolling interest in net income } & 150 \\\hline \text { Noncontrolling interest in other comprehensive loss } & ( 10 ) \\\hline \text { Total } &\$\quad 0 \\\hline\end{array}$$

-The consolidated trial balance reports consolidated other comprehensive income, but a noncontrolling interest in other comprehensive loss. What is the reason for the discrepancy?

A) The noncontrolling interest is subtracted from consolidated income to obtain income to the controlling interest.
B) The subsidiary declared dividends in excess of reported income for the year.
C) The subsidiary reports an other comprehensive loss for the year, while the parent reports other comprehensive income for the year.
D) The revaluation write-offs of identifiable intangible assets previously unreported by the subsidiary are in excess of the subsidiary's reported comprehensive income.

Question 45

Use the following information to answer bellow Questions
On January 1, 2020, Portal Corporation acquired 90% of Squaredeal Company's voting stock for $62,000 in cash and stock. The noncontrolling interest in Squaredeal had a fair value of $5,000. The entire excess of fair value over book value was attributable to goodwill, which is not impaired in 2020. It is now December 31, 2020, and Squaredeal's trial balance is as follows:
$$\begin{array} { | l | c | } \hline \text { Squaredeal's trial balance, December 31, 2020 } & \text { Dr (Cr) } \\\hline \text { Current assets } & \$ 3,000 \\\hline \text { Plant assets, net } & 97,000 \\\hline \text { Liabilities } & ( 59,000 ) \\\hline \text { Capital stock } & ( 12,700 ) \\\hline \text { Retained earnings, beginning } & ( 25,300 ) \\\hline \text { Dividends } & 1,000 \\\hline \text { Sales revenue } & ( 280,000 ) \\\hline \text { Cost of sales and operating expenses } & 276,000 \\\hline \text { Total } & \$\quad0 \\\hline\end{array}$$ Portal uses the complete equity method to report its investment in Squaredeal on its own books.

-On the 2020 consolidation working paper, eliminating entry (E) credits the noncontrolling interest in Squaredeal by:

A) $1,270
B) $2,530
C) $3,800
D) $3,840

Question 46

Use the following information to answer bellow Questions
On January 1, 2020, Portal Corporation acquired 90% of Squaredeal Company's voting stock for $62,000 in cash and stock. The noncontrolling interest in Squaredeal had a fair value of $5,000. The entire excess of fair value over book value was attributable to goodwill, which is not impaired in 2020. It is now December 31, 2020, and Squaredeal's trial balance is as follows:
$$\begin{array} { | l | c | } \hline \text { Squaredeal's trial balance, December 31, 2020 } & \text { Dr (Cr) } \\\hline \text { Current assets } & \$ 3,000 \\\hline \text { Plant assets, net } & 97,000 \\\hline \text { Liabilities } & ( 59,000 ) \\\hline \text { Capital stock } & ( 12,700 ) \\\hline \text { Retained earnings, beginning } & ( 25,300 ) \\\hline \text { Dividends } & 1,000 \\\hline \text { Sales revenue } & ( 280,000 ) \\\hline \text { Cost of sales and operating expenses } & 276,000 \\\hline \text { Total } & \$\quad0 \\\hline\end{array}$$ Portal uses the complete equity method to report its investment in Squaredeal on its own books.

-On the 2020 consolidation working paper, eliminating entry (R) recognizes goodwill in the amount of:

A) $33,000
B) $29,000
C) $27,800
D) $41,700

Question 47

Use the following information to answer bellow Questions
On January 1, 2020, Portal Corporation acquired 90% of Squaredeal Company's voting stock for $62,000 in cash and stock. The noncontrolling interest in Squaredeal had a fair value of $5,000. The entire excess of fair value over book value was attributable to goodwill, which is not impaired in 2020. It is now December 31, 2020, and Squaredeal's trial balance is as follows:
$$\begin{array} { | l | c | } \hline \text { Squaredeal's trial balance, December 31, 2020 } & \text { Dr (Cr) } \\\hline \text { Current assets } & \$ 3,000 \\\hline \text { Plant assets, net } & 97,000 \\\hline \text { Liabilities } & ( 59,000 ) \\\hline \text { Capital stock } & ( 12,700 ) \\\hline \text { Retained earnings, beginning } & ( 25,300 ) \\\hline \text { Dividends } & 1,000 \\\hline \text { Sales revenue } & ( 280,000 ) \\\hline \text { Cost of sales and operating expenses } & 276,000 \\\hline \text { Total } & \$\quad0 \\\hline\end{array}$$ Portal uses the complete equity method to report its investment in Squaredeal on its own books.

-On the 2020 consolidation working paper, eliminating entry (N) recognizes noncontrolling interest in net income of:

A) $400
B) $300
C) $0
D) $325

Question 48

Use the following information to answer bellow Questions
On January 1, 2020, Portal Corporation acquired 90% of Squaredeal Company's voting stock for $62,000 in cash and stock. The noncontrolling interest in Squaredeal had a fair value of $5,000. The entire excess of fair value over book value was attributable to goodwill, which is not impaired in 2020. It is now December 31, 2020, and Squaredeal's trial balance is as follows:
$$\begin{array} { | l | c | } \hline \text { Squaredeal's trial balance, December 31, 2020 } & \text { Dr (Cr) } \\\hline \text { Current assets } & \$ 3,000 \\\hline \text { Plant assets, net } & 97,000 \\\hline \text { Liabilities } & ( 59,000 ) \\\hline \text { Capital stock } & ( 12,700 ) \\\hline \text { Retained earnings, beginning } & ( 25,300 ) \\\hline \text { Dividends } & 1,000 \\\hline \text { Sales revenue } & ( 280,000 ) \\\hline \text { Cost of sales and operating expenses } & 276,000 \\\hline \text { Total } & \$\quad0 \\\hline\end{array}$$ Portal uses the complete equity method to report its investment in Squaredeal on its own books.

-On the consolidated balance sheet at December 31, 2020, the noncontrolling interest is valued at

A) $5,000
B) $3,800
C) $5,300
D) $5,400

Question 49

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-What is the initial goodwill related to this acquisition?

A) $52,000
B) $18,300
C) $31,000
D) $36,000

Question 50

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-What percentage of initial goodwill is allocated to the controlling interest?

A) 80%
B) 85%
C) 75%
D) 70%

Question 51

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-On the consolidated income statement for 2020, what is the balance for noncontrolling interest in net income?

A) $320
B) $450
C) $364
D) $410

Question 52

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-On the consolidation working paper for 2020, what is the credit to noncontrolling interest in Silicon for eliminating entry (E)?

A) $ 500
B) $1,629
C) $1,600
D) $1,589

Question 53

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-On the consolidation working paper for 2020, what is the credit to noncontrolling interest in Silicon for eliminating entry (R)?

A) $12,750
B) $13,000
C) $11,200
D) $12,700

Question 54

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-What is consolidated net income for 2020?

A) $2,600
B) $2,190
C) $2,800
D) $3,520

Question 55

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-On the consolidated balance sheet at December 31, 2020, what is the balance for consolidated retained earnings?

A) $21,960
B) $22,600
C) $22,190
D) $20,000

Question 56

Use the following information to answer bellow Questions
On January 1, 2019, Pali Company acquired 75% of Silicon Company's voting stock for $44,300 in cash. The noncontrolling interest had an estimated fair value of $12,700. Silicon's assets and liabilities at the date of acquisition were reported at amounts approximating fair value, but it had previously unreported indefinite life identifiable intangibles valued at $21,000. Silicon's total shareholders' equity at January 1, 2019 was as follows:
$\begin{array}{lr}\text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & 2,900 \\\text { Accumulated other comprehensive income } & \underline{100} \\\text{Total} & \$ 5,000\end{array}$ It is now December 31, 2020 (two years later). Identifiable intangibles impairment for 2019 was $1,000 and there was no goodwill impairment. There is no identifiable intangibles impairment for 2020, but goodwill impairment for 2020 is $200. Pali uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pali and Silicon follow.
$\begin{array}{|l|c|c|}\hline \text { Current assets } & \$ 5,000 & \$ \quad 1,000 \\\hline \text { Property, net } & 42,000 & 28,000 \\\hline \text { Intangibles } & - & - \\\hline \text { Investment in Silicon } & 45,892 & - \\\hline \text { Goodwill } & \begin{array}{ll}-\end{array} & - \\\hline \text { Liabilities } & (53,887) & (20,664) \\\hline \text { Capital stock } & (15,000) & (2,000) \\\hline R E \text {, beginning } & (20,000) & (4,400) \\\hline \mathrm{AOCl} \text {, beginning } & (1,100) & \text { (116) } \\\hline \text { Sales revenue } & (25,000) & (14,000) \\\hline \text { Equity in net income of Silicon } & (1,190) & - \\\hline \text { Equity in } \mathrm{OCl} \text { of Silicon } & \text { (15) } & - \\\hline \text { Cost of goods sold } & 20,000 & 9,000 \\\hline \text { Operating expenses } & 4,000 & 3,200 \\\hline \text { Other comprehensive income } & (700) & \text { (20) } \\\hline \text { Total } & \$\quad0& \$\quad0 \\\hline\end{array}$


-What is consolidated comprehensive income for 2020?

A) $2,185
B) $2,600
C) $2,905
D) $3,320

Question 57

Pontos Corporation buys 80% of the voting stock of Springfield Company on January 1, 2017. At the date of acquisition, it is determined that Springfield has a secret recipe for its famous cookies, not currently reported on its balance sheet, that has a fair value of $20,000. The secret cookie recipe meets ASC Topic 805 requirements for capitalization as an intangible asset, and has an estimated life of 5 years, straight-line. On the consolidated balance sheet at December 31, 2020, at what value is the secret cookie recipe reported?

A) $ 4,000
B) $ 3,200
C) $16,000
D) $ 8,000

Question 58

Use the following information to answer bellow Questions
Pomery Company has a financial relationship with Styro Inc., a separate legal entity, but does not own any of Styro's voting stock. On January 1, 2021, Pomery determines that Styro is a variable interest entity and that Pomery is Styro's prime beneficiary. Sparkle's shareholders' equity on January 1, 2021 is as follows:
$$\begin{array} { l r } \text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & \underline { 7,000 } \\\text { Total } & \underline { \underline { \$ 9,000 } }\end{array}$$ Styro's net assets are reported at values approximating fair value, except that its equipment (5-year life, straight-line) is overvalued by $3,000 and it has previously unreported indefinite life identifiable intangibles valued at $4,000. The fair value of Styro at January 1, 2021 is $15,000. Pomery and Styro were not under common control prior to January 1, 2021.
Styro reported net income of $800 in 2021, and identifiable intangibles were impaired by $200. Styro reported net income of $650 in 2022, and identifiable intangibles were not impaired. Goodwill was not impaired in either year.

-Noncontrolling interest in net income, reported on the 2021 consolidated income statement, is

A) $1,200
B) $ 800
C) $1,400
D) $ 600

Question 59

Use the following information to answer bellow Questions
Pomery Company has a financial relationship with Styro Inc., a separate legal entity, but does not own any of Styro's voting stock. On January 1, 2021, Pomery determines that Styro is a variable interest entity and that Pomery is Styro's prime beneficiary. Sparkle's shareholders' equity on January 1, 2021 is as follows:
$$\begin{array} { l r } \text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & \underline { 7,000 } \\\text { Total } & \underline { \underline { \$ 9,000 } }\end{array}$$ Styro's net assets are reported at values approximating fair value, except that its equipment (5-year life, straight-line) is overvalued by $3,000 and it has previously unreported indefinite life identifiable intangibles valued at $4,000. The fair value of Styro at January 1, 2021 is $15,000. Pomery and Styro were not under common control prior to January 1, 2021.
Styro reported net income of $800 in 2021, and identifiable intangibles were impaired by $200. Styro reported net income of $650 in 2022, and identifiable intangibles were not impaired. Goodwill was not impaired in either year.

-Noncontrolling interest, reported on the December 31, 2021 consolidated balance sheet, is

A) $15,600
B) $10,200
C) $16,200
D) $15,800

Question 60

Use the following information to answer bellow Questions
Pomery Company has a financial relationship with Styro Inc., a separate legal entity, but does not own any of Styro's voting stock. On January 1, 2021, Pomery determines that Styro is a variable interest entity and that Pomery is Styro's prime beneficiary. Sparkle's shareholders' equity on January 1, 2021 is as follows:
$$\begin{array} { l r } \text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & \underline { 7,000 } \\\text { Total } & \underline { \underline { \$ 9,000 } }\end{array}$$ Styro's net assets are reported at values approximating fair value, except that its equipment (5-year life, straight-line) is overvalued by $3,000 and it has previously unreported indefinite life identifiable intangibles valued at $4,000. The fair value of Styro at January 1, 2021 is $15,000. Pomery and Styro were not under common control prior to January 1, 2021.
Styro reported net income of $800 in 2021, and identifiable intangibles were impaired by $200. Styro reported net income of $650 in 2022, and identifiable intangibles were not impaired. Goodwill was not impaired in either year.

-Noncontrolling interest in net income, reported on the 2022 consolidated income statement, is

A) $1,450
B) $ 650
C) $ 50
D) $1,250

Question 61

Use the following information to answer bellow Questions
Pomery Company has a financial relationship with Styro Inc., a separate legal entity, but does not own any of Styro's voting stock. On January 1, 2021, Pomery determines that Styro is a variable interest entity and that Pomery is Styro's prime beneficiary. Sparkle's shareholders' equity on January 1, 2021 is as follows:
$$\begin{array} { l r } \text { Capital stock } & \$ 2,000 \\\text { Retained earnings } & \underline { 7,000 } \\\text { Total } & \underline { \underline { \$ 9,000 } }\end{array}$$ Styro's net assets are reported at values approximating fair value, except that its equipment (5-year life, straight-line) is overvalued by $3,000 and it has previously unreported indefinite life identifiable intangibles valued at $4,000. The fair value of Styro at January 1, 2021 is $15,000. Pomery and Styro were not under common control prior to January 1, 2021.
Styro reported net income of $800 in 2021, and identifiable intangibles were impaired by $200. Styro reported net income of $650 in 2022, and identifiable intangibles were not impaired. Goodwill was not impaired in either year.

-Noncontrolling interest, reported on the December 31, 2022 consolidated balance sheet, is

A) $16,200
B) $16,850
C) $17,450
D) $18,650

Question 62

When a subsidiary has a 20% noncontrolling interest, and the acquisition is a bargain purchase, the gain on acquisition is:

A) The fair value of identifiable net assets acquired less acquisition cost
B) The fair value of identifiable net assets acquired less acquisition cost less fair value of noncontrolling interest
C) 80% of the fair value of identifiable net assets less acquisition cost
D) 80% of the fair value of identifiable net assets less acquisition cost less fair value of noncontrolling interest

Question 63

Use the following information to answer bellow Questions
Python acquires 80% of the voting stock of Slither on January 1, 2020 for $4,000. The fair value of the noncontrolling interest is $950. Slither's balance sheet at the date of acquisition is as follows:
$\begin{array}{|l|r|r|}\hline & \begin{array}{c}\text { Book Value } \\\text { Dr (Cr) }\end{array} & \begin{array}{c}\text { Fair Value } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets } & \$ 5,000 & \$ 6,500 \\\hline \text { Identifiable int angibles } & - & 2,000 \\\hline \text { Liabilities } & \{3,000\} & \{3,000\} \\\hline \text { Capital stock } & \{600\} & - \\\hline \text { Retained earnings } & \{1,400\} & - \\\hline\end{array}$

-The gain on acquisition is:

A) $1,500
B) $ 550
C) $ 600
D) $ 750

Question 64

Use the following information to answer bellow Questions
Python acquires 80% of the voting stock of Slither on January 1, 2020 for $4,000. The fair value of the noncontrolling interest is $950. Slither's balance sheet at the date of acquisition is as follows:
$\begin{array}{|l|r|r|}\hline & \begin{array}{c}\text { Book Value } \\\text { Dr (Cr) }\end{array} & \begin{array}{c}\text { Fair Value } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets } & \$ 5,000 & \$ 6,500 \\\hline \text { Identifiable int angibles } & - & 2,000 \\\hline \text { Liabilities } & \{3,000\} & \{3,000\} \\\hline \text { Capital stock } & \{600\} & - \\\hline \text { Retained earnings } & \{1,400\} & - \\\hline\end{array}$

-On the consolidation working paper at January 1, 2020, what is the credit to noncontrolling interest in Slither for eliminating entry (E)?

A) $-0-
B) $100
C) $300
D) $400

Question 65

Use the following information to answer bellow Questions
Python acquires 80% of the voting stock of Slither on January 1, 2020 for $4,000. The fair value of the noncontrolling interest is $950. Slither's balance sheet at the date of acquisition is as follows:
$\begin{array}{|l|r|r|}\hline & \begin{array}{c}\text { Book Value } \\\text { Dr (Cr) }\end{array} & \begin{array}{c}\text { Fair Value } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets } & \$ 5,000 & \$ 6,500 \\\hline \text { Identifiable int angibles } & - & 2,000 \\\hline \text { Liabilities } & \{3,000\} & \{3,000\} \\\hline \text { Capital stock } & \{600\} & - \\\hline \text { Retained earnings } & \{1,400\} & - \\\hline\end{array}$

-On the consolidation working paper at January 1, 2020, what is the credit to Investment in Slither for eliminating entry (R)?

A) $2,340
B) $2,550
C) $2,950
D) $2,400

Question 66

Use the following information to answer bellow Questions
Python acquires 80% of the voting stock of Slither on January 1, 2020 for $4,000. The fair value of the noncontrolling interest is $950. Slither's balance sheet at the date of acquisition is as follows:
$\begin{array}{|l|r|r|}\hline & \begin{array}{c}\text { Book Value } \\\text { Dr (Cr) }\end{array} & \begin{array}{c}\text { Fair Value } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets } & \$ 5,000 & \$ 6,500 \\\hline \text { Identifiable int angibles } & - & 2,000 \\\hline \text { Liabilities } & \{3,000\} & \{3,000\} \\\hline \text { Capital stock } & \{600\} & - \\\hline \text { Retained earnings } & \{1,400\} & - \\\hline\end{array}$

-On the consolidation working paper at January 1, 2020, what is the credit to Noncontrolling Interest in Slither for eliminating entry (R)?

A) $550
B) $950
C) $700
D) $850

Question 67

Use the information bellow to answer bellow Questions
Pearl acquires 90% of the voting stock of Spruce on January 1, 2020 for $5,000. The fair value of the noncontrolling interest is $550. Spruce's equity is reported at $4,800 at the date of acquisition. Its net assets are reported at amounts approximating fair value, but it has previously unreported identifiable intangible assets (5-year life, straight-line), valued at $1,000. Pearl uses the complete equity method to account for its investment. Spruce reports net income of $300 for 2020.

-At what value does Pearl record its investment in Spruce at January 1, 2020?

A) $5,100
B) $5,000
C) $5,250
D) $4,900

Question 68

Use the information bellow to answer bellow Questions
Pearl acquires 90% of the voting stock of Spruce on January 1, 2020 for $5,000. The fair value of the noncontrolling interest is $550. Spruce's equity is reported at $4,800 at the date of acquisition. Its net assets are reported at amounts approximating fair value, but it has previously unreported identifiable intangible assets (5-year life, straight-line), valued at $1,000. Pearl uses the complete equity method to account for its investment. Spruce reports net income of $300 for 2020.

-What is the noncontrolling interest in net income for 2020?

A) $30
B) $20
C) $10
D) $40

Question 69

Use the information bellow to answer bellow Questions
Pearl acquires 90% of the voting stock of Spruce on January 1, 2020 for $5,000. The fair value of the noncontrolling interest is $550. Spruce's equity is reported at $4,800 at the date of acquisition. Its net assets are reported at amounts approximating fair value, but it has previously unreported identifiable intangible assets (5-year life, straight-line), valued at $1,000. Pearl uses the complete equity method to account for its investment. Spruce reports net income of $300 for 2020.

-What is the noncontrolling interest in Spruce at December 31, 2020?

A) $550
B) $560
C) $580
D) $540

Question 70

Use the information bellow to answer bellow Questions
Pearl acquires 90% of the voting stock of Spruce on January 1, 2020 for $5,000. The fair value of the noncontrolling interest is $550. Spruce's equity is reported at $4,800 at the date of acquisition. Its net assets are reported at amounts approximating fair value, but it has previously unreported identifiable intangible assets (5-year life, straight-line), valued at $1,000. Pearl uses the complete equity method to account for its investment. Spruce reports net income of $300 for 2020.

-On the 2020 consolidation working paper, what is the credit to noncontrolling interest in eliminating entry (R)?

A) $85
B) $65
C) $80
D) $70

Question 71

How is the noncontrolling interest in a subsidiary valued at the date of acquisition, following the IFRS alternative method of valuing acquired goodwill?

A) Fair value at the date of acquisition
B) The noncontrolling interest's share of the fair value of the subsidiary's identifiable net assets at the date of acquisition
C) The noncontrolling interest's share of the book value of the subsidiary at the date of acquisition
D) The noncontrolling interest's share of the book value of the subsidiary at the date of acquisition plus its share of date-of-acquisition goodwill

Question 72

IFRS allows an alternative method for valuing the acquired subsidiary's goodwill. When is U.S. GAAP and IFRS valuation of goodwill the same regardless of which valuation method is used under IFRS?

A) There is no noncontrolling interest in the acquired subsidiary.
B) There are no revaluations of the acquired subsidiary's identifiable net assets.
C) There is no goodwill impairment.
D) It is the date of acquisition.

Question 73

Use the following information to answer bellow Questions
On January 1, 2020, Panda, a U.K. company, acquired 80% of Sauer's voting stock for £20,000 in cash. The noncontrolling interest had an estimated fair value of £4,500. Panda identified the following identifiable intangible assets that are not reported on Sauer's balance sheet: $$\begin{array} { | l | c | } \hline & \text { Fair Value } \\\hline \text { Developed technology } & £ 3,000 \\\hline \text { Brand names } & 7,000 \\\hline\end{array}$$ Sauer's total shareholders' equity at January 1, 2020 was £4,000. Panda uses IFRS and values the noncontrolling interest using the IFRS alternative method.

-At what value will the noncontrolling interest in Sauer be reported on the consolidated balance sheet at the date of acquisition?

A) £3,950
B) £4,500
C) £2,800
D) £3,200

Question 74

Use the following information to answer bellow Questions
On January 1, 2020, Panda, a U.K. company, acquired 80% of Sauer's voting stock for £20,000 in cash. The noncontrolling interest had an estimated fair value of £4,500. Panda identified the following identifiable intangible assets that are not reported on Sauer's balance sheet: $$\begin{array} { | l | c | } \hline & \text { Fair Value } \\\hline \text { Developed technology } & £ 3,000 \\\hline \text { Brand names } & 7,000 \\\hline\end{array}$$ Sauer's total shareholders' equity at January 1, 2020 was £4,000. Panda uses IFRS and values the noncontrolling interest using the IFRS alternative method.

-Total goodwill recognized for this acquisition is:

A) £10,500
B) £ 8,800
C) £ 9,600
D) £18,700

Question 75

Use the following information to answer Questions bellow.
On January 1, 2020, PC Power Company, a company located in Singapore, acquired 75% of Sandisk Company's voting stock for S$25,000 in cash. Indefinite life identifiable intangible assets not previously reported on Sandisk's balance sheet had a fair value of S$8,000. There were no other date-of-acquisition revaluations of Sandisk's identifiable net assets. Sandisk's book value at January 1, 2020 was S$3,000.
It is now December 31, 2021 (two years later). There is no goodwill impairment in 2020, and goodwill impairment for 2021 is S$300. The previously unreported identifiable intangible assets were impaired by S$200 in 2020 and S$100 in 2021. PC Power uses the complete equity method to account for its investment, and follows IFRS, using the alternative method for valuing noncontrolling interests and goodwill. December 31, 2017 trial balances for PC Power and Sandisk appear bellow.
$$\begin{array} { | l | r | r | } \hline & \begin{array} { c } \text { PC Power } \\\text { Dr (Cr) }\end{array} & \begin{array} { c } \text { Sandisk } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets, net } & \text { S\$ 46,000 } & \text { S\$ } 30,500 \\\hline \text { Irwestment in Sandisk } & 26,725 & - \\\hline \text { Liabilities } & \{ 35,350 \} & \{ 24,500 \} \\\hline \text { Capital stock } & \{ 15,000 \} & \{ 1,000 \} \\\hline \text { Retained earnings, beginning } & \{ 21,000 \} & \{ 4,000 \} \\\hline \text { Sales revenue } & \{ 25,000 \} & \{ 13,500 \} \\\hline \text { Equity in net income of Sandisk } & \{ 375 \} & - \\\hline \text { Cost of sales and operating expenses } & \underline { 24,000 } & \underline { 12,500 } \\\hline \text { Total } &\underline { \underline { \mathbf { S\$ } \quad 0 }}& \underline { \underline { \mathbf { S\$ } \quad 0 }}\\\hline\end{array}$$

-On the consolidated balance sheet at December 31, 2021, what is the balance for goodwill?

A) S$13,700
B) S$14,000
C) S$16,450
D) S$16,750

Question 76

Use the following information to answer Questions bellow.
On January 1, 2020, PC Power Company, a company located in Singapore, acquired 75% of Sandisk Company's voting stock for S$25,000 in cash. Indefinite life identifiable intangible assets not previously reported on Sandisk's balance sheet had a fair value of S$8,000. There were no other date-of-acquisition revaluations of Sandisk's identifiable net assets. Sandisk's book value at January 1, 2020 was S$3,000.
It is now December 31, 2021 (two years later). There is no goodwill impairment in 2020, and goodwill impairment for 2021 is S$300. The previously unreported identifiable intangible assets were impaired by S$200 in 2020 and S$100 in 2021. PC Power uses the complete equity method to account for its investment, and follows IFRS, using the alternative method for valuing noncontrolling interests and goodwill. December 31, 2017 trial balances for PC Power and Sandisk appear bellow.
$$\begin{array} { | l | r | r | } \hline & \begin{array} { c } \text { PC Power } \\\text { Dr (Cr) }\end{array} & \begin{array} { c } \text { Sandisk } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets, net } & \text { S\$ 46,000 } & \text { S\$ } 30,500 \\\hline \text { Irwestment in Sandisk } & 26,725 & - \\\hline \text { Liabilities } & \{ 35,350 \} & \{ 24,500 \} \\\hline \text { Capital stock } & \{ 15,000 \} & \{ 1,000 \} \\\hline \text { Retained earnings, beginning } & \{ 21,000 \} & \{ 4,000 \} \\\hline \text { Sales revenue } & \{ 25,000 \} & \{ 13,500 \} \\\hline \text { Equity in net income of Sandisk } & \{ 375 \} & - \\\hline \text { Cost of sales and operating expenses } & \underline { 24,000 } & \underline { 12,500 } \\\hline \text { Total } &\underline { \underline { \mathbf { S\$ } \quad 0 }}& \underline { \underline { \mathbf { S\$ } \quad 0 }}\\\hline\end{array}$$

-On the consolidated income statement at December 31, 2021, what is the balance for noncontrolling interest in net income?

A) S$175
B) S$150
C) S$250
D) S$225

Question 77

Use the following information to answer Questions bellow.
On January 1, 2020, PC Power Company, a company located in Singapore, acquired 75% of Sandisk Company's voting stock for S$25,000 in cash. Indefinite life identifiable intangible assets not previously reported on Sandisk's balance sheet had a fair value of S$8,000. There were no other date-of-acquisition revaluations of Sandisk's identifiable net assets. Sandisk's book value at January 1, 2020 was S$3,000.
It is now December 31, 2021 (two years later). There is no goodwill impairment in 2020, and goodwill impairment for 2021 is S$300. The previously unreported identifiable intangible assets were impaired by S$200 in 2020 and S$100 in 2021. PC Power uses the complete equity method to account for its investment, and follows IFRS, using the alternative method for valuing noncontrolling interests and goodwill. December 31, 2017 trial balances for PC Power and Sandisk appear bellow.
$$\begin{array} { | l | r | r | } \hline & \begin{array} { c } \text { PC Power } \\\text { Dr (Cr) }\end{array} & \begin{array} { c } \text { Sandisk } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets, net } & \text { S\$ 46,000 } & \text { S\$ } 30,500 \\\hline \text { Irwestment in Sandisk } & 26,725 & - \\\hline \text { Liabilities } & \{ 35,350 \} & \{ 24,500 \} \\\hline \text { Capital stock } & \{ 15,000 \} & \{ 1,000 \} \\\hline \text { Retained earnings, beginning } & \{ 21,000 \} & \{ 4,000 \} \\\hline \text { Sales revenue } & \{ 25,000 \} & \{ 13,500 \} \\\hline \text { Equity in net income of Sandisk } & \{ 375 \} & - \\\hline \text { Cost of sales and operating expenses } & \underline { 24,000 } & \underline { 12,500 } \\\hline \text { Total } &\underline { \underline { \mathbf { S\$ } \quad 0 }}& \underline { \underline { \mathbf { S\$ } \quad 0 }}\\\hline\end{array}$$

-On the consolidation working paper for 2021, what is the credit to the noncontrolling interest for eliminating entry (R)?

A) S$1,950
B) S$3,050
C) S$6,300
D) S$2,825

Question 78

Use the following information to answer Questions bellow.
On January 1, 2020, PC Power Company, a company located in Singapore, acquired 75% of Sandisk Company's voting stock for S$25,000 in cash. Indefinite life identifiable intangible assets not previously reported on Sandisk's balance sheet had a fair value of S$8,000. There were no other date-of-acquisition revaluations of Sandisk's identifiable net assets. Sandisk's book value at January 1, 2020 was S$3,000.
It is now December 31, 2021 (two years later). There is no goodwill impairment in 2020, and goodwill impairment for 2021 is S$300. The previously unreported identifiable intangible assets were impaired by S$200 in 2020 and S$100 in 2021. PC Power uses the complete equity method to account for its investment, and follows IFRS, using the alternative method for valuing noncontrolling interests and goodwill. December 31, 2017 trial balances for PC Power and Sandisk appear bellow.
$$\begin{array} { | l | r | r | } \hline & \begin{array} { c } \text { PC Power } \\\text { Dr (Cr) }\end{array} & \begin{array} { c } \text { Sandisk } \\\text { Dr (Cr) }\end{array} \\\hline \text { Tangible assets, net } & \text { S\$ 46,000 } & \text { S\$ } 30,500 \\\hline \text { Irwestment in Sandisk } & 26,725 & - \\\hline \text { Liabilities } & \{ 35,350 \} & \{ 24,500 \} \\\hline \text { Capital stock } & \{ 15,000 \} & \{ 1,000 \} \\\hline \text { Retained earnings, beginning } & \{ 21,000 \} & \{ 4,000 \} \\\hline \text { Sales revenue } & \{ 25,000 \} & \{ 13,500 \} \\\hline \text { Equity in net income of Sandisk } & \{ 375 \} & - \\\hline \text { Cost of sales and operating expenses } & \underline { 24,000 } & \underline { 12,500 } \\\hline \text { Total } &\underline { \underline { \mathbf { S\$ } \quad 0 }}& \underline { \underline { \mathbf { S\$ } \quad 0 }}\\\hline\end{array}$$

-In the operating section of the consolidated statement of cash flows, if using the indirect method, which item below is subtracted from consolidated net income?

A) Consolidated depreciation expense
B) Cash dividends received on equity method investments
C) Noncontrolling interest in net loss of subsidiary
D) Undistributed equity method income

Question 79

On the consolidated statement of cash flows, cash dividends paid to the shareholders of the parent company are:

A) Reported in the operating activities section
B) Reported in the investing activities section
C) Reported in the financing activities section
D) Not reported

Question 80

Use the following information for Questions bellow
Penrose Corporation acquired 80% of the voting stock of Speedy Company several years ago. There were no revaluations of Speedy's identifiable net assets, and the excess of acquisition cost over Speedy's book value was attributed entirely to goodwill. Here are the consolidated balance sheets for Penrose and Speedy, the consolidated income statement for 2021, plus additional information:
$\begin{array}{|l|r|r|}\hline \text { Consolidated Balance Sheets at December 31 } & \mathbf{2 0 2 1} & \mathbf{2 0 2 0} \\\hline \text { Assets } & & \\\hline \text { Cash } & \$ 220 & \$ 210 \\\hline \text { Other current assets } & 600 & 580 \\\hline \text { Plant asset s } & 4,550 & 4,300 \\\hline \text { Accumulated depreciation } & (1,237) &(1,090) \\\hline \text { Goodwill } & \underline{470}& \underline{500} \\\hline \text { Total assets } &\$4,603 &{\$ 4,500} \\\hline \\\hline \text { Liabilities \& Equity } & \\\hline \text { Current liabilities } & \$590&\$600 \\\hline \text { Long-term debt } & 3,015&3,000 \\\hline \text { Controlling int erest in equity } &925&850\\\hline \text { Noncontrolling interest in equity } & \underline{73} & \underline{50}\\\hline \text { Total liabilities \& equity } & \$ 4,603 & \$ 4,500 \\\hline\end{array}$


$\begin{array}{|l|c|} \hline \text { Cons olidated Statem ent of Income and Comprehensive Income for } 2021\\\hline \text { Sales revenue } & \$ 2,000 \\\hline \text { Less Cost of goods sold } & (1,400) \\\hline \text { Less Operating expenses and losses } & (450) \\\hline \text { Consolidated net income } & 150 \\\hline \text { Less Noncontrolling interest in net income } & (\$ 25)\\\hline \text { Net income attributable to controlling interest } & \$ 125\\\hline\end{array}$
Additional information for 2021:
1. Consolidated depreciation expense was $400, and the goodwill impairment loss was $30.
2. Plant assets with an original cost of $300 were sold for $20.
3. Penrose declared and paid $50 in cash dividends.
4. Speedy declared and paid $10 in cash dividends.

-In the operating section of the 2021 consolidated statement of cash flows, the loss on the sale of plant assets is an adjustment to consolidated net income. The loss is

A) $ 32
B) $195
C) $ 27
D) $280