Deck 5: Consolidation of Less-Than-Wholly- Owned Subsidiaries Acquired at More Than Book Value

Question 1

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
Based on the preceding information,what amount of consolidated retained earnings will be reported immediately after the business combination?

A)$205,000
B)$120,000
C)$325,000
D)$310,000

Answer 1

A

Question 2

Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
Based on the preceding information,what amount of Stamp's buildings and equipment (net)will be included in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$50,000
C)$250,000
D)$300,000

Answer 2

D

Question 3

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash.The fair value of the noncontrolling interest at that date was determined to be $90,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Spice's assets and liabilities approximated fair value except for inventory,which had a fair value of $30,000,and land,which had a fair value of $95,000.
Based on the preceding information,what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$190,000
B)$230,000
C)$240,000
D)$440,000

Answer 3

C

Question 4

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash.The fair value of the noncontrolling interest at that date was determined to be $90,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Spice's assets and liabilities approximated fair value except for inventory,which had a fair value of $30,000,and land,which had a fair value of $95,000.
Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$0
B)$5,000
C)$25,000
D)$30,000

Question 5

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination?

A)$0
B)$15,000
C)$40,000
D)$46,000

Question 6

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash.The fair value of the noncontrolling interest at that date was determined to be $90,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Spice's assets and liabilities approximated fair value except for inventory,which had a fair value of $30,000,and land,which had a fair value of $95,000.
Based on the preceding information,what amount of total assets will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$800,000
B)$830,000
C)$1,010,000
D)$1,040,000

Question 7

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$0
B)$40,000
C)$20,000
D)$15,000

Question 8

Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
Based on the preceding information,what amount of Stamp's land will be included in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$10,000
C)$90,000
D)$100,000

Question 9

Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$120,000
C)$65,000
D)$20,000

Question 10

Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
Based on the preceding information,what amount will be reported as investment in Stamp Corporation stock in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$210,000
C)$300,000
D)$400,000

Question 11

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
Based on the preceding information,what amount of total assets will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$720,000
B)$840,000
C)$825,000
D)$865,000

Question 12

Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
Based on the preceding information,what amount of Stamp's inventory will be included in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$65,000
C)$70,000
D)$60,000

Question 13

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
Based on the preceding information,what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$130,000
B)$135,000
C)$90,000
D)$45,000

Question 14

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash.The fair value of the noncontrolling interest at that date was determined to be $90,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Spice's assets and liabilities approximated fair value except for inventory,which had a fair value of $30,000,and land,which had a fair value of $95,000.
Based on the preceding information,what amount of consolidated retained earnings will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$180,000
B)$200,000
C)$300,000
D)$380,000

Question 15

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
Based on the preceding information,what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$395,000
B)$280,000
C)$275,000
D)$195,000

Question 16

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
Based on the preceding information,what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?

A)$445,000
B)$205,000
C)$565,000
D)$550,000

Question 17

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash.The fair value of the noncontrolling interest at that date was determined to be $90,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Spice's assets and liabilities approximated fair value except for inventory,which had a fair value of $30,000,and land,which had a fair value of $95,000.
Based on the preceding information,what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?

A)$360,000
B)$590,000
C)$770,000
D)$860,000

Question 18

Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$70,000
C)$83,750
D)$100,000

Question 19

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash.The fair value of the noncontrolling interest at that date was determined to be $90,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Spice's assets and liabilities approximated fair value except for inventory,which had a fair value of $30,000,and land,which had a fair value of $95,000.
Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination?

A)$0
B)$81,000
C)$90,000
D)$96,000

Question 20

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash.The fair value of the noncontrolling interest at that date was determined to be $90,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Spice's assets and liabilities approximated fair value except for inventory,which had a fair value of $30,000,and land,which had a fair value of $95,000.
Based on the preceding information,what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$20,000
B)$30,000
C)$50,000
D)$60,000

Question 21

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 20X8,Pancake Company provided consulting services to Syrup Company and has not yet paid for them.There were no other receivables or payables between the companies at December 31,20X8.
Based on the information given,Pancake Company and Syrup Company reported wages payable of

A)$50,000 and $28,000 respectively.
B)$60,000 and $32,000 respectively.
C)$40,000 and $35,000 respectively.
D)$28,000 and $60,000 respectively.

Question 22

On December 31,20X5,Paris Corporation acquired 60 percent of Sanlo Company's common stock for $180,000.At that date,the fair value of the noncontrolling interest was $120,000.Of the $45,000 differential,$5,000 related to the increased value of Sanlo's inventory,$15,000 related to the increased value of its land,and $10,000 related to the increased value of its equipment that had a remaining life of five years from the date of combination.Sanlo sold all inventory it held at the end of 20X5 during 20X6.The land to which the differential related was also sold during 20X6 for a large gain.In 20X6,Sanlo reported net income of $40,000 but paid no dividends.Paris accounts for its investment in Sanlo using the equity method.
Based on the preceding information,the amount of goodwill reported in the consolidated financial statements prepared immediately after the combination is:

A)$9,000
B)$15,000
C)$27,000
D)$45,000

Question 23

All of the following are examples of how a parent company may lose control over a subsidiary and discontinue future consolidation,except:

A)The parent sells some of its interest in the subsidiary.
B)The subsidiary issues additional common stock.
C)The subsidiary comes under the control of the government or other regulator.
D)The subsidiary issues a stock dividend or a stock split.

Question 24

On January 1,20X6,Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash.Side reported net income of $30,000 and dividends of $10,000 for 20X6,20X7,and 20X8.On January 1,20X6,Side reported common stock outstanding of $100,000 and retained earnings of $60,000,and the fair value of the noncontrolling interest was $20,000.It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of five years.All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years.Plus uses the equity method in accounting for its investment in Side.
Based on the preceding information,the increase in the fair value of patents held by Side is:

A)$20,000
B)$25,000
C)$15,000
D)$5,000

Question 25

On January 1,20X6,Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash.Side reported net income of $30,000 and dividends of $10,000 for 20X6,20X7,and 20X8.On January 1,20X6,Side reported common stock outstanding of $100,000 and retained earnings of $60,000,and the fair value of the noncontrolling interest was $20,000.It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of five years.All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years.Plus uses the equity method in accounting for its investment in Side.
Based on the preceding information,what balance would Plus report as its investment in Side at January 1,20X9?

A)$251,100
B)$224,100
C)$215,100
D)$234,000

Question 26

On January 1,20X8,Polo Corporation acquired 75 percent of Stallion Company's voting common stock for $300,000.At the time of the combination,Stallion reported common stock outstanding of $200,000 and retained earnings of $150,000,and the fair value of the noncontrolling interest was $100,000.The book value of Stallion's net assets approximated market value except for patents that had a market value of $50,000 more than their book value.The patents had a remaining economic life of ten years at the date of the business combination.Stallion reported net income of $40,000 and paid dividends of $10,000 during 20X8.
Based on the preceding information,what balance will Polo report as its investment in Stallion at December 31,20X8,assuming Polo uses the equity method in accounting for its investment?

A)$318,750
B)$317,500
C)$330,000
D)$326,250

Question 27

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 20X8,Pancake Company provided consulting services to Syrup Company and has not yet paid for them.There were no other receivables or payables between the companies at December 31,20X8.
Based on the information given,what percentage of Syrup Company's shares were acquired by Pancake Company?

A)100 percent
B)60 percent
C)80 percent
D)75 percent

Question 28

On December 31,20X5,Paris Corporation acquired 60 percent of Sanlo Company's common stock for $180,000.At that date,the fair value of the noncontrolling interest was $120,000.Of the $45,000 differential,$5,000 related to the increased value of Sanlo's inventory,$15,000 related to the increased value of its land,and $10,000 related to the increased value of its equipment that had a remaining life of five years from the date of combination.Sanlo sold all inventory it held at the end of 20X5 during 20X6.The land to which the differential related was also sold during 20X6 for a large gain.In 20X6,Sanlo reported net income of $40,000 but paid no dividends.Paris accounts for its investment in Sanlo using the equity method.
Based on the preceding information,what amount of differential would Paris amortize during 20X6 in its equity method journal entries?

A)$13,200
B)$15,000
C)$22,000
D)$30,000

Question 29

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 20X8,Pancake Company provided consulting services to Syrup Company and has not yet paid for them.There were no other receivables or payables between the companies at December 31,20X8.
Based on the information given,what was the fair value of Syrup Company as a whole at the date of acquisition?

A)$155,000
B)$110,000
C)$115,000
D)$135,000

Question 30

Scissor Corporation holds assets with a fair value of $150,000 and a book value of $125,000 and liabilities with a book value and fair value of $50,000.What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Paper Company pays $90,000 to acquire 75 percent ownership in Scissor and goodwill of $20,000 is reported?

A)$50,000
B)$30,000
C)$40,000
D)$20,000

Question 31

On January 1,20X2,Pint Corporation acquired 80 percent of Size Corporation for $200,000 cash.Size reported net income of $25,000 each year and dividends of $5,000 each year for 20X2,20X3,and 20X4.On January 1,20X2,Size reported common stock outstanding of $160,000 and retained earnings of $40,000,and the fair value of the noncontrolling interest was $50,000.It held land with a book value of $90,000 and a market value of $100,000,and equipment with a book value of $40,000 and a market value of $48,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of eight years.All depreciable assets held by Size at the date of acquisition had a remaining economic life of eight years.Pint uses the equity method in accounting for its investment in Size.
Based on the preceding information,what balance would Pint report as its investment in Size at January 1,20X4?

A)$200,000
B)$224,000
C)$232,000
D)$240,000

Question 32

On December 31,20X8,Peak Corporation acquired 80 percent of Summit Company's common stock for $160,000.At that date,the fair value of the noncontrolling interest was $40,000.Of the $75,000 differential,$10,000 related to the increased value of Summit's inventory,$20,000 related to the increased value of its land,and $25,000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination.Summit sold all inventory it held at the end of 20X8 during 20X9.The land to which the differential related was also sold during 20X9 for a large gain.At the date of combination,Summit reported retained earnings of $75,000 and common stock outstanding of $50,000.In 20X9,Summit reported net income of $60,000,but paid no dividends.Peak accounts for its investment in Summit using the equity method.
Based on the preceding information,what is the amount of write-off of differential associated with this acquisition recorded by Peak during 20X9?

A)$0
B)$32,500
C)$26,000
D)$20,000

Question 33

On December 31,20X8,Peak Corporation acquired 80 percent of Summit Company's common stock for $160,000.At that date,the fair value of the noncontrolling interest was $40,000.Of the $75,000 differential,$10,000 related to the increased value of Summit's inventory,$20,000 related to the increased value of its land,and $25,000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination.Summit sold all inventory it held at the end of 20X8 during 20X9.The land to which the differential related was also sold during 20X9 for a large gain.At the date of combination,Summit reported retained earnings of $75,000 and common stock outstanding of $50,000.In 20X9,Summit reported net income of $60,000,but paid no dividends.Peak accounts for its investment in Summit using the equity method.
Based on the preceding information,the amount of goodwill reported in the consolidated financial statements prepared immediately after the combination is:

A)$0
B)$32,500
C)$26,000
D)$20,000

Question 34

On January 1,20X6,Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash.Side reported net income of $30,000 and dividends of $10,000 for 20X6,20X7,and 20X8.On January 1,20X6,Side reported common stock outstanding of $100,000 and retained earnings of $60,000,and the fair value of the noncontrolling interest was $20,000.It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of five years.All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years.Plus uses the equity method in accounting for its investment in Side.
Based on the preceding information,what balance would Plus report as its investment in Side at January 1,20X8?

A)$230,400
B)$180,000
C)$234,000
D)$203,400

Question 35

When a parent owns less than 100% of a subsidiary,the noncontrolling interest shareholders are allocated their ownership percentage of income or net assets in all of the following consolidating entries except for:

A)The basic investment account consolidation entry
B)The excess value (differential)reclassification entry
C)The accumulated depreciation consolidation entry
D)The amortized excess value reclassification entry

Question 36

On January 1,20X2,Pint Corporation acquired 80 percent of Size Corporation for $200,000 cash.Size reported net income of $25,000 each year and dividends of $5,000 each year for 20X2,20X3,and 20X4.On January 1,20X2,Size reported common stock outstanding of $160,000 and retained earnings of $40,000,and the fair value of the noncontrolling interest was $50,000.It held land with a book value of $90,000 and a market value of $100,000,and equipment with a book value of $40,000 and a market value of $48,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of eight years.All depreciable assets held by Size at the date of acquisition had a remaining economic life of eight years.Pint uses the equity method in accounting for its investment in Size.
Based on the preceding information,what balance would Pint report as its investment in Size at January 1,20X5?

A)$236,000
B)$248,000
C)$260,000
D)$300,000

Question 37

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 20X8,Pancake Company provided consulting services to Syrup Company and has not yet paid for them.There were no other receivables or payables between the companies at December 31,20X8.
Based on the information given,what amount will be reported as total controlling interest in the consolidated balance sheet?

A)$254,000
B)$285,000
C)$364,000
D)$395,000

Question 38

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 20X8,Pancake Company provided consulting services to Syrup Company and has not yet paid for them.There were no other receivables or payables between the companies at December 31,20X8.
Based on the information given,what balance in accounts receivable did Syrup Company report at December 31,20X8?

A)$28,000
B)$48,000
C)$40,000
D)$38,000

Question 39

On January 1,20X2,Pint Corporation acquired 80 percent of Size Corporation for $200,000 cash.Size reported net income of $25,000 each year and dividends of $5,000 each year for 20X2,20X3,and 20X4.On January 1,20X2,Size reported common stock outstanding of $160,000 and retained earnings of $40,000,and the fair value of the noncontrolling interest was $50,000.It held land with a book value of $90,000 and a market value of $100,000,and equipment with a book value of $40,000 and a market value of $48,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of eight years.All depreciable assets held by Size at the date of acquisition had a remaining economic life of eight years.Pint uses the equity method in accounting for its investment in Size.
Based on the preceding information,the increase in the fair value of patents held by Size is

A)$10,000
B)$18,000
C)$32,000
D)$50,000

Question 40

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 20X8,Pancake Company provided consulting services to Syrup Company and has not yet paid for them.There were no other receivables or payables between the companies at December 31,20X8.
Based on the information given,what is the amount of unpaid consulting services at December 31,20X8,on work done by Pancake Company for Syrup Company?

A)$0
B)$10,000
C)$5,000
D)$15,000

Question 41

On January 1,20X8,Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.At that date,Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Stamp's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Stamp reported the following data for 20X8 and 20X9:
Package reported net income of $100,000 and paid dividends of $30,000 for both the years.
Based on the preceding information,what is the amount of comprehensive income attributable to the controlling interest for 20X9?

A)$138,750
B)$131,000
C)$128,750
D)$135,000

Question 42

Pink Inc.sells half of its 70% interest in Salmon Co.on January 1,20X6.On that date,the fair value of Salmon as a whole is $940,000 and the carrying amount of Pink's 70% share of Salmon is $320,000.What,if any,is the gain on the sale of half of Pink's interest in Salmon?

A)$0
B)$9,000
C)$169,000
D)$338,000

Question 43

Poppy Corporation acquired 80 percent of Seed Corporation's common stock on January 1,20X8,for $520,000.At that date,Seed reported common stock outstanding of $250,000 and retained earnings of $375,000.Assume the fair value of the noncontrolling interest on January 1,20X8 was $130,000.The book values and fair values of Seed's assets and liabilities were equal on the acquisition date,except for other intangible assets,which had a fair value $25,000 greater than book value and a 5-year remaining life.Poppy and Seed reported the following data for 20X8 and 20X9:


a.Compute consolidated comprehensive income for 20X8 and 20X9.
b.Compute comprehensive income attributable to the controlling interest for 20X8 and 20X9.

Question 44

On January 1,20X8,Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.At that date,Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Stamp's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Stamp reported the following data for 20X8 and 20X9:
Package reported net income of $100,000 and paid dividends of $30,000 for both the years.
Based on the preceding information,what is the amount of consolidated comprehensive income reported for 20X9?

A)$145,000
B)$135,000
C)$138,750
D)$128,750

Question 45

On January 1,20X8,Parsley Corporation acquired 75 percent of Sage Company's voting common stock for $90,000 cash.At that date,the fair value of the noncontrolling interest was $30,000.Sage's balance sheet at the date of acquisition contained the following balances:
At the date of acquisition,the reported book values of Sage's assets and liabilities approximated fair value.Consolidating entries are being made to prepare a consolidated balance sheet immediately following the business combination.
Based on the preceding information,the amount of goodwill reported is:

A)$0.
B)$10,000.
C)$15,000.
D)$20,000.

Question 46

On January 1,20X8,Parsley Corporation acquired 75 percent of Sage Company's voting common stock for $90,000 cash.At that date,the fair value of the noncontrolling interest was $30,000.Sage's balance sheet at the date of acquisition contained the following balances:
At the date of acquisition,the reported book values of Sage's assets and liabilities approximated fair value.Consolidating entries are being made to prepare a consolidated balance sheet immediately following the business combination.
Based on the preceding information,in the entry to eliminate the investment balance,

A)retained earnings will be credited for $20,000.
B)additional paid-in-capital will be credited for $20,000.
C)retained earnings will be credited for $10,000.
D)noncontrolling interest will be debited for 30,000.

Question 47

On January 1,20X8,Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.At that date,Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Stamp's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Stamp reported the following data for 20X8 and 20X9:
Package reported net income of $100,000 and paid dividends of $30,000 for both the years.
Based on the preceding information,what is the amount of comprehensive income attributable to the controlling interest for 20X8?

A)$123,750
B)$118,750
C)$119,000
D)$104,000

Question 48

On January 1,20X8,Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.At that date,Stamp reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Stamp's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Stamp reported the following data for 20X8 and 20X9:
Package reported net income of $100,000 and paid dividends of $30,000 for both the years.
Based on the preceding information,what is the amount of consolidated comprehensive income reported for 20X8?

A)$125,000
B)$123,750
C)$118,750
D)$130,000

Question 49

Which of the following stockholders' equity accounts are eliminated during the consolidation process?

A)Common Stock of the subsidiary
B)Preferred Stock of the subsidiary
C)Additional Paid-in Capital of the subsidiary
D)All of the choices.