Details of this Paper

accounts data bank

Description

solution


Question

Question;20.;Subsidiary Company issued $200,000 of 8%, 5-year;bonds on January 1, 20X6. The discount on issuance was $12,000. Bond interest;is paid annually on December 31. On December 31, 20X8, Parent Company purchased;one-half of the outstanding bonds for $96,000. Both companies use the;straight-line method of amortization. How much interest expense will appear on;the December 31, 20X8, consolidated income statement?;a.;$18,400;b.;$16,000;c.;$9,200;d. $8,000;21.;Subsidiary Company issued $200,000 of 8%, 5-year;bonds on January 1, 20X6. The discount on issuance was $12,000. Bond interest;is paid annually on December 31. On December 31, 20X8, Parent Company purchased;one-half of the outstanding bonds for $96,000. Both companies use the;straight-line method of amortization. How much interest expense will appear on;the December 31, 20X9, consolidated income statement?;a.;$18,400;b.;$16,000;c.;$9,200;d. $8,000;22.;The consolidated income statement in the year one;member of a consolidated group purchases bonds from outside parties includes;a.;an extraordinary gain if purchased above book value.;b.;an extraordinary gain if purchased below book value.;c.;loss if purchased below book value.;d. gain if purchased above book;value.;1;The consolidated income statement in the year one;member of a consolidated group purchases bonds from outside parties includes;a(n);a.;extraordinary loss if purchased above book value.;b.;extraordinary loss if purchased below book value.;c.;loss if purchased above book value.;d. loss if purchased above book;value.;24. On an;income distribution schedule, any gain or loss resulting from intercompany;bonds is absorbed by;a.;the issuer of the bonds.;b.;the purchaser of the bonds.;c.;allocation between the issuer and the purchaser.;d. none of the above;5-6;Chapter 5;25.;In years subsequent to the year one member of a;consolidated group purchases bonds from outside parties, Consolidated Income;Statements;a. recognize a;prorated share of any gain or loss from intercompany bonds.;b. recognize a;prorated share of any gain but would not show a share of a loss from;intercompany bonds.;c. recognize a;prorated share of any loss but would not show a share of a gain from;intercompany bonds.;d. would not recognize any gain;or loss from intercompany bonds.;26. When one member of a;consolidated group purchases only part of the outstanding bonds of another;member of the group (for example, 80% of the bonds);a.;all bonds, and all the interest expense and interest;revenue applicable to the bonds should be eliminated.;b. 20% of the;bonds, and 20% the interest expense and interest revenue applicable to the;bonds should be eliminated.;c. 80% of the;bonds, and 80% the interest expense and interest revenue applicable to the;bonds should be eliminated.;d. none of the;bonds, and none of the interest expense and interest revenue applicable to the;bonds should be eliminated.;27. Leasing subsidiaries are;formed to achieve centralized asset management through leasing to affiliated;firms, and when they are consolidated with the parent, they are consolidated;with the parent;a. only if the;parent controls at least 20% of the leasing subsidiary.;b. only if the;parent controls at least 50% of the leasing subsidiary.;c. only if the;parent controls at least 90% of the leasing subsidiary.;d. regardless of the ownership;percentage of the parent.;28. The effect of an operating;lease on the income distribution schedule;a.;is non-existent.;b.;affects only the lessee's income.;c.;affects only the lessor's income.;d.;affects the amount of income or distribution of;income between the noncontrolling and controlling interests.;5-7;Chapter 5;29. Lease terms can be considered;to be "significantly affected:;a. when the;terms are the same for affiliated firms as for independent firms.;b. when the;terms could not reasonably be expected to occur between independent firms.;c.;only if the lease is an operating lease to the;lessee and lessor.;d.;only if the lease is a direct-financing lease to the;lessee and lessor.;30. Which of the following;statements is true?;a. No;adjustments are made in the income distribution schedule as a result of;Operating, Direct-Financing, and Sales-Type leases.;b. No;adjustments are made in the income distribution schedule as a result of;Operating and Direct-Financing leases.;c. No;adjustments are made in the income distribution schedule as a result of;Operating and Sales-Type leases.;d. No adjustments;are made in the income distribution schedule as a result of Direct-Financing;and Sales-Type leases.;31. Which of the following;statements is true?;a. No;elimination entries are required on a worksheet as a result of Operating;Direct-Financing, and Sales-Type leases.;b. No;elimination entries are required on a worksheet as a result of Direct-Financing;and Sales-Type leases.;c. No;elimination entries are required on a worksheet as a result of Operating;leases.;d. All the preceding are false.;32.;When there is an unguaranteed residual value for the;lessor in a Direct-Financing Lease, this means;a.;the total payments to be received by the lessor will;come from the lessee.;b.;the total payments to be received by the lessee will;come from the lessor.;c. a portion of;the total payments to be received by the lessor will come from parties outside;the consolidated group.;d. a portion;of the total payments to be received by the lessee will come from parties;outside the consolidated group.;5-8;Chapter 5;33. Consolidation procedures for;Sale-Type Leases;a. allow for;the recognition of the profit or loss from the lease by the lessee at the;inception of the lease.;b. allow for;the recognition of the profit or loss from the lease by the lessor at the;inception of the lease.;c.;defer the profit or loss and then amortize it over;the lessee's period of usage.;d.;defer the profit or loss and then amortize it over;the lessor's period of usage.;34. Which of the following;statements is true?;a.;When one affiliate purchases another affiliate's;bonds prior to the business combination, the bonds become an intercompany debt;as of the purchase date and thus are viewed as being retired on the purchase;date when consolidating if the acquisition is viewed as a purchase rather than;a pooling of interest.;b.;When one affiliate purchases another affiliate's;bonds prior to the business combination, the bonds become an intercompany debt;as of the purchase date and thus are viewed as being retired on the purchase;date when consolidating if the acquisition is viewed as a pooling of interest;rather than a purchase.;c.;When one affiliate purchases another affiliate's;bonds prior to the business combination, the bonds become an intercompany debt;as of the purchase date and thus are viewed as being retired on the purchase;date when consolidating if the acquisition is viewed as a pooling of interest;or a purchase.;d. All of the above answers are;false.;35.;The parent company leased a machine to its;subsidiary using a direct financing lease that included a bargain purchase;option. As a result of the intercompany lease, the following items should be;eliminated in the consolidation process;Machine;Debt;Interest;Depreciation;Expense;a.;Yes;Yes;Yes;Yes;b.;Yes;Yes;Yes;No;c.;Yes;No;No;No;d. No;Yes;Yes;No;5-9;Chapter 5;36.;Phil Company leased a machine to its 100%-owned;subsidiary, Scout Company. The direct financing lease required annual lease;payments in advance of $2,319 for 5 years. The present value of the minimum;lease payments at 8% interest is $10,000. The adjustment needed to arrive at;consolidated net income for the first year after the lease is;a.;$0;b.;$800;c.;$2,319;d. $10,000;5.;Phil Company leased a machine to its 100%-owned;subsidiary, Scout Company. The direct financing lease required annual lease;payments in advance of $2,319 for 5 years. The present value of the minimum;lease payments at 8% interest is $10,000. The adjustment of assets and;liabilities needed to prepare a consolidated balance sheet is to eliminate the;asset leased.;asset leased and the obligation under the capital;lease.;obligation under the capital lease and the present;value of the minimum lease payments.;obligation;under the capital lease.;38.;Park owns an 80% interest in the common stock of;Stable Company. Park leased a machine to Stable under a 5-year, direct;financing lease with a bargain purchase option. The lease term began January 1;20X4. The impact of the lease on the Noncontrolling share of income for 20X4;a. is an increase.;b.;is a decrease.;c.;is none.;d. cannot be determined from;the information given.;5-10;Chapter 5;39.;Lion Company leased equipment to its wholly owned;subsidiary, Tiger, Inc., on July 1, 20X8. The lease is for a 10-year period;(the useful life of the asset), expiring June 30, 20X8. The first of 10 equal;annual payments of $600,000 was made on July 1, 20X8 and established a list;selling price of $3,900,000 on the equipment. Assume that on July 1, 20X8, the;present value of the rent payments over the lease term discounted at 12% was;$3,797,000. The book value of the asset is $3,100,000.;What is the profit on the;sale that Lion should recognize on the consolidated financial statements for;the years ended December 31, 20X8 and 20X9?;a.;$800,000 and $0;b.;$697,000 and $80,000;c.;$80,000 and $80,000;d. $34,850 and $69,700

 

Paper#44367 | Written in 18-Jul-2015

Price : $22
SiteLock