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Question;1.;The cash purchase of a controlling interest in a;firm on the statement of cash flows is considered;a.;an operating activity.;b.;a financing activity.;c.;an investing activity.;d. as all of the preceding.;2.;The cash purchase of a controlling interest in a;firm requires disclosure on the statement of cash flows in the following as;a(n);a.;financing activity only.;b.;financing activity and in the schedule of noncash;financing and investing activity.;c.;investing activity only.;d.;investing activity and in the schedule of noncash;financing and investing activity.;3.;In;a noncash purchase of a controlling interest in a firm, disclosure is required;on the statement of cash flows disclosure in the following as a(n);a.;financing activity only.;b.;financing activity and in the schedule of noncash;financing and investing activity.;c.;investing activity only.;d.;investing activity and in the schedule of noncash;financing and investing activity.;4.;Amortization of excesses in periods subsequent to;the purchase would affect which sections of a cash flow statement?;a.;operating activity;b.;financing activity;c.;investing activity;d. all of the above;5.;The purchase of additional shares directly from a;subsidiary by the parent results in disclosure in which section of a cash flow;statement?;a.;operating activities;b.;financing activities;c.;investing activities;d. not reflected on the;statement of cash flows;Chapter 6;6.;The;purchase of additional shares from the noncontrolling interest of a subsidiary;by the parent results in disclosure in which section of a cash flow statement?;a.;operating activities;b.;financing activities;c.;investing activities;d. not reflected on the;statement of cash flows;7.;Dividends paid by a subsidiary have the following;affect on the consolidated cash flow;a.;all dividends to the parent and to noncontrolling;stockholders appear on the statement.;b.;only dividends to the parent appear on the;statement.;c.;only dividends to NCI appear on the statement.;d.;neither dividends to the parent or to noncontrolling;stockholders appear on the statement;8.;Which;of the following statements is true?;a.;The consolidated statement of cash flows treats the;purchase of intercompany bonds from parties outside the consolidated group as a;retirement of consolidated debt, and includes the cash outflow under cash flows;from financing activities.;b.;The consolidated statement of cash flows treats the;purchase of intercompany bonds from parties outside the consolidated group as a;retirement of consolidated debt, and includes the cash outflow under cash flows;from investing activities.;c.;The consolidated statement of cash flows treats the;intercompany interest payments and amortization of premiums and/or discounts on;intercompany bonds under operating activities.;d.;The consolidated statement of cash flows treats the;intercompany interest payments and amortization of premiums and/or discounts on;intercompany bonds under investing activities.;9.;Assume investments in the stock of firms not;included in the consolidated group result in the nonconsolidated firm reporting;income of $200,000 and the firm paid dividends of $50,000. If the consolidated;firm paid $10,000 more than book value for its 40% interest and regards the;excess as attributable to goodwill, the operating activities, prepared using;the indirect method, would reflect a net increase as a result of this;investment of __________.;a.;$80,000;b.;$70,000;c.;$59,000;d. $20,000;6-2;Chapter 6;10.;Ponti Company purchased the net assets of the Sorri;Company for $800,000. The net assets of Sorri Company were recorded as follows;on the acquisition date;Cash.............................................;$;50,000;Inventory........................................;150,000;Land.............................................;150,000;Building;(net)...................................;400,000;Liabilities......................................;$;(200,000);Net assets.....................................;550,000;=========;The market;values were as follows: Inventory, $160,000, Land, $170,000, Building;$450,000. The excess purchase price is allocated to goodwill. What is the;amount that will appear as cash applied to investing as a result of this;purchase?;a.;$800,000;b.;$720,000;c.;$750,000;d. $670,000;11.;Company P acquired 80% of the outstanding common;stock of the Company S by issuing common stock with a market value of $550,000.;The balance sheet of Company S was as follows on the acquisition date;Assets;Liabilities and Equity;Cash...........;$ 50,000............Liabilities;par..;$120,000;Inventory.......;120,000;Common stock, $10;100,000;Land............;100,000;Other paid-in capital..;150,000;Building (net)..;350,000;Retained;earnings......;250,000;Total.........;$620,000;Total................;$620,000;========;========;The market;values were as follows: Inventory, $130,000, Land, $120,000, Building;$400,000. What is the amount that will appear as cash-investing on the;consolidated statement of cash flows, as a result of this purchase?;a.;$600,000;b.;$500,000;c.;$(50,000);d. $0;6-3;Chapter 6;12.;Company P acquired 75% of the outstanding common;stock of the Company S by issuing common stock with a market value of $650,000;on January 1, 20X3. The balance sheet of Company S was as follows on the;acquisition date;Assets;Liabilities and Equity;Cash...........;$100,000............Liabilities;par..;$100,000;Inventory.......;90,000;Common stock, $10;100,000;Land............;150,000;Other paid-in capital..;200,000;Building (net)..;500,000;Retained earnings......;440,000.........Total;$840,000................Total;$840,000;========;========;The market values were as;follows: Inventory, $180,000, Land, $150,000, Building, $600,000. What is the;amount that will appear as cash-financing as a result of this purchase?;a.;$560,000;b.;$100,000;c.;$75,000;d. $0;13.;Company P acquired 60% of the outstanding common;stock of Company S by issuing common stock with a market value of $400,000 on;January 1, 20X3. The balance sheet of Company S was as follows on the;acquisition date;Assets;Liabilities and Equity;Cash...........;$ 50,000............Liabilities;par..;$ 80,000;Inventory.......;100,000;Common stock, $10;100,000;Land............;100,000;Other paid-in capital..;120,000;Building (net)..;250,000;Retained;earnings......;200,000;Total.........;$500,000;Total................;$500,000;========;========;The market;values were as follows: Inventory, $130,000, Land, $150,000, Building;$400,000. The inventory was sold during 20X3, the building has a 10-year life;and any excess purchase price is attributed to goodwill. What adjustment is;needed to consolidated net income to arrive at cash flow-operations for 20X4;under the indirect method, as a result of amortization of excesses from the;purchase?;a.;$1,000;b.;$9,000;c.;$14,800;d. $15,000;6-4;Chapter 6;14.;Company P purchased an 80% interest in Company S on;January 1, 20X3, at a price in excess of book value, such that a patent arises;in the consolidation process. As a result of amortizing the patent on the;consolidated income statement, where would an adjustment be required in the;following sections of the consolidated statement of cash flows?;Operating;Investing;Financing No Adjustment;a.;Yes;No;No;No;b.;No;Yes;No;No;c.;No;No;Yes;No;d. No;No;No;Yes;15.;A parent company purchased all the outstanding bonds;of its subsidiary. Will this cash transaction appear in the following sections;of the consolidated statement of cash flows?;Operating;Investing;Financing No Adjustment;a.;Yes;No;No;No;b.;No;Yes;No;No;c.;No;No;Yes;No;d. No;No;No;Yes;16.;A parent company owns 80% of the common stock of its;subsidiary. During the current year, the parent purchases an additional 10%;interest from noncontrolling shareholders. On which line of the following;sections of the consolidated statement of cash flows would this cash;transaction appear?;Operating;Investing;Financing No Adjustment;a.;Yes;No;No;No;b.;No;Yes;No;No;c.;No;No;Yes;No;e. No;No;No;Yes;17. Basic Earnings Per Share;(BEPS) is calculated by dividing;a.;consolidated net income by parent company;outstanding stock.;b.;consolidated net income by parent company;outstanding stock and subsidiary outstanding stock.;c.;consolidated net income by parent company;outstanding stock and subsidiary noncontrolling outstanding stock.;d. the;controlling interest in net income by parent company outstanding stock.;6-5;Chapter 6;18. When the acquisition of a;subsidiary occurs during a reporting period using the purchase method, the;computation of both BEPS and DEPS includes subsidiary income;a.;and subsidiary securities for the entire period.;b.;for the entire period and the number of subsidiary;shares weighted for the partial period.;c. for the;partial period and the number of subsidiary shares weighted for the partial;period;d. for the;partial period and the number of subsidiary shares entire period

 

Paper#44371 | Written in 18-Jul-2015

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