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When Jolt Co. acquired 75% of the common stock of Yelts Corp., Yelts owned land




Question;1.;When Jolt Co. acquired 75% of the common stock of Yelts Corp.;Yelts owned land with a book value of $70,000 and a fair value of $100,000.;What amount should have been reported for the land in a;consolidated balance sheet at the acquisition date?;$52,500;$70,000;$75,000;$100,000;Question 2. 2.When Jones;Co. acquired 75% of the common stock of Jackson Corp., Jackson owned land;with a book value of $70,000 and a fair value of $100,000.;What is the amount of excess land allocation attributed to the;non-controlling interest at the acquisition date? (Points: 2);$0;$7,500;$30,000;$22,500;Question 3. 3.Perch Co.;acquired 80% of the common stock of Float Corp. for $1,600,000. The fair;value of Float's net assets was $1,850,000, and the book value was;$1,500,000. The non-controlling interest shares of Float Corp. are not;actively traded.;What amount of goodwill should be attributed to Perch at the;date of acquisition?;$250,000;$0;$120,000;$170,000;Question 4. 4.Parnell Co.;acquired 80% of the common stock of Franklin Corp. for $1,600,000. The fair;value of Franklin's net assets was $1,850,000, and the book value was;$1,500,000. The non-controlling interest shares of Franklin Corp. are not;actively traded.;What is the dollar amount of Franklin Corp.'s net assets that;would be represented in a consolidated balance sheet prepared at the date;of acquisition?;$1,600,000;$1,480,000;$1,850,000;$1,780,000;Question 5. 5.Femur Co.;acquired 70% of the voting common stock of Harbor Corp. on January 1, 2013.;During 2013, Harbor had revenues of $2,500,000 and expenses of $2,000,000.;The amortization of excess cost allocations totaled $60,000 in 2013.;The non-controlling interest's share of the earnings of Harbor;Corp. is calculated to be what amount?;$132,000;$0;$150,000;$168,000;Question 6. 6.;Bell Company purchases 80% of Demers Company;for $500,000 on January 1, 2013. Demers reported common stock of $300,000;and retained earnings of $200,000 on that date. Equipment was undervalued;by $30,000 and buildings were undervalued by $40,000, each having a 10-year;remaining life. Any excess cost over fair value was attributed to goodwill;with an indefinite life. Based on an annual review, goodwill has not been;impaired.;Demers earns income and pays dividends as follows;2013;2014;2015;Net income;$100,000;$120,000;$130,000;Dividends;40,000;50,000;60,000;Assume the equity method is applied.Compute;Bell's income from Demers for the year ended December 31, 2015.;$50,400;$56,000;$98,400;$124,400;Question 7. 7.In a;step acquisition, which of the following statements is false?;(Points: 2);Each investment;is viewed as an individual purchase with its own cost allocations and related;amortizations.;Income from;subsidiary is computed by applying a partial year for a new purchase acquired;during the year.;Income from;subsidiary is computed for the entire year for a new purchase acquired during;the year.;Noncontrolling;interest is computed by multiplying the book value of the subsidiary at;year-end by the new percent ownership.;Question 8. 8.Keefe;Incorporated, acquires 70% of George Company on September 1, 2013, and an;additional 10% on April 1, 2014. Annual amortization of $5,000 relates to;the first acquisition and $3,000 to the second. George reports the;following figures for 2014;Revenues;$500,000;Expenses;400,000;Retained earnings 1/1/14;300,000;Dividends paid;50,000;Common Stock;200,000;Without regard for this investment, Keefe;earns $300,000 in net income during 2014.;What is consolidated net income for 2014?;$365,000;$370,250;$372,000;$374,000;Question 9. 9.All of;the following statements regarding the sale of subsidiary shares are true;except which of the following.;The use of;specific identification based on serial number is acceptable.;The use of the;FIFO assumption is acceptable.;The use of the;averaging assumption is acceptable.;The use of;specific LIFO assumption is acceptable.;Question 10. 10.Kordel;Inc. holds 75% of the outstanding common stock of Raxston Corp. Raxston;currently owes Kordel $500,000 for inventory acquired over the past few;months. In preparing consolidated financial statements, what amount;of this debt should be eliminated?;$375,000;$125,000;$300,000;$500,000;Question 11. 11.X-Beams Inc. owned 70% of the voting common;stock of Kent Corp. During 2013, Kent made several sales of inventory to;X-Beams. The total selling price was $180,000 and the cost was $100,000. At;the end of the year, 20% of the goods were still in X-Beams' inventory.;Kent's reported net income was $300,000. What was the noncontrolling;interest in Kent's net income?;$90,000;$88,560;$85,200;$77,700;Question 12. 12.Yukon Co. purchased 75% percent of the;voting common stock of Ontario Corp. on January 1, 2013. During the year;Yukon made sales of inventory to Ontario. The inventory cost Yukon $260,000;and was sold to Ontario for $390,000. Ontario still had $60,000 of the;goods in its inventory at the end of the year. The amount of unrealized;intercompany profit which should be eliminated in the consolidation;process at the end of 2013 is;$15,000;$20,000;$32,500;$30,000;Question 13. 13.On;January 1, 2013, Race Corp. purchased 80% of the voting common stock of;Gallow Inc. During the year, Race sold to Gallow for $450,000 goods which;cost $330,000. Gallow still owned 15% of the goods at year-end. Gallow's;reported net income was $204,000, and Race's net income was $806,000. Race;decided to use the equity method to account for this investment.;What was the noncontrolling interest's share of consolidated net income?;$37,200;$22,800;$30,900;$40,800;Question 14. 14.;Norek Corp. owned 70%;of the voting common stock of Thelma Co. On January 2, 2013, Thelma sold a;parcel of land to Norek. The land had a book value of $32,000 and was sold;to Norek for $45,000. Thelma's reported net income for 2013 was $119,000.;What is the noncontrolling interest's share of Thelma's net income?;$35,700;$31,800;$39,600;$26,100;Question 15. 15.Prince Corp. owned 80%;of Kile Corp.'s common stock. During October 2013, Kile sold merchandise to;Prince for $140,000. At December 31, 2013, 50% of this merchandise remained;in Prince's inventory. For 2013, gross profit percentages were 30% of sales;for Prince and 40% of sales for Kile. The amount of unrealized intercompany;profit in ending inventory at December 31, 2013 that should be eliminated;in the consolidation process is;$28,000;$56,000;$22,400;$42,000;Question 16. 16.;On November 8, 2013, Power;Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost;$61,500 and was sold to Wood for $89,000. From the perspective of the;combination, when is the gain on the sale of the land realized?;Proportionately;over a designated period of years.;When Wood Co.;sells the land to a third party.;No gain can be;recognized.;When Wood Co.;begins using the land productively.;Question 17. 17.Which;of the following statements is true regarding an intercompany sale of;land?;A loss is always;recognized but a gain is eliminated on a consolidated income statement.;A loss and a gain;are always eliminated on a consolidated income statement.;A loss and a gain;are always recognized on a consolidated income statement.;A gain is always;recognized but a loss is eliminated on a consolidated income statement.;Question 18. 18.Shannon Co. owned all of the voting common;stock of Chain Corp. The corporations' balance sheets dated December 31;2013, include the following balances for land: for;Shannon--$416,000, and for Chain--$256,000. On the original date of;acquisition, the book value of Chain's land was equal to its fair market;value. On April 4, 2014, Shannon sold to Chain a parcel of land with a book;value of $65,000. The selling price was $83,000. There were no other;transactions which affected the companies' land accounts during;2014. What is the consolidated balance for land on the 2014 balance;sheet?;$672,000;$690,000;$755,000;$737,000;Question 19. 19.Justings Co. owned 80% of Evana Corp. During;2013, Justings sold to Evana land with a book value of $48,000. The selling;price was $70,000. In its accounting records, Justings should;recognize a gain;of $17,600.;defer recognition of the gain until Evana;sells the land to a third party.;recognize a gain;of $8,000.;recognize a gain;of $22,000.;Question 20. 20.On January;1, 2013, Demers Company, an 80% owned subsidiary of Collins, Inc.;transferred equipment with a 10-year life (six of which remain with no;salvage value) to Collins in exchange for $84,000 cash. At the date of;transfer, Demers records carried the equipment at a cost of $120,000 less;accumulated depreciation of $48,000. Straight-line depreciation is used.;Demers reported net income of $28,000 and $32,000 for 2013 and 2014;respectively. Compute the gain recognized by Demers Company relating to the;equipment for 2014;$36,000;$34,000;$12,000;$10,000;21. What is meant by unrealized;inventory gains, and how are they treated on a consolidation worksheet?


Paper#52035 | Written in 18-Jul-2015

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