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ACC 401 Practice Final

ACC 401 Practice Final

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Published by misstonia

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Published by: misstonia on Jun 28, 2011
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08/14/2013

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 Name: __________________________ Date: _____________ 1.If a portion of an investment is sold, the value of the shares sold is determined by usingthe:1. first-in, first-out method.2. average cost method.3. specific identification method.A)1B)2C)3D)1 and 32.If a parent company acquires additional shares of its subsidiary's stock directly from thesubsidiary for a price less than their book value:1. total noncontrolling book value interest increases.2. the controlling book value interest increases.3. the controlling book value interest decreases.A)1B)2C)3D)1 and 33.Under the partial equity method, the workpaper entry that reverses the effect of subsidiary income for the year includes a:1. credit to Equity in Subsidiary Income.2. debit to Subsidiary Income Sold.3. debit to Equity in Subsidiary Income.A)1B)2C)3D)both 1 and 2
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4.Polk Company owned 24,000 of the 30,000 outstanding common shares of SloanCompany on January 1, 2010. Polk's shares were purchased at book value when the fair values of Sloan's assets and liabilities were equal to their book values. The stockholders'equity of Sloan Company on January 1, 2010, consisted of the following:Common stock, $15 par value$ 450,000Other contributed capital337,500Retained earnings 712,500Total$1,500,000 Sloan Company sold 7,500 additional shares of common stock for $90 per share onJanuary 2, 2010. If Polk Company purchased all 7,500 shares, the book entry to recordthe purchase should increase the Investment in Sloan Company account byA)$562,500.B)$590,625.C)$675,000.D)$150,000.E)Some other account.5.Polk Company owned 24,000 of the 30,000 outstanding common shares of SloanCompany on January 1, 2010. Polk's shares were purchased at book value when the fair values of Sloan's assets and liabilities were equal to their book values. The stockholders'equity of Sloan Company on January 1, 2010, consisted of the following:Common stock, $15 par value$ 450,000Other contributed capital337,500Retained earnings 712,500Total$1,500,000Sloan Company sold 7,500 additional shares of common stock for $90 per share onJanuary 2, 2010. If all 7,500 shares were sold to noncontrolling stockholders, theworkpaper adjustment needed each time a workpaper is prepared should increase(decrease) the Investment in Sloan Company byA)($140,625).B)$140,625.C)($112,500).D)$112,500.E)None of these.
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6.On January 1, 2006, Parent Company purchased 32,000 of the 40,000 outstandingcommon shares of Sims Company for $1,520,000. On January 1, 2010, Parent Companysold 4,000 of its shares of Sims Company on the open market for $90 per share. SimsCompany's stockholders' equity on January 1, 2006, and January 1, 2010, was asfollows:1/1/061/1/10Common stock, $10 par value$400,000$400,000Other contributed capital400,000400,000Retained earnings 800,000 1,400,000$1,600,000$2,200,000 The difference between implied and book value is assigned to Sims Company's land.The amount of the gain on sale of the 4,000 shares that should be recorded on the booksof Parent Company isA)$68,000.B)$170,000.C)$96,000.D)$200,000.E)None of these.7.On January 1, 2006, Patterson Corporation purchased 24,000 of the 30,000 outstandingcommon shares of Stewart Company for $1,140,000. On January 1, 2010, PattersonCorporation sold 3,000 of its shares of Stewart Company on the open market for $90 per share. Stewart Company's stockholders' equity on January 1, 2006, and January 1, 2010,was as follows:1/1/061/1/10Common stock, $10 par value$ 300,000$ 300,000Other contributed capital300,000300,000Retained earnings 600,000 1,050,000$1,200,000$1,650,000 The difference between implied and book value is assigned to Stewart Company's land.As a result of the sale, Patterson Corporation's Investment in Stewart account should becredited for A)$165,000.B)$206,250.C)$120,000.
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