ch02

Student: ___________________________________________________________________________

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If Push Company owned 51 percent of the outstanding common stock of Shove Company, which reporting method would be appropriate? A. Cost method B. Consolidation C. Equity method D. Merger method Usually, an investment of 20 to 50 percent in another company's voting stock is reported under the: A. cost method. B. equity method. C. full consolidation method. D. fair value method. The main pronouncement on equity-method reporting, APB 19 (ASC 323 and 325) requires all of the following except: A. The investor's share of the investee's extraordinary items should be reported. B. The investor's share of the investee's prior-period adjustments should be reported. C. Continued use of the equity-method even if continued losses results in a zero or negative balance in the investment account. D Preferred dividends of the investee should be deducted from net income before the investor computes . its share of investee earnings.

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On January 1, 20X4, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Shipping's retained earnings was $75,000 on the date of acquisition. On December 31, 20X4, the trial balance data for the two companies are as follows:

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Based on the information provided, what amount of net income will be reported in the consolidated financial statements prepared on December 31, 20X4? A. $100,000 B. $85,000 C. $110,000 D. $125,000

000 C. what amount of total liabilities will be reported in the consolidated balance sheet prepared on December 31. $650. 8. D. at underlying book value of $100. 20X4? A. A dividend declared by the investee in excess of the investee's retained earnings.500 C. Under the cost method of accounting for a stock investment.000 B. A dividend declared by the investee in excess of its earnings since acquisition by the investor.000 for 20X8 and paid total dividends of $72.000.000 From an investor's point of view. $310. $16.000 B. 20X9 Athlon Company acquired 30 percent of the common stock of Opteron Corporation. $460. 7.000 B. what amount of total assets will be reported in the consolidated balance sheet prepared on December 31. D. $12. at underlying book value.000 D. C. B.000. $630. 20X4? A. 20X4? A. C. $525. what amount of retained earnings will be reported in the consolidated balance sheet prepared on December 31. $425. is written off. William Company acquired 30 percent of eGate Company's common stock. $4.000 D. $225. Based on the information provided. For the same year.000 Based on the information provided. 20X4? A. No dividends are in arrears. B. 5 percent cumulative preferred stock outstanding. $190.000 D.000 C. By what amount would Athlon's investment in Opteron Corporation increase for the year. a liquidating dividend from an investee is: A. Which of the following observations is NOT consistent with the cost method of accounting? A. 12. what amount of total stockholder's equity will be reported in the consolidated balance sheet prepared on December 31. $125. if Athlon used the equity method? A. Investee dividends from earnings since acquisition by investor are treated as reduction of investment.000 B.500 D. Opteron reported net income of $55. $525. $235. . Any dividend declared by the investee since acquisition. $0 B.000 shares of $2 par value.000 D. 11. $335. It did not pay any dividends during the year.000 C.000. William uses the equity method to account for this investment. is amortized. eGate has 100. C. $190. 10. eGate reported net income of $150.000. D.000 C. It is consistent with the treatment normally accorded noncurrent assets.000 Based on the information provided. B. $210. Investments are carried by the investor at historical cost. 20X8. On January 1. is not amortized or written off.000 On January 1. 9. A dividend declared by the investee in excess of its earnings in the current year.000 Based on the information provided. which includes an extraordinary gain of 40. 6. $115. the differential: A.5. is written down if related to limited-life assets. Differential is not amortized or written off. $310.

000 on December 31. $7. what amount will be reported by Yang as balance in investment in Spiel on December 31.500 C.000 B. $11.250 D. what amount would be reported by William Company as the balance in its investment account on December 31.000 cash. $111.000 14. Based on the preceding information. if it used the fair value method of accounting? A. $18. what amount will be reported by Yang as income from its investment in Spiel for 20X7. $120. what amount will be reported by Yang as income from its investment in Spiel for 20X8.500 18. $54.000 C. $122. $11. $2. 16.500 C. $62. Spiel Company reported net income of $75. what amount of investment income will William Company report from its investment in eGate for the year? A. $12. $42. Based on the preceding information. if it used the equity method of accounting? A. $7. Based on the preceding information.000 and $105. $26. what amount would William Company receive as dividends from eGate for the year? A. Based on the preceding information.250 17.13. $142.250 D. $17.000 B. $35. 20X8.000 On January 1.500 B.500 B.750 C.400 C.600 D.400 D. 20X8? A.000 for both 20X7 and 20X8. $21. $123.000 D. $6. 20X7. $100. $62. Yang Corporation acquired 25 percent of the outstanding shares of Spiel Corporation for $100.000 B.000 15.500 . $100.250 B.750 D. what amount will be reported by Yang as income from its investment in Spiel for 20X8. $18.250 B.250 C. Based on the preceding information. $118. 20X7 and 20X8 respectively. $45. $11. Based on the preceding information. if it used the fair value method of accounting? A. $7. if it used the equity method of accounting? A. Based on the preceding information. The fair value of shares held by Yang was $110.500 19.000 and paid dividends of $30.600 C.000 D.

23. $122. Which of the following observations is consistent with the equity method of accounting? A. C. proportionate share of the fair value of the investee company's net assets. It may be used in place of consolidation. $420. Additional paid-in capital C.000 during 20X2.20. $105.000 D. net of tax. Common stock B. that the change be accounted for as an unrealized gain included in other comprehensive income. D. All of the balances are eliminated 27. What portion of the balances of subsidiary stockholders' equity accounts are eliminated in preparing the consolidated balance sheet? A. retroactive restatement as if the investor always had used the equity method. D.000 D. Adding together the financial statements of two or more legally separate companies.000 C.750 C. B. Based on the preceding information and assuming Parent uses the cost method to account for its investment in Son. C. $118. C. Parent Company purchased 100% of Son Inc. on January 1. Based on the preceding information. $424. only a footnote disclosure. what amount will be reported by Yang as balance in investment in Spiel on December 31. what is the balance in Parent's Investment in Son account on December 31. Closing the subsidiary's earnings into the parent's retained earnings. $416. $420. B. prior to consolidation? A. Son reported earnings of $82. C. Dividends declared by the investee are treated as income by the investor.000 and declared dividends of $4. prior to consolidation? A. 20X2 for $420.000 D. cost minus any differential.000 B. 20X2. D. Eliminating intercompany transactions and holdings. The consolidation process consists of all the following except: A. that the cumulative amount of the change be shown as a line item on the income statement.000 26. if it used the fair value method of accounting? A. the investment initially should be recorded at: A. 20X2. 20X8. what is the balance in Parent's Investment in Son account on December 31.000 B. $498. creating a single set of financial statements.000. Its primary use is in reporting nonsubsidiary investments. D. $100. It is used when the investor lacks the ability to exercise significant influence over the investee. A change from the cost method to the equity method of accounting for an investment in common stock resulting from an increase in the number of shares held by the investor requires: A.000 C. Based on the preceding information and assuming Parent uses the equity method to account for its investment in Son. $498. B. . Retained Earnings D. proportionate share of the book value of the investee company's net assets. Combining the accounts of separate companies. $424.000 25. 22. Under the equity method of accounting for a stock investment.000 B. B. cost. 24. $416.500 21.

what is Parent's post-closing retained earnings balance on December 31. $165. Included in Standard's liabilities was an account payable to Beta in the amount of $20.000 D.000 D. what amount of stockholders' equity was reported in the consolidated balance sheet immediately after acquisition? A.000 B.000 B. $650.000 Parent Co. $370. $750.000. $150. $150. Based on the preceding information. $141. and stockholders' equity of $220. $900. At that date. $159.00 29.000.000 of net income and declares $6.000.000 C. $280.000 B. liabilities of $250. $530. During 20X1.000 .000 C. Immediately prior to the acquisition. $750.000. what amount of total liabilities was reported in the consolidated balance sheet immediately after acquisition? A. $525. 32. Parent reports $105. $485. what amount of total assets was reported in the consolidated balance sheet immediately after acquisition? A. $660. Based on the preceding information. which Beta included in its accounts receivable.000. $500.000 of dividends.000 of separate operating earnings plus $15. Beta reported total assets of $500. $650. by issuing bonds with a par value and fair value of $150. 20X1 when Parent's retained earnings balance is $520.000.000 D.000.000 of equity-method income from its 100 percent interest in Son.000 D.000 33. liabilities of $280. Based on the preceding information.000 B. purchases 100% of Son Company on January 1. Parent declares dividends of $40. Son reports $15. $505. 20X1? A.000 C. and stockholders' equity of $150.000 C.000.Beta Company acquired 100 percent of the voting common shares of Standard Video Corporation. $920. $220.000 30.000 D.000 C. what amount of total assets did Beta report in its balance sheet immediately after the acquisition? A. $500. Based on the preceding information. Standard Video reported total assets of $400. its bitter rival.000 D.000 31. Based on the preceding information.000.000 B.000.000 C. Based on the preceding information. 20X1? A. $880. what is Son's post closing retained earnings balance on December 31.000 B. $350. 28.000 and Son's is $150. $600.

what is the consolidated retained earnings balance on December 31.000 D. 3) Define a parent corporation. Based on the preceding information. Dear Corporation acquired 100 percent of the voting shares of Therry Inc. What are some of the other factors that could constitute evidence of the ability to exercise significant influence? 37. common stock ownership of 20 percent or more is viewed as indicating that the investor is able to exercise significant influence over the investee. Why are not all cash dividends considered to be "liquidating dividends"? In your response include a discussion of how an investor accounts for a liquidating dividend.000 C. $470. Required: 1) Which company is the parent and which is the subsidiary? 2) Define a subsidiary corporation. In the absence of other evidence.000 new shares of $5 par value common stock with a $30 market value. 20X1? A. 36. $585.000 35. 4) Which entity prepares consolidated worksheet? 5) Why are elimination entries used? . $759. A cash dividend returns assets to the stockholders while reducing corporate liquidity.000 B. by issuing 10.34. $600.

20X7. 20X8. On January 1. Plimsol Company acquired 100 percent of Shipping Corporation's voting shares. Plimsol uses the cost method in accounting for its investment in Shipping. 2) Prepare a three-part consolidation worksheet in good form as of December 31.38. The trial balances for Plimsol Company and Shipping Corporation as of December 31. follow: Required: 1) Provide all eliminating entries required to prepare a full set of consolidated statements for 20X8. . at underlying book value. 20X8. Shipping's reported retained earnings of $75.000 on the date of acquisition.

39. Zigma uses the equity method in accounting for its ownership of Standard. On December 31. Zigma Company acquired 100 percent of Standard Company's common shares at underlying book value. 20X9. 2) Prepare a three-part consolidation worksheet as of December 31. 20X9. to complete a consolidation worksheet. On January 1. 20X9. 20X9. the trial balances of the two companies are as follows: Required: 1) Prepare the eliminating entries needed as of December 31. .

an investment of 20 to 50 percent in another company's voting stock is reported under the: A. the trial balance data for the two companies are as follows: Baker . B. equity method. Merger method AACSB: Reflective Thinking Baker .ch02 Key 1. full consolidation method. On January 1. Plimsol uses the cost method in accounting for its investment in Shipping.Preferred dividends of the investee should be deducted from net income before the investor computes its share of investee earnings.Chapter 02 #3 Blooms: Remember Difficulty: 2 Medium Learning Objective: 02-01 Understand and explain how ownership and control can influence the accounting for investments in common stock. If Push Company owned 51 percent of the outstanding common stock of Shove Company. D. cost method. 2. On December 31. Usually. Plimsol Company acquired 100 percent of Shipping Corporation's voting shares. AACSB: Reflective Thinking Baker . Consolidation C. 20X4. 20X4. C.000 on the date of acquisition. The investor's share of the investee's extraordinary items should be reported. B. AACSB: Reflective Thinking Baker . Equity method D.Chapter 02 . 3. The investor's share of the investee's prior-period adjustments should be reported. fair value method. D. at underlying book value. which reporting method would be appropriate? A.Chapter 02 #1 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-01 Understand and explain how ownership and control can influence the accounting for investments in common stock. C. Shipping's retained earnings was $75. Continued use of the equity-method even if continued losses results in a zero or negative balance in the investment account. APB 19 (ASC 323 and 325) requires all of the following except: A.Chapter 02 #2 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-01 Understand and explain how ownership and control can influence the accounting for investments in common stock. Cost method B. The main pronouncement on equity-method reporting.

Based on the information provided. Based on the information provided.000 C.000 AACSB: Analytic Baker . 7. 20X4? A. $125.000 C.000 AACSB: Analytic Baker . 20X4? A.000 D.Chapter 02 #8 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments. Based on the information provided. $630.000 AACSB: Analytic Baker .000 D. $125. $190. $110.Chapter 02 #5 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments. $425. $525. 20X4? A. what amount of total liabilities will be reported in the consolidated balance sheet prepared on December 31. $310. what amount of retained earnings will be reported in the consolidated balance sheet prepared on December 31. what amount of total stockholder's equity will be reported in the consolidated balance sheet prepared on December 31. 5.000 D. 6. Based on the information provided. Based on the information provided. $100.Chapter 02 #4 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments. 20X4? A. $235. what amount of net income will be reported in the consolidated financial statements prepared on December 31. $225. $460.000 C.000 D. $650. $210.Chapter 02 #7 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments. $335. $525. 8.000 B.000 AACSB: Analytic Baker . 20X4? A. $85.000 C.4.000 D.000 AACSB: Analytic Baker . $190.000 B.000 B.000 B. .000 B. what amount of total assets will be reported in the consolidated balance sheet prepared on December 31.Chapter 02 #6 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments. $115.000 C. $310.

On January 1. By what amount would Athlon's investment in Opteron Corporation increase for the year. which includes an extraordinary gain of 40. is written off. at underlying book value of $100. AACSB: Reflective Thinking Baker . Any dividend declared by the investee since acquisition. is amortized.500 C. On January 1. the differential: A.Chapter 02 #10 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments.600 C. AACSB: Reflective Thinking Baker . Which of the following observations is NOT consistent with the cost method of accounting? A. .500 D. $18. 10.000 B. $21.000 AACSB: Analytic Baker . is not amortized or written off. 5 percent cumulative preferred stock outstanding. a liquidating dividend from an investee is: A. D. William uses the equity method to account for this investment. Opteron reported net income of $55.000 shares of $2 par value. Investments are carried by the investor at historical cost. $16.9. 11. A dividend declared by the investee in excess of its earnings since acquisition by the investor. Investee dividends from earnings since acquisition by investor are treated as reduction of investment.Chapter 02 13. A dividend declared by the investee in excess of its earnings in the current year. $62. Based on the preceding information.Chapter 02 #12 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments.000. B.Chapter 02 #11 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments. AACSB: Reflective Thinking Baker .600 D. William Company acquired 30 percent of eGate Company's common stock. D.000 for 20X8 and paid total dividends of $72. $4. C. It did not pay any dividends during the year.000.000. 12. eGate has 100. is written down if related to limited-life assets.Chapter 02 #13 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments. 20X8. Differential is not amortized or written off. Under the cost method of accounting for a stock investment. C. Baker . C. $54. $12. No dividends are in arrears. D.000. at underlying book value. $0 B. For the same year. It is consistent with the treatment normally accorded noncurrent assets.Chapter 02 #9 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-02 Prepare journal entries using the cost method for accounting for investments. what amount would William Company receive as dividends from eGate for the year? A. eGate reported net income of $150. if Athlon used the equity method? A. B. 20X9 Athlon Company acquired 30 percent of the common stock of Opteron Corporation. From an investor's point of view. A dividend declared by the investee in excess of the investee's retained earnings.000 AACSB: Analytic Baker . B.

$118.500 AACSB: Analytic Baker . $17.14. Based on the preceding information. what amount would be reported by William Company as the balance in its investment account on December 31. $142.Chapter 02 #15 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments. 20X7.000 AACSB: Analytic Baker .250 D. if it used the equity method of accounting? A. $42. $12. 20X8? A. 20X8.Chapter 02 #17 Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments. Based on the preceding information. $120. Yang Corporation acquired 25 percent of the outstanding shares of Spiel Corporation for $100.000 C. Based on the preceding information. $18.Chapter 02 16. 17. $100. $7.750 D. Based on the preceding information. $35. $122.000 and $105. $26. On January 1. 18.400 C. . Based on the preceding information.000 and paid dividends of $30. if it used the equity method of accounting? A.000 AACSB: Analytic Baker .250 C. $111.250 AACSB: Analytic Baker . $123.000 for both 20X7 and 20X8.Chapter 02 #16 Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments.750 C.000 D. $7. what amount will be reported by Yang as income from its investment in Spiel for 20X8. what amount will be reported by Yang as income from its investment in Spiel for 20X7.500 B.000 D. what amount of investment income will William Company report from its investment in eGate for the year? A. 15. The fair value of shares held by Yang was $110.500 AACSB: Analytic Baker . $100.Chapter 02 #18 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-05 Prepare journal entries using the fair value option. if it used the fair value method of accounting? A.500 C.500 B.000 B.000 cash. Baker .000 on December 31.400 D.Chapter 02 #14 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments.000 B. $62. $45. 20X7 and 20X8 respectively. Spiel Company reported net income of $75. $11. what amount will be reported by Yang as balance in investment in Spiel on December 31.250 B. $11.

on January 1. if it used the fair value method of accounting? A. Dividends declared by the investee are treated as income by the investor.Chapter 02 #19 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-05 Prepare journal entries using the fair value option. that the change be accounted for as an unrealized gain included in other comprehensive income. AACSB: Reflective Thinking Baker .500 AACSB: Analytic Baker . C.000 and declared dividends of $4.000. C. Its primary use is in reporting nonsubsidiary investments. only a footnote disclosure. cost minus any differential. proportionate share of the book value of the investee company's net assets. if it used the fair value method of accounting? A. 20.Chapter 02 #23 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments. It may be used in place of consolidation.Chapter 02 .250 D. $122. It is used when the investor lacks the ability to exercise significant influence over the investee. 20X2 for $420. B. $6. Which of the following observations is consistent with the equity method of accounting? A. Based on the preceding information. $7.500 AACSB: Analytic Baker .19. net of tax.250 B. retroactive restatement as if the investor always had used the equity method. B. Parent Company purchased 100% of Son Inc. Son reported earnings of $82. D. Under the equity method of accounting for a stock investment. 21.500 C.Chapter 02 #22 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments. $105. the investment initially should be recorded at: A.Chapter 02 #21 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-03 Prepare journal entries using the equity method for accounting for investments. proportionate share of the fair value of the investee company's net assets. cost.Chapter 02 #20 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-05 Prepare journal entries using the fair value option. that the cumulative amount of the change be shown as a line item on the income statement. 20X8. C. D.750 C. $100. AACSB: Reflective Thinking Baker . $11. $2. 22.000 B. B. what amount will be reported by Yang as income from its investment in Spiel for 20X8. what amount will be reported by Yang as balance in investment in Spiel on December 31. $118.000 D. D. 23. AACSB: Reflective Thinking Baker . A change from the cost method to the equity method of accounting for an investment in common stock resulting from an increase in the number of shares held by the investor requires: A.000 during 20X2. Baker . Based on the preceding information.

000 D. creating a single set of financial statements.000. Eliminating intercompany transactions and holdings. 20X2.24. and stockholders' equity of $220. liabilities of $280.000 AACSB: Analytic Baker .000. Standard Video reported total assets of $400. Adding together the financial statements of two or more legally separate companies. its bitter rival.000 B. $498.000 B. 25. $420.000. All of the balances are eliminated AACSB: Reflective Thinking Baker . $424.000 D. by issuing bonds with a par value and fair value of $150. Included in Standard's liabilities was an account payable to Beta in the amount of $20.Chapter 02 #24 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-04 Understand and explain differences between the cost and equity methods. Based on the preceding information and assuming Parent uses the equity method to account for its investment in Son.000. 26.Chapter 02 #27 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-06 Make calculations and prepare basic elimination entries for a simple consolidation. B. At that date. What portion of the balances of subsidiary stockholders' equity accounts are eliminated in preparing the consolidated balance sheet? A.000.Chapter 02 . prior to consolidation? A.Chapter 02 #25 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-04 Understand and explain differences between the cost and equity methods. Beta Company acquired 100 percent of the voting common shares of Standard Video Corporation. D. AACSB: Reflective Thinking Baker . Immediately prior to the acquisition. and stockholders' equity of $150. Additional paid-in capital C. $424. Combining the accounts of separate companies. Based on the preceding information and assuming Parent uses the cost method to account for its investment in Son. Retained Earnings D.000.000. $416.000 AACSB: Analytic Baker . Closing the subsidiary's earnings into the parent's retained earnings. what is the balance in Parent's Investment in Son account on December 31.Chapter 02 #26 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-06 Make calculations and prepare basic elimination entries for a simple consolidation. Beta reported total assets of $500. liabilities of $250. prior to consolidation? A.000 C. $420. The consolidation process consists of all the following except: A. what is the balance in Parent's Investment in Son account on December 31. Common stock B. $416.000 C. $498. 20X2. Baker . which Beta included in its accounts receivable.000. 27. C.

000 of net income and declares $6. what is Parent's post-closing retained earnings balance on December 31. $600.000 C.000 and Son's is $150. Based on the preceding information.000 C. $920. Parent declares dividends of $40. 31. $350.Chapter 02 #28 Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-07 Prepare a Consolidation Worksheet. purchases 100% of Son Company on January 1.000 B. Based on the preceding information. During 20X1.Chapter 02 #32 Blooms: Understand Difficulty: 1 Easy Learning Objective: 02-07 Prepare a Consolidation Worksheet. $900.000 B.000 B.000 D. Son reports $15. Based on the preceding information.Chapter 02 #29 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-07 Prepare a Consolidation Worksheet. $650.000 AACSB: Analytic Baker . $530.000 D. what amount of total assets did Beta report in its balance sheet immediately after the acquisition? A. $660.000 C. $525. $150. 20X1? A. $505.Chapter 02 32.000 D.000 B.000 of dividends.Chapter 02 #30 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-07 Prepare a Consolidation Worksheet. $370. Baker . $220. Parent reports $105.000.000 B. Based on the preceding information.000 D. what amount of total assets was reported in the consolidated balance sheet immediately after acquisition? A. $880. 20X1 when Parent's retained earnings balance is $520.000.Chapter 02 #31 Blooms: Apply Difficulty: 3 Hard Learning Objective: 02-07 Prepare a Consolidation Worksheet.000 D. . Parent Co. $280.000 C. 30.28.000 C. what amount of stockholders' equity was reported in the consolidated balance sheet immediately after acquisition? A. $750.000 of equity-method income from its 100 percent interest in Son. $750.000 of separate operating earnings plus $15. what amount of total liabilities was reported in the consolidated balance sheet immediately after acquisition? A. $650. Based on the preceding information. $485.000 AACSB: Analytic Baker .00 AACSB: Analytic Baker . $500.000 AACSB: Analytic Baker . $500.000 AACSB: Analytic Baker . 29.

Chapter 02 #33 Blooms: Understand Difficulty: 1 Easy Learning Objective: 02-07 Prepare a Consolidation Worksheet. 20X1? A.000 C. Based on the preceding information. Why are not all cash dividends considered to be "liquidating dividends"? In your response include a discussion of how an investor accounts for a liquidating dividend. 36.000 C. Based on the preceding information. $759. Material intercompany transactions 4. $165.Chapter 02 #34 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-07 Prepare a Consolidation Worksheet.000 B. A cash dividend returns assets to the stockholders while reducing corporate liquidity.33. Technological dependency 6. An individual investor must treat a liquidating dividend associated with its investment as a return of capital and reduce the investment account accordingly. . $150. what is Son's post closing retained earnings balance on December 31. Size of investment in relation to concentration of other shareholdings AACSB: Communication Baker .Chapter 02 #35 Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-01 Understand and explain how ownership and control can influence the accounting for investments in common stock. Interchange of managerial personnel 5. Representation on board of directors 2. $159. 35. 20X1? A. Participation in policy making 3.Chapter 02 #36 Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-01 Understand and explain how ownership and control can influence the accounting for investments in common stock. In the absence of other evidence. A dividend represents earnings of a company being returned to its shareholders. common stock ownership of 20 percent or more is viewed as indicating that the investor is able to exercise significant influence over the investee.000 D. It is possible for blocks of stock acquired at different times to have different amounts associated with a potential liquidating dividend.000 AACSB: Analytic Baker . AACSB: Communication Baker . $600. What are some of the other factors that could constitute evidence of the ability to exercise significant influence? APB stated that these include: 1.000 D. $585. A liquidating dividend occurs when an investee declares dividends in excess of the earnings from the purchase date of the investment.000 AACSB: Analytic Baker .000 B. what is the consolidated retained earnings balance on December 31. 34. $141. $470.

37. AACSB: Reflective Thinking Baker .Chapter 02 #37 Blooms: Understand Difficulty: 1 Easy Learning Objective: 02-06 Make calculations and prepare basic elimination entries for a simple consolidation. 2) A subsidiary is an entity in which another entity. by issuing 10. . the parent company. 4) The parent. prepares the consolidated worksheet. 4) Which entity prepares consolidated worksheet? 5) Why are elimination entries used? 1) Dear is the parent and Therry is the subsidiary. 3) A parent company holds a controlling financial interest in another company. holds a controlling financial interest. 3) Define a parent corporation. Dear Corporation acquired 100 percent of the voting shares of Therry Inc. Dear. Required: 1) Which company is the parent and which is the subsidiary? 2) Define a subsidiary corporation. 5) Elimination entries are used to adjust the amounts reported by the parent and all of the subsidiaries to reflect the amounts that would be reported if the separate legal entities were a single company.000 new shares of $5 par value common stock with a $30 market value.