ch05

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Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances:

A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders. 1. Based on the preceding information, what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition? A. $0 B. $65,000 C. $70,000 D. $60,000 Based on the preceding information, what amount of land will be included in the consolidated balance sheet immediately following the acquisition? A. $0 B. $10,000 C. $90,000 D. $100,000 Based on the preceding information, what amount of buildings and equipment (net) will be included in the consolidated balance sheet immediately following the acquisition? A. $0 B. $50,000 C. $250,000 D. $300,000 Based on the preceding information, what amount of goodwill will be reported in the consolidated balance sheet immediately following the acquisition? A. $0 B. $120,000 C. $65,000 D. $20,000

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$130. The fair value of the noncontrolling interest at that date was determined to be $40.000 D.000 Based on the preceding information. .000 Based on the preceding information. Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160. $400.000. $865.000 D. $45. $40. what amount will be reported as investment in Silver Corporation stock in the consolidated balance sheet immediately following the acquisition? A. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: At the date of the business combination.000 D.750 D. $0 B. what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition? A. 20X9. $20. 9.000 C. On January 1. 7.000 cash. $825.000 C. $0 B. $135. $840.000 C. what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination? A.000 Based on the preceding information.000 C. $720.000 D. Based on the preceding information. Based on the preceding information. $15. what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination? A.000.000 C.000 8. $300.5. what amount of total assets will be reported in the consolidated balance sheet prepared immediately after the business combination? A. which had a fair value of $60. $83. which had a fair value of $45. $70.000 6.000 B.000 B. $100.000. $90. $210. and land. $0 B. the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory.

Based on the information given.000 C. Based on the preceding information.000 11. $280. 14. X Company provided consulting services to Y Company and has not yet been paid for them. There were no other receivables or payables between the companies at December 31. $0 B. $205. Based on the preceding information. A consolidated balance sheet was prepared immediately. X Company acquired controlling ownership of Y Company.10. what amount will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination? A. what amount of consolidated retained earnings will be reported? A.000 C. $205.000 B. $445. on work done by X Company for Y Company? A.000 C. $0 B.000 C. $46. $40. Partial balance sheet data for the two companies and the consolidated entity at that date follow: During 20X8. 20X8.000 D. $5. $395.000 D.000 12.000 B.000 On December 31. Based on the preceding information. $275.000 . $15. $550. $15.000 D. 20X8. $325.000 13. $310. Based on the preceding information. what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination? A.000 D. $120. $195. $10.000 B. 20X8.000 C. what is the amount of unpaid consulting services at December 31. what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination? A. $565.000 D.

The optional accumulated depreciation elimination entry D.000 C. Tester reported net income of $40. Based on the information given. C. $155. what was the fair value of Y Company as a whole at the date of acquisition? A.000 during 20X8. $40. the noncontrolling interest shareholders are allocated their ownership percentage of income or net assets in all of the following eliminating entries except for: A.000 B. $135. $48.000 more than their book value.000 and a book value of $125. C. $38. The basic investment account elimination entry B.000 20. $60. $364.000 B.000 to acquire 75 percent ownership in Rohan and goodwill of $20. The book value of Tester's net assets approximated market value except for patents that had a market value of $50. $40. Based on the information given. D. $50.000 16. and the fair value of the noncontrolling interest was $100.000 C. Based on the information given.000 respectively. Based on the information given.000 18.000 C.000 and $28. At the time of the combination.000.000. $28. Rohan Corporation holds assets with a fair value of $150. B.000 D.15.000 respectively.000 C. $40. $254. When a parent owns less than 100% of a subsidiary. 17. $110. $50.000 respectively. $115. $30. $20.000 respectively. 20X8. X Company and Y Company reported wages payable of A. 20X8? A. what amount will be reported as total controlling interest in the consolidated balance sheet? A. 100 percent 60 percent 80 percent 75 percent 19.000 B. The amortized excess value reclassification entry On January 1. The patents had a remaining economic life of ten years at the date of the business combination.000 and paid dividends of $10. $395. $285. what balance in accounts receivable did Y Company report at December 31.000 is reported? A.000. $28.000 B. what percentage of Y Company's shares were acquired by X Company? A.000 and $32.000 D.000 and $60. What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Helms Company pays $90. Based on the information given. Tester reported common stock outstanding of $200. Ramon Corporation acquired 75 percent of Tester Company's voting common stock for $300.000 D.000 and $35. D.000 21. The excess value (differential) reclassification entry C. B.000 and retained earnings of $150.000.000 D.000 and liabilities with a book value and fair value of $50. .

assuming Ramon uses the equity method in accounting for its investment? A.000 and retained earnings of $60.000. the increase in the fair value of patents held by Wisden is: A. $317.000 and equipment with a book value of $50. and the fair value of the noncontrolling interest was $20. Wisden reported net income of $30. what balance will Ramon report as its investment in Tester at December 31. Based on the preceding information. Based on the preceding information.000 for 20X6. Based on the preceding information. 20X6.000 and a market value of $35.000 . Climber Corporation acquired 90 percent of Wisden Corporation for $180. 20X6. and 20X8.000 and a market value of $60. $15. $5. $20.000 D. $25. All depreciable assets held by Wisden at the date of acquisition had a remaining economic life of five years.000 at the date of combination. It held land with a book value of $30.000 D. 20X8.000 and dividends of $10. B. which of the following is an eliminating entry needed to prepare a full set of consolidated financial statements at December 31. On January 1.22.250 23. 24.000 B.000. Climber uses the equity method in accounting for its investment in Wisden.750 B. Wisden reported common stock outstanding of $100. The remainder of the differential at acquisition was attributable to an increase in the value of patents. $318.500 C. D. 20X8? A. $326. Choice A Choice B Choice C Choice D On January 1.000 C. $330. which had a remaining useful life of five years.000 cash. C. 20X7.

000 and retained earnings of $100. Based on the preceding information. $0 B. Bristol Company acquired 80 percent of Animation Company's common stock for $280. $180.25. $230.000 and the carrying amount of Pink's 70% share of Brown is $320.400 B.100 D. and the fair value of the noncontrolling interest was $70. $234.000 . The book values and fair values of Animation's assets and liabilities were equal. $118. sells half of its 70% interest in Brown Co.000.000 On January 1.000 for both the years.000 cash. if any.000 C. The subsidiary comes under the control of the government or other regulator.750 D. $203. what balance would Climber report as its investment in Wisden at January 1. 20X8. The subsidiary issues additional common stock. $215. All of the following are examples of how a parent company may lose control over a subsidiary and discontinue future consolidation. $234. Based on the preceding information. Animation reported common stock outstanding of $200.000. What. 29. $251. the fair value of Brown as a whole is $940. $123.100 B. At that date. B. $9. The parent sells some of its interest in the subsidiary.100 C. $130.000 D. $125. On that date.000 D. The subsidiary issues a stock dividend or a stock split. D. 20X9? A. Pink Inc. is the gain on the sale of half of Pink's interest in Brown? A. $338.000 C.000 B.000 greater than book value and an 8-year remaining life. what balance would Climber report as its investment in Wisden at January 1. $169. 20X6. except: A. on January 1.000 27. what is the amount of consolidated comprehensive income reported for 20X8? A.000.400 26.750 C. Animation reported the following data for 20X8 and 20X9: Bristol reported net income of $100. $224. 28. Based on the preceding information. 20X8? A.000 and paid dividends of $30. except for other intangible assets which had a fair value $50. C.

$138. $119. $135. Eliminating entries are being made to prepare a consolidated balance sheet immediately following the business combination. in the entry to eliminate the investment balance. A. Based on the preceding information. $118.750 C. what is the amount of comprehensive income attributable to the controlling interest for 20X9? A. what is the amount of consolidated comprehensive income reported for 20X9? A. B.750 B.750 D.000 C.000. noncontrolling interest will be debited for 30. D.000 D. retained earnings will be credited for $20.000.000 cash. $135. 20X8. C.750 B.750 31. Based on the preceding information.000.000 B. At that date.30. Colorado Corporation acquired 75 percent of Denver Company's voting common stock for $90. $128. $138.000 32. Based on the preceding information. $128. the reported book values of Denver's assets and liabilities approximated fair value. additional paid-in-capital will be credited for $20. Denvers's balance sheet at the date of acquisition contained the following balances: At the date of acquisition. retained earnings will be credited for $10. $145. $123. 33. Based on the preceding information. . the fair value of the noncontrolling interest was $30. $104.000 C.000.000 On January 1. $131.000. what is the amount of comprehensive income attributable to the controlling interest for 20X8? A.750 D.

Of the $75. In 20X9.000 related to the increased value of Sydney's inventory.000 D.34. $20. $20. B. Melkor Corporation acquired 80 percent of Sydney Company's common stock for $160. Sydney sold all inventory it held at the end of 20X8 during 20X9.000. Based on the preceding information. $32.000. On December 31. $0. 20X8. Sydney reported retained earnings of $75.000 36. D. Additional Paid-in Capital of the subsidiary D. what is the amount of write-off of differential associated with this acquisition recorded by Melkor during 20X9? A. $20. Which of the following stockholders equity accounts are eliminated during the consolidation process? A. $32. the fair value of the noncontrolling interest was $40. $0 B. $0 B.000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination. Preferred Stock of the subsidiary C. $10. the amount of goodwill reported in the consolidated financial statements prepared immediately after the combination is: A. Based on the preceding information.000. but paid no dividends. $26.000 D.500 C.000. $20. 35. At that date. At the date of combination.000.000 37.000.000. The land to which the differential related was also sold during 20X9 for a large gain. Common Stock of the subsidiary B. C. $15. All of the above .000 and common stock outstanding of $50. $26.500 C. Based on the preceding information. Melkor accounts for its investment in Sydney using the equity method.000 related to the increased value of its land. $10. and $25. the amount of goodwill reported is: A.000 differential. Sydney reported net income of $60.

At that date. and buildings and equipment. The fair value of the noncontrolling interest was $50. The fair value of the noncontrolling interest at that date was determined to be $26. 20X8.38.000 and retained earnings of $150.000 cash. At December 31.000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: On that date. Required: 1) Provide the journal entries recorded by Magellan during 20X8 on its books if it accounts for its investment in Dipper using the equity method.000 to Crusoe. Canton reported net income of $40.000 and paid dividends of $20. . The differential is assigned to equipment. for $200. which reported an equal amount in its accounts receivable.000. 2) Give the eliminating entries needed at December 31. Defoe Corporation acquired 80 percent of Crusoe Company's common stock for $104. the book values of Crusoe's assets and liabilities approximated fair value except for inventory. 39. Dipper reported common stock outstanding of $75. Required: 1) Provide the eliminating entries needed to prepare a consolidated balance sheet immediately following the business combination. which had a fair value of $100. Defoe reported accounts payable of $15. 20X8. which had a fair value of $45.000. Magellan Corporation acquired 80 percent ownership of Dipper Corporation on January 1. which had a fair value $25.000 in 20X8. 2) Prepare a consolidated balance sheet worksheet. 20X8.000. On December 31. 20X8. to prepare consolidated financial statements.000.000.000 greater than book value and a remaining economic life of five years at the date of the business combination.

At that date. The book values and fair values of Scalar's assets and liabilities were equal. are as follows: Required: 1) Provide all eliminating entries needed to prepare a three-part consolidation worksheet as of December 31. The book value of Scalar's net assets at acquisition was $125.40. 20X9. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. which were worth $15.000. 20X8. the management of Vector concluded at December 31. the fair value of the noncontrolling interest was $30. Buildings and equipment are depreciated on a 10-year basis. On January 1. . Vector Company acquired 80 percent of Scalar Company's ownership on for $120. 20X8. 2) Prepare a three-part consolidation worksheet for 20X9 in good form. except for buildings and equipment. No additional impairment occurred in 20X9. Although goodwill is not amortized.000. that goodwill from its acquisition of Scalar shares had been impaired and the correct carrying amount was $5.000 cash.000. Trial balance data for Vector and Scalar on December 31.000 more than book value. 20X9.

000. 20X8. Compute consolidated comprehensive income for 20X8 and 20X9. . 20X8 was $130.000.000 and retained earnings of $375.41.000. b. Compute comprehensive income attributable to the controlling interest for 20X8 and 20X9. Bottom reported common stock outstanding of $250. Top Corporation acquired 80 percent of Bottom Corporation's common stock on January 1. for $520. Assume the fair value of the noncontrolling interest on January 1. At that date. The book values and fair values of Bottom's assets and liabilities were equal on the acquisition date.000 greater than book value and a 5-year remaining life. Top and Bottom reported the following data for 20X8 and 20X9: a. which had a fair value $25. except for other intangible assets.

C 22. B 8. D 36. C 12. C 19. C 27. A 6. D 4. A 10. C 11. B 2. D 3. A 14. A 34. D 28. D 26.ch05 Key 1. A 20. C 31. A 18. B 30. D 9. A 23. C 24. C 5. B 25. D 16. D 35. D 29. C . D 7. B 21. A 13. B 33. C 32. B 15. A 17.

1) . D 2) 38.37.

2) 39. 1) .

2) .

1) Proof of various numbers in calculations to parts "a" and "b": 41. .40.

4 .Chapter 05 49 Bloom's: Apply 7 Bloom's: Remember 3 Bloom's: Understand 31 Difficulty: 1 Easy 7 Difficulty: 2 Medium 27 Difficulty: 3 Hard 7 Learning Objective: 05-01 Understand and explain how the consolidation process differs when the subsidiary is less-than24 wholly owned and there is a differential. 2 Learning Objective: 055 04 Make calculations and prepare elimination entries for the consolidation of a partially owned subsidiary when there is a complex positive differential and other comprehensive income. Learning Objective: 05-03 Understand and explain what happens when a parent company ceases to consolidate a subsidiary. Learning Objective: 056 02 Make calculations and prepare elimination entries for the consolidation of a partially owned subsidiary when there is a complex positive differential.ch05 Summary Category # of Questions AACSB: Analytic 38 AACSB: Reflective Thinking 3 Baker . Learning Objective: 05-05 Understand and explain additional considerations associated with consolidation.

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