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ACCT 7605 Exam II-Practice Questions Gleim's Exam Questions Test Prep Financial Accounting [Fact Pattern #1]- Parma Corp. and Seville Corp. condensed balance sheets on January 1, year 1 are presented below. On January 2, year 1, Parma borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Seville. Ten equal principal and interest payments begin December 30, year 1. The excess cost of the investment over Sevilles carrying amount of acquired net assets should be allocated 60% to inventory and 40% to goodwill. Parma Seville Current assets $ 70,000 $20,000 Noncurrent assets 90,000 40,000 Total assets $160,000 $60,000 Current liabilities $ 30,000 $10,000 Long-term debt 50,000 -- Equity 80,000 50,000 Total liabilities and equity $160,000 $60,000 [1] Gleim #: 25.3.36 -- Source: CPA 1188 I-2 (Refers to Fact Pattern #1) On Parma's January 2, year 1 consolidated balance sheet, current assets should be A. $99,000 B. $96,000 C. $90,000 D. $79,000 [2] Gleim #: 25.3.37 -- Source: CPA 1188 I-3 (Refers to Fact Pattern #1) On Parma's January 2, year 1 consolidated balance sheet, noncurrent assets should be A. $130,000 B. $134,000 C. $136,000 D. $140,000 [3] Gleim #: 25.3.38 -- Source: CPA 1188 I-4 (Refers to Fact Pattern #1) On Parma's January 2, year 1 consolidated balance sheet, current liabilities should be A. $50,000 B. $46,000 C. $40,000 D. $30,000 [4] Gleim #: 25.3.39 -- Source: CPA 1188 I-5 (Refers to Fact Pattern #1) On Parma's January 2, year 1 consolidated balance sheet, noncurrent liabilities, including the minority interest, should be A. $115,000 B. $109,000 C. $104,000 D. $55,000 [5] Gleim #: 25.3.40 -- Source: CPA 1188 I-6 (Refers to Fact Pattern #2) On Parma's January 2, year 1 consolidated balance sheet, equity should be A. $80,000 B. $85,000 C. $90,000 D. $130,000 [6] Gleim #: 25.4.61 -- Source: CPA 593 I-14 Wright Corp. has several subsidiaries that are included in its consolidated financial statements. In its December 31, year 1 trial balance, Wright had the following intercompany balances before eliminations: Debit Credit Current receivable due from Main Co. $ 32,000 Noncurrent receivable from Main 114,000 Cash advance to Corn Corp. 6,000 Cash advance from King Co. $ 15,000 Intercompany payable to King 101,000 In its December 31, year 1 consolidated balance sheet, what amount should Wright report as intercompany receivables? $152,000 $146,000 $36,000 $0 [7] Gleim #: 25.4.65 -- Source: CPA 1193 T-11 Perez, Inc. owns 80% of Senior, Inc. During year 1, Perez sold goods with a 40% gross profit to Senior. Senior sold all of these goods in year 1. In its year 1 consolidated financial statements, how should the summation of Perez and Senior income statement items be adjusted? ... View Full Document

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