Ch#1-7 Practice
32 Pages

Ch#1-7 Practice

Course: ACCOUNTING 401, Spring 2012

School: Kaplan University

Word Count: 4463

Rating:

Document Preview

Chapter #1 1. Estimated goodwill is determined by computing the present value of the A) average earnings. B) C) excess earnings. expected future earnings. D) normal earnings. 2. Which of the following statements would not be a valid or logical reason for entering into a business combination? A) to increase market share. B) C) to avoid becoming a takeover target. to reduce risk by acquiring established product...

Unformatted Document Excerpt
Coursehero >> Nebraska >> Kaplan University >> ACCOUNTING 401

Course Hero has millions of student submitted documents similar to the one
below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.

Course Hero has millions of student submitted documents similar to the one below including study guides, practice problems, reference materials, practice exams, textbook help and tutor support.

#1 Chapter 1. Estimated goodwill is determined by computing the present value of the A) average earnings. B) C) excess earnings. expected future earnings. D) normal earnings. 2. Which of the following statements would not be a valid or logical reason for entering into a business combination? A) to increase market share. B) C) to avoid becoming a takeover target. to reduce risk by acquiring established product lines. D) the operating costs of the combined entity would be more than the sum of the separate entities. 3. The parent company concept of consolidation represents the view that the primary purpose of consolidated financial statements is: A) to provide information relevant to the controlling stockholders. B) C) to represent the view that the affiliated companies are a separate, identifiable economic entity. to emphasis control of the whole by a single management. D) to include only a portion of the subsidiary's assets, liabilities, revenues, expenses, gains, and losses. 4. Which of the following statements is correct? A) Total elimination is consistent with the parent company concept. B) C) Partial elimination is consistent with the economic unit concept. Past accounting standards required the total elimination of unrealized intercompany profit in assets acquired from affiliated companies. D) none of these. Page 1 5. Under the parent company concept, consolidated net income __________ the consolidated net income under the economic unit concept. A) is the same as B) C) is higher than is lower than D) can be higher or lower than 6. Under the economic unit concept, noncontrolling interest in net assets is treated as A) a liability. B) C) an asset. stockholders' equity. D) an expense. 7. The parent company concept adjusts subsidiary net asset values for the A) differences between cost and fair value. B) C) differences between cost and book value. total fair value implied by the price paid by the parent. D) total cost implied by the price paid by the parent. 8. According to the economic unit concept, the primary purpose of consolidated financial statements is to provide information that is relevant to A) majority stockholders. B) C) minority stockholders. creditors. D) both majority and minority stockholders. 9. Which of the following statements is correct? A) The economic unit concept suggests partial elimination of unrealized intercompany profits. B) The parent company concept suggests partial elimination of unrealized intercompany profits. Page 2 C) The economic unit concept suggests no elimination of unrealized intercompany profits. D) The parent company concept suggests total elimination of unrealized intercompany profits. 10. When following the parent company concept in the preparation of consolidated financial statements, noncontrolling interest in combined income is considered a(n) A) prorated share of the combined income. B) C) addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. D) deduction from current assets in the balance sheet. 11. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the A) book values of subsidiary assets and liabilities. B) C) fair values of subsidiary assets and liabilities. general price level adjusted values of subsidiary assets and liabilities. D) fair values of parent company assets and liabilities. 12. The view that consolidated financial statements represent those of a single economic entity with several classes of stockholder interest is consistent with the A) parent company concept. B) C) current practice concept. historical cost company concept. D) economic unit concept. 13. The view that the noncontrolling interest in income reflects the noncontrolling stockholders' allocated share of consolidated income is consistent with the A) economic unit concept. B) C) parent company concept. current practice concept. Page 3 D) historical cost company concept. 14. The view that only the parent company's share of the unrealized intercompany profit recognized by the selling affiliate that remains in assets should be eliminated in the preparation of consolidated financial statements is consistent with the A) economic unit concept. B) C) current practice concept. parent company concept. D) historical cost company concept. Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. B D A C A C B D B C B D A C Chapter #2 1. Par Company and Sub Company were combined in an acquisition transaction. Par was able to acquire Sub at a bargain Pratt. The sum of the fair values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Par. After eliminating previously recorded goodwill, there was still some "negative goodwill." Proper accounting treatment by Par is to report the amount as A) paid-in capital. B) C) a deferred credit, which is amortized. an ordinary gain. Page 4 D) an extraordinary gain. 2. P Corporation issued 10,000 shares of common stock with a fair value of $25 per share for all the outstanding common stock of S Company in a business combination properly accounted for as an acquisition. The fair value of S Company's net assets on that date was $220,000. P Company also agreed to issue an additional 2,000 shares of common stock with a fair value of $50,000 to the former stockholders of S Company as an earnings contingency. Assuming that the contingency is expected to be met, the $50,000 fair value of the additional shares to be issued should be treated as a(n) A) decrease in noncurrent liabilities of S Company that were assumed by P Company. B) C) decrease in consolidated retained earnings. increase in consolidated goodwill. D) decrease in consolidated other contributed capital. 3. On February 5, Pryor Corporation paid $1,600,000 for all the issued and outstanding common stock of Shaw, Inc., in a transaction properly accounted for as an acquisition. The book values and fair values of Shaw's assets and liabilities on February 5 were as follows Cash Receivables (net) Inventory Plant and equipment (net) Liabilities Net assets Book Value $ 160,000 180,000 315,000 820,000 (350,000) $1,125,000 Fair Value $ 160,000 180,000 300,000 920,000 (350,000) $1,210,000 What is the amount of goodwill resulting from the business combination? A) $-0-. B) C) $475,000. $85,000. D) $390,000. Page 5 4. P Company purchased the net assets of S Company for $225,000. On the date of P's purchase, S Company had no investments in marketable securities and $30,000 (book and fair value) of liabilities. The fair values of S Company's assets, when acquired, were Current assets Noncurrent assets Total $ 120,000 180,000 $300,000 How should the $45,000 difference between the fair value of the net assets acquired ($270,000) and the consideration paid ($225,000) be accounted for by P Company? A) The noncurrent assets should be recorded at $ 135,000. B) C) The $45,000 difference should be credited to retained earnings. The current assets should be recorded at $102,000, and the noncurrent assets should be recorded at $153,000. D) An ordinary gain of $45,000 should be recorded. 5. P Co. issued 5,000 shares of its common stock, valued at $200,000, to the former shareholders of S Company two years after S Company was acquired in an all-stock transaction. The additional shares were issued because P Company agreed to issue additional shares of common stock if the average post combination earnings over the next two years exceeded $500,000. P Company will treat the issuance of the additional shares as a (decrease in) A) consolidated retained earnings. B) C) consolidated goodwill. consolidated paid-in capital. D) non-current liabilities of S Company assumed by P Company. 6. The first step in determining goodwill impairment involves comparing the A) implied value of a reporting unit to its carrying amount (goodwill excluded). B) C) fair value of a reporting unit to its carrying amount (goodwill excluded). implied value of a reporting unit to its carrying amount (goodwill included). D) fair value of a reporting unit to its carrying amount (goodwill included). Page 6 7. P Company acquires all of the voting stock of S Company for $930,000 cash. The book values of S Company's assets are $800,000, but the fair values are $840,000 because land has a fair value above its book value. Goodwill from the combination is computed as: A) $130,000. B) C) $90,000. $40,000. D) $0. Use the following to answer questions 8-9: Pratt Company issued 24,000 shares of its $20 par value common stock for the net assets of Sele Company in business combination under which Sele Company will be merged into Pratt Company. On the date of the combination, Pratt Company common stock had a fair value of $30 per share. Balance sheets for Pratt Company and Sele Company immediately prior to the combination were as follows: Pratt Current Assets Plant and Equipment (net) Total Liabilities Common Stock, $20 par value Other Contributed Capital Retained Earnings Total $1,314,000 1,725,000 $3,039,000 $ 900,000 1,650,000 218,000 271,000 $3,039,000 Sele $192,000 408,000 $600,000 $150,000 240,000 60,000 150,000 $600,000 8. If the business combination is treated as an acquisition and Sele Company's net assets have a fair value of $686,400, Pratt Company's balance sheet immediately after the combination will include goodwill of A) $30,600. B) C) $38,400. $33,600. D) $56,400. Page 7 9. If the business combination is treated as an acquisition and the fair value of Sele Company's current assets is $270,000, its plant and equipment is $726,000, and its liabilities are $168,000, Pratt Company's financial statements immediately after the combination will include A) Negative goodwill of $108,000. B) C) Plant and equipment of $2,451,000. Plant and equipment of $2,343,000. D) An ordinary gain of $108,000. 10. On May 1, 2011, the Phil Company paid $1,200,000 for 80% of the outstanding common stock of Sage Corporation in a transaction properly accounted for as an acquisition. The recorded assets and liabilities of Sage Corporation on May 1, 2011, follow: Cash Inventory Property & equipment (Net of accumulated depreciation) Liabilities $100,000 200,000 800,000 (160,000) On May 1, 2011, it was determined that the inventory of Sage had a fair value of $220,000 and the property and equipment (net) has a fair value of $1,200,000. What is the amount of goodwill resulting from the business combination? A) $0. B) C) $112,000. $140,000. D) $28,000. Page 8 Use the following to answer questions 11-12: Posch Company issued 12,000 shares of its $20 par value common stock for the net assets of Sato Company in a business combination under which Sato Company will be merged into Posch Company. On the date of the combination, Posch Company common stock had a fair value of $30 per share. Balance sheets for Posch Company and Sato Company immediately prior to the combination were as follows: Posch Current Assets Plant and Equipment (net) Total Liabilities Common Stock, $20 par value Other Contributed Capital Retained Earnings Total $ 657,000 863,000 $1,520,000 $ 450,000 825,000 109,000 136,000 $1,520,000 Sato $ 96,000 204,000 $300,000 $ 75,000 120,000 30,000 75,000 $300,000 11. If the business combination is treated as an acquisition and Sato Company's net assets have a fair value of $343,200, Posch Company's balance sheet immediately after the combination will include goodwill of A) $15,300. B) C) $19,200. $16,800. D) $28,200. 12. If the business combination is treated as an acquisition and the fair value of Sato Company's current assets is $135,000, its plant and equipment is $363,000, and its liabilities are $84,000, Posch Company's financial statements immediately after the combination will include A) Negative goodwill of $54,000. B) C) Plant and equipment of $1,226,000. Plant and equipment of $1,172,000. D) An ordinary gain of $54,000. Page 9 13. Following its acquisition of the net assets of Sandy Company, Potter Company assigned goodwill of $60,000 to one of the reporting divisions. Information for this division follows: Cash Inventory Equipment Goodwill Accounts Payable Carrying Amount $ 20,000 35,000 125,000 60,000 30,000 30,000 Fair Value $20,000 40,000 160,000 Based on the preceding information, what amount of goodwill will be reported for this division if its fair value is determined to be $200,000? A) $0 B) C) $60,000 $30,000 D) $10,000 14. The fair value of net identifiable assets of a reporting unit exclusive of goodwill of Y Company is $270,000. The carrying value of the reporting unit's net assets on Y Company's books is $320,000, including $50,000 goodwill. If the reported goodwill impairment for the unit is $10,000, what would be the fair value of the reporting unit? A) $320,000 B) C) $310,000 $270,000 D) $290,000 Page 10 15. Potter Corporation acquired Sims Company through an exchange of common shares. All of Sims' assets and liabilities were immediately transferred to Potter. Potter Company's common stock was trading at $20 per share at the time of exchange. The following selected information is also available: Potter Company Before Acquisition After Acquisition $200,000 $250,000 350,000 550,000 Par value of shares outstanding Additional Paid in Capital What number of shares was issued at the time of the exchange? A) 5,000 B) C) 17,500 12,500 D) 10,000 Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. C C D D C D B C D C C D D B C Page 11 Chapter #3 Use the following to answer questions 1-3: On January 1, 2011, Polk Company and Sigler Company had condensed balance sheets as follows: Polk Sigler Current assets $ 280,000 $ 80,000 Noncurrent assets Total assets Current liabilities Long-term debt Stockholders' equity Total liabilities & stockholders' equity _360,000 $640,000 $ 120,000 200,000 120,000 $640,000 160,000 $240,000 $ 40,000 -0200,000 $240,000 On January 2, 2011 Polk borrowed $240,000 and used the proceeds to purchase 90% of the outstanding common stock of Sigler. This debt is payable in 10 equal annual principal payments, plus interest, starting December 30, 2011. Any difference between book value and the value implied by the purchase price relates to land. On Polk's January 2, 2011 consolidated balance sheet, 1. Noncurrent assets should be A) $520,000. B) C) $536,000. $544,000. D) $586,667. 2. Current liabilities should be A) $200,000. B) C) $184,000. $160,000. D) $120,000. Page 12 3. Noncurrent liabilities should be A) $440,000. B) C) $416,000. $240,000. D) $216,000. 4. In which of the following cases would consolidation be inappropriate? A) The subsidiary is in bankruptcy. B) C) Subsidiary's operations are dissimilar from those of the parent. The parent owns 90 percent of the subsidiary's common stock, but all of the subsidiary's nonvoting preferred stock is held by a single investor. D) Subsidiary is foreign. 5. Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2011. On the date of acquisition, Princeton held land with a book value of $150,000 and a fair value of $300,000; Sheffield held land with a book value of $100,000 and fair value of $500,000. What amount would land be reported in the consolidated balance sheet prepared immediately after the combination? A) $650,000 B) C) $500,000 $550,000 D) $375,000 Page 13 Use the following to answer questions 6-8: On January 1, 2011, Pena Company and Shelby Company had condensed balanced sheets as follows: Current assets Noncurrent assets Total assets Current liabilities Long-term debt Stock holders' equity Total liabilities & stockholders' equity Pena $210,000 270,000 $480,000 $ 90,000 150,000 240,000 $ 480,000 Shelby $ 60,000 120,000 $180,000 $ 30,000 -0150,000 $ 180,000 On January 2, 2011 Pena borrowed $180,000 and used the proceeds to purchase 90% of the outstanding common stock of Shelby. This debt is payable in 10 equal annual principal payments, plus interest, starting December 30, 2011. Any difference between book value and the value implied by the purchase price relates to land. On Pena's January 2, 2011 consolidated balance sheet, 6. Noncurrent assets should be A) $390,000. B) C) $402,000. $408,000. D) $440,000. 7. Current liabilities should be A) $150,000. B) C) $138,000. $120,000. D) $90,000. Page 14 8. Noncurrent liabilities should be A) $330,000. B) C) $312,000. $180,000. D) $162,000. 9. On January 1, 2011, Primer Corporation acquired 80 percent of Sutter Corporation's voting common stock. Sutters's buildings and equipment had a book value of $300,000 a and fair value of $350,000 at the time of acquisition. At what amount will Sutter's buildings and equipment will be reported in the consolidated statements? A) $350,000 B) C) $340,000 $280,000 D) $300,000 Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. D B B A A D B B A Page 15 Chapter #4 1. P Company purchased 90% of the outstanding common stock of S Company on January 1, 1997. S Company's stockholders' equity at various dates was: Common stock Retained earnings Total 1/1/97 $400,000 120,000 $520,000 1/1/11 $400,000 380,000 $780,000 12/31/11 $400,000 460,000 $860,000 The workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on December 31, 2011 should include a credit to P Company's retained earnings of A) $80,000. B) C) $234,000. $260,000. D) $306,000. 2. On October 1, 2011, Parr Company acquired for cash all of the voting common stock of Stein Company. The purchase price of Stein's stock equaled the book value and fair value of Stein's net assets. The separate net income for each company, excluding Parr's share of income from Stein was as follows: Twelve months ended 12/31/11 Three months ended 12/31/11 Parr $4,500,000 495,000 Stein $2,700,000 450,000 During September, Stein paid $150,000 in dividends to its stockholders. For the year ended December 31, 2011, Parr issued parent company only financial statements. These statements are not considered those of the primary reporting entity. Under the partial equity method, what is the amount of net income reported in Parr's income statement? A) $7,200,000. B) C) $4,650,000. $4,950,000. D) $1,800,000. Page 16 Use the following to answer questions 3-4: Prior Industries acquired a 70 percent interest in Stevenson Company by purchasing 14,000 of its 20,000 outstanding shares of common stock at book value of $210,000 on January 1, 2010. Stevenson reported net income in 2010 of $90,000 and in 2011 of $120,000 earned evenly throughout the respective years. Prior received $24,000 dividends from Stevenson in 2010 and $36,000 in 2011. Prior uses the equity method to record its investment. 3. Prior should record investment income from Stevenson during 2011 of: A) $36,000 B) C) $120,000 $84,000 D) $48,000 4. The balance of Prior's Investment in Stevenson account at December 31, 2011 is: A) $210,000 B) C) $285,000 $297,000 D) $315,000 5. P Company purchased 80% of the outstanding common stock of S Company on May 1, 2011, for a cash payment of $318,000. S Company's December 31, 2010 balance sheet reported common stock of $200,000 and retained earnings of $180,000. During the calendar year 2011, S Company earned $210,000 evenly throughout the year and declared a dividend of $75,000 on November 1. What is the amount needed to establish reciprocity under the cost method in the preparation of a consolidated workpaper on December 31, 2011? A) $52,000 B) C) $65,000 $62,000 D) $108,000 Page 17 6. P Company purchased 90% of the outstanding common stock of S Company on January 1, 1997. S Company's stockholders' equity at various dates was: Common stock Retained earnings Total 1/1/97 $200,000 60,000 $260,000 1/1/11 $200,000 190,000 $390,000 12/31/11 $200,000 230,000 $430,000 The workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on December 31, 2011 should include a credit to P Company's retained earnings of A) $40,000. B) C) $117,000. $130,000. D) $153,000. Use the following to answer questions 7-8: Prior Industries acquired an 80 percent interest in Sanderson Company by purchasing 24,000 of its 30,000 outstanding shares of common stock at book value of $105,000 on January 1, 2010. Sanderson reported net income in 2010 of $45,000 and in 2011 of $60,000 earned evenly throughout the respective years. Prior received $12,000 dividends from Sanderson in 2010 and $18,000 in 2011. Prior uses the equity method to record its investment. 7. Prior should record investment income from Sanderson during 2011 of: A) $18,000. B) C) $60,000. $48,000. D) $33,600. 8. The balance of Prior's Investment in Sanderson account at December 31, 2011 is: A) $105,000. B) C) $138,600. $159,000. Page 18 D) $165,000. 9. Pendleton Company acquired a 70% interest in Sunflower Company on December 31, 2010, for $380,000. During 2011 Sunflower had a net income of $30,000 and paid a cash dividend of $10,000. Applying the cost method would give a debit balance in the Investment in Stock of Sunflower Company account at the end of 2011 of: A) $400,000. B) C) $394,000. $373,000. D) $380,000. Use the following to answer questions 10-11: On January 1, 2011, Rotor Corporation acquired 30 percent of Stator Company's stock for $150,000. On the acquisition date, Stator reported net assets of $450,000 valued at historical cost and $500,000 stated at fair value. The difference was due to the increased value of buildings with a remaining life of 10 years. During 2011 Stator reported net income of $25,000 and paid dividends of $10,000. Rotor uses the equity method. 10. What will be the balance in the Investment account as of Dec 31, 2011? A) $150,000 B) C) $157,500 $154,500 D) $153,000 11. What amount of investment income will be reported by Rotor for the year 2011? A) $7,500 B) C) $6,000 $4,500 D) $25,000 Page 19 12. On January 1, 2011, Potter Company purchased 25 % of Smith Company's common stock; no goodwill resulted from the acquisition. Potter Company appropriately carries the investment using the equity method of accounting and the balance in Potter's investment account was $190,000 on December 31, 2011. Smith reported net income of $120,000 for the year ended December 31, 2011 and paid dividends on its common stock totaling $48,000 during 2011. How much did Potter pay for its 25% interest in Smith? A) $172,000 B) C) $202,000 $208,000 D) $232,000 Use the following to answer questions 13-14: On January 1, 2011, Paterson Company purchased 40% of Stratton Company's 30,000 shares of voting common stock for a cash payment of $1,800,000 when 40% of the net book value of Stratton Company was $1,740,000. The payment in excess of the net book value was attributed to depreciable assets with a remaining useful life of six years. As a result of this transaction Paterson has the ability to exercise significant influence over Stratton Company's operating and financial policies. Stratton's net income for the ended December 31, 2011 was $600,000. During 2011, Stratton paid $325,000 in dividends to its shareholders. 13. The income reported by Paterson for its investment in Stratton should be: A) $120,000 B) C) $130,000 $230,000 D) $240,000 14. What is the ending balance in Paterson's investment account as of December 31, 2011? A) $1,800,000 B) C) $1,900,000 $1,910,000 D) $2,030,000 Page 20 Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. B C C C A B C C D D B A C B Chapter #5 1. When the value implied by the purchase price of a subsidiary is in excess of the fair value of identifiable net assets, the workpaper entry to allocate the difference between implied and book value includes a 1. debit to Difference Between Implied and Book Value. 2. credit to Excess of Implied over Fair Value. 3. credit to Difference Between Implied and Book Value. A) 1 B) C) 2 3 D) Both 1 and 2 2. The excess of fair value over implied value must be allocated to reduce proportionally the fair values initially assigned to A) current assets. B) C) noncurrent assets. both current and noncurrent assets. D) none of the above. Page 21 Use the following to answer questions 3-6: On January 1, 2010, Pandora Company purchased 75% of the common stock of Saturn Company. Separate balance sheet data for the companies at the combination date are given below: Pandora Co. $ 18,000 108,000 99,000 60,000 525,000 (180,000) 330,000 $960,000 $156,000 600,000 204,000 $960,000 Saturn Co. Book Values $155,000 20,000 26,000 24,000 225,000 (45,000) ________ $405,000 $105,000 225,000 75,000 $405,000 ________ $565,000 $105,000 Saturn Co. Fair Values $155,000 20,000 45,000 45,000 300,000 Cash Accounts receivable Inventory Land Plant assets Acc. depreciation Investment in Saturn Co. Total assets Accounts payable Capital stock Retained earnings Total liabilities & equities Determine below what the consolidated balance would be for each of the requested accounts on January 2, 2010. 3. What amount of inventory will be reported? A) $125,000 B) C) $132,750 $139,250 D) $144,000 4. What amount of goodwill will be reported? A) ($20,000) Page 22 B) C) ($25,000) $25,000 D) $0 5. What is the amount of consolidated retained earnings? A) $204,000 B) C) $209,250 $260,250 D) $279,000 6. What is the amount of total assets? A) $921,000 B) C) $1,185,000 $1,525,000 D) $1,195,000 7. Sensible Company, a 70%-owned subsidiary of Proper Corporation, reported net income of $600,000 and paid dividends totaling $225,000 during Year 3. Year 3 amortization of differences between current fair values and carrying amounts of Sensible's identifiable net assets at the date of the business combination was $112,500. The noncontrolling interest in consolidated net income of Sensible for Year 3 was A) $146,250. B) C) $33,750. $67,500. D) $180,000. Page 23 Use the following to answer questions 8-10: On January 1, 2010, Poole Company purchased 75% of the common stock of Swimmer Company. Separate balance sheet data for the companies at the combination date are given below: Swimmer Co. Cash Accounts receivable Inventory Land Plant assets Acc. depreciation Investment in Swimmer Co. Total assets Accounts payable Capital stock Retained earnings Total liabilities & equities Poole Co. $ 24,000 144,000 132,000 78,000 700,000 (240,000) 440,000 $1,278,000 $206,000 800,000 272,000 $1,278,000 Book Values $206,000 26,000 38,000 32,000 300,000 (60,000) ________ $542,000 $142,000 300,000 100,000 $542,000 ________ $702,000 $142,000 Swimmer Co. Fair Values $206,000 26,000 60,000 60,000 350,000 Determine below what the consolidated balance would be for each of the requested accounts on January 2, 2010. 8. What amount of inventory will be reported? A) $170,000. B) C) $177,000. $186,500. D) $192,000. 9. What amount of goodwill will be reported? A) $26,667. Page 24 B) C) $20,000. $42,000. D) $86,667. 10. What is the amount of total assets? A) $1,626,667. B) C) $1,566,667 $1,980,000. D) $2,006,667. Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. C D D D A D A D A B Page 25 Chapter #6 Use the following to answer questions 1-2: P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2010, P sold merchandise that cost $240,000 to S for $300,000. Half of this merchandise remained in S's December 31, 2010 inventory. During 2011, P sold merchandise that cost $375,000 to S for $468,000. Forty percent of this merchandise inventory remained in S's December 31, 2011 inventory. Selected income statement information for the two affiliates for the year 2011 is as follows: Sales Revenue Cost of Goods Sold Gross profit P $2,250,000 1,800,000 $450,000 S $1,125,000 937,500 $187,500 1. Consolidated sales revenue for P and Subsidiary for 2011 are: A) $2,907,000. B) C) $3,000,000. $3,205,500. D) $3,375,000. 2. Consolidated cost of goods sold for P Company and Subsidiary for 2011 are: A) $2,260,500. B) C) $2,268,000. $2,276,700. D) $2,737,500. Page 26 Use the following to answer questions 3-4: P Company owns an 80% interest in S Company. During 2011, S sells merchandise to P for $200,000 at a profit of $40,000. On December 31, 2011, 50% of this merchandise is included in P's inventory. Income statements for P and S are summarized below: Sales Cost of Sales Operating Expenses Net Income (2011) P $1,200,000 (600,000) (300,000) $300,000 S $600,000 (400,000) ( 80,000) $120,000 3. Controlling interest in consolidated net income for 2011 is: A) $300,000. B) C) $380,000. $396,000. D) $420,000. 4. Noncontrolling interest in income for 2011 is: A) $4,000. B) C) $19,200. $20,000. D) $24,000. 5. The amount of intercompany profit eliminated is the same under total elimination and partial elimination in the case of 1. upstream sales where the selling affiliate is a less than wholly owned subsidiary. 2. all downstream sales. 3. horizontal sales where the selling affiliate is a wholly owned subsidiary. A) 1. B) C) 2. 3. Page 27 D) both 2 and 3. 6. P Corporation acquired a 60% interest in S Corporation on January 1, 2011, at book value equal to fair value. During 2011, P sold merchandise that cost $225,000 to S for $315,000. One-third of this merchandise remained in S's inventory at December 31, 2011. S reported net income of $200,000 for 2011. P's income from S for 2011 is: A) $60,000. B) C) $90,000. $120,000. D) $102,000. Use the following to answer questions 7-8: P Company regularly sells merchandise to its 80%-owned subsidiary, S Corporation. In 2010, P sold merchandise that cost $192,000 to S for $240,000. Half of this merchandise remained in S's December 31, 2010 inventory. During 2011, P sold merchandise that cost $300,000 to S for $375,000. Forty percent of this merchandise inventory remained in S's December 31, 2011 inventory. Selected income statement information for the two affiliates for the year 2011 is as follows: P Sales Revenue Cost of Goods Sold Gross profit $1,800,000 1,440,000 $ 360,000 S $900,000 750,000 $150,000 7. Consolidated sales revenue for P and Subsidiary for 2011 are: A) $2,325,000. B) C) $2,400,000. $2,565,000. D) $2,700,000. 8. Consolidated cost of goods sold for P Company and Subsidiary for 2011 are: A) $1,809,000. Page 28 B) C) $1,815,000. $1,821,000. D) $2,190,000. Use the following to answer questions 9-10: P Company owns an 80% interest in S Company. During 2011, S sells merchandise to P for $150,000 at a profit of $30,000. On December 31, 2011, 50% of this merchandise is included in P's inventory. Income statements for P and S are summarized below: Sales Cost of Sales Operating Expenses Net Income (2011) P $900,000 (450,000) (225,000) $225,000 S $450,000 (300,000) (60,000) $90,000 9. Controlling interest in consolidated net income for 2011 is: A) $225,000. B) C) $285,000. $297,000. D) $315,000. 10. Noncontrolling interest in income for 2011 is: A) $3,000. B) C) $14,400. $15,000. D) $18,000. Page 29 Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. A C B C D C A C B C Chapter #7 1. On January 1, 2010, P Corporation sold equipment with a 3-year remaining life and a book value of $40,000 to its 70% owned subsidiary for a price of $46,000. In the consolidated workpapers for the year ended December 31, 2011, an elimination entry for this transaction will include a: A) debit to Equipment for $6,000. B) C) debit to Gain on Sale of Equipment for $6,000. credit to Depreciation Expense for $6,000. D) debit to Accumulated Depreciation for $4,000. 2. In January 2008, S Company, an 80% owned subsidiary of P Company, sold equipment to P Company for $990,000. S Company's original cost for this equipment was $1,000,000 and had accumulated depreciation of $100,000. P Company continued to depreciate the equipment over its 9 year remaining life using the straight-line method. This equipment was sold to a third party on January 1, 2011 for $720,000. What amount of gain should P Company record on its books in 2011? A) $30,000. B) C) $60,000. $120,000. D) $180,000. Page 30 3. P Corporation acquired an 80% interest in S Corporation two years ago at an implied value equal to the book value of S. On January 2, 2011, S sold equipment with a fiveyear remaining life to P for a gain of $180,000. S reports net income of $900,000 for 2011 and pays dividends of $300,000. P's Equity from Subsidiary Income for 2011 is: A) $720,000. B) C) $576,000. $604,800. D) $864,000 4. P Company purchased land from its 80% owned subsidiary at a cost of $30,000 greater than it subsidiary's book value. Two years later P sold the land to an outside entity for $15,000 more than it's cost. In its current year consolidated income statement P and its subsidiary should report a gain on the sale of land of: A) $15,000. B) C) $36,000. $39,000. D) $45,000. 5. On January 1, 2010, P Corporation sold equipment with a 3-year remaining life and a book value of $100,000 to its 70% owned subsidiary for a price of $115,000. In the consolidated workpapers for the year ended December 31, 2011, an elimination entry for this transaction will include a: A) debit to Equipment for $15,000. B) C) debit to Gain on Sale of Equipment for $15,000. credit to Depreciation Expense for $15,000. D) debit to Accumulated Depreciation for $10,000. Page 31 Answer Key 1. 2. 3. 4. 5. D B C D D Page 32

Find millions of documents on Course Hero - Study Guides, Lecture Notes, Reference Materials, Practice Exams and more. Course Hero has millions of course specific materials providing students with the best way to expand their education.

Below is a small sample set of documents:

Kaplan University - ACCOUNTING - 401
Advanced Accounting Chapter 3 Acquisitions Juan LewisName: _ Date: _ 1. Under the acquisition method, indirect costs relating to acquisitions should be A) included in the investment cost. B) expensed as incurred. C) deducted from other contributed capita
Kaplan University - ACCOUNTING - 401
Advanced Accounting Chapter 7 Juan LewisName: _ Date: _ 1. In the year a subsidiary sells land to its parent company at a gain, a workpaper entry is made debiting 1. Retained Earnings - P Company. 2. Retained Earnings - S Company. 3. Gain on Sale of Land
Kaplan University - ACCOUNTING - 401
1. The founders of an acquired company are granted a contingent payment for three years after the acquisition based on those years earnings: (Points: 4) The acquirer typically recognizes the payment as goodwill when the contingency is resolved and payment
Kaplan University - ACCOUNTING - 401
CHAPTER 18ANSWERS TO QUESTIONS 1. Fund Entities Governmental Funds (1) General Fund - to account for all unrestricted resources except those required to be accounted for in another fund. (2) Special Revenue Funds - to account for the proceeds of specific
Kaplan University - ACCOUNTING - 401
1. In years subsequent to the year a 90% owned subsidiary sells equipment to its parent company at a gain, the non-controlling interest in consolidated income is computed by multiplying the non-controlling interest percentage by the subsidiary's reported
Kaplan University - ACCOUNTING - 401
Grading SummaryThese are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: Multiple Choice Date and Time Started: Time Spent: Points Received
Kaplan University - ACCOUNTING - 401
Sample Chronological Resume Accounting Entry LevelJANE DOEAddress Phone number is your voice mail message professional? Email Is your email address professional?OBJECTIVE: To obtain a position as Accounting Clerk SUMMARY OF QUALIFICATIONS Detailed-orie
Kaplan University - ACCOUNTING - 401
Grading SummaryThese are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: True/False Multiple Choice Date and Time Started: Time Spent: Poin
Kaplan University - ACCOUNTING - 401
Kaplan University - ACCOUNTING - 401
Kaplan University - ACCOUNTING - 401
1. Question: Birmingham Machine Works had the following data regarding monthly power costs:Month Machine hours Power costJun 300 $680Jul 600 720Aug 400 695Sept 200 640Assume that management expects 500 machine hours in October. Using the high-low me
Kaplan University - ACCOUNTING - 401
Chapter 9-Break-Even Point and Cost-Volume-Profit AnalysisLEARNING OBJECTIVES LO 1 LO 2 LO 3 LO 4 LO 5 LO 6Why is variable costing more useful than absorption costing in determining the break-even point and doing cost-volume-profit analysis? How is the
Kaplan University - ACCOUNTING - 401
1 Davis Company example RM - Beg inv RM - purchases less RM end inv RM used 3500 29000 32500 6000 265002 Urban Company RM - Beg inv RM - purchases Available less RM end inv RM used 3 Reno Corp. Est OH - planned Est DLH OH rate 4 Birmingham Machine high l
Kaplan University - ACCOUNTING - 401
Grading SummaryThese are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Question Type: Multiple Choice Date and Time Started: Time Spent: Points Received
Kaplan University - ACCOUNTING - 401
C2-5 Cost and Expense Recognition (AICPA Adapted) An accountant must be familiar with the concepts involved in determining earnings of a company. The amount of earnings reported for a company is dependent on the proper recognition, in general, of revenue
Kaplan University - ACCOUNTING - 401
Accounting like any other profession is affected by several causing factors. One factor is the constant changes and updates with Generally Accepted Accounting Principles (GAAP) and the requirements of the International Financial Reporting Standards (IFRS)
Kaplan University - ACCOUNTING - 401
Relevance and Reliability are the parts of Hierarchy of Qualitative Characteristics of Accounting Information. Accounting information is relevant if it can make a difference in a decision by helping company's management predict the outcomes of past, prese
Kaplan University - ACCOUNTING - 401
Asmir Begic Intermediate Accounting I AC300 June 21, 2011 Unit II Case 1-9 Currently, there is no single document that includes all the accounting standards. However, Financial Accounting Standards Board (FASB) has released its FASB Accounting Standards C
Berkeley - OCHEM - x36B
Organic Chemistry II Week 1 worksheetNot for creditProvide the correct IUPAC name for each of the following compounds: Draw the correct structure for each of the following compounds: Acetaldehyde Formaldehydecyclopent-2-en-1-one2-chlorocyc
Berkeley - OCHEM - x36B
Berkeley - OCHEM - x36B
Organic Chemistry II Week 2 worksheetNot for credit Draw the mechanism of acid-catalyzed keto-enol tautomerization that shows the racemization of (3S)-3-methylpentan-2-one. 1 of 2Provide the correct IUPAC name for each of the following com
Berkeley - OCHEM - x36B
Berkeley - OCHEM - x36B
Organic Chemistry II Week 9 worksheet Not for credit Place the following compounds in order of increasing activity as Diels-Alder dienes:Place the following compounds in order of increasing activity as Diels-Alder dienophiles:O O OOOCNCH3 CO2CH3 CO
Berkeley - OCHEM - x36B
Berkeley - OCHEM - x36B
Organic Chemistry II Week 11 worksheet Not for credit For each of these aldoses, identify the number of carbons and number of chiral centers: D-Glyceraldehyde D-Galactose D-Ribose D-Glucose D-XyloseDraw Fischer projections of D-Glucose and L-Glucose:Dra
Berkeley - OCHEM - x36B
Berkeley - OCHEM - xb36B
Berkeley - OCHEM - xb36B
Berkeley - OCHEM - xb36B
Berkeley - OCHEM - xb36B
Berkeley - OCHEM - xb36B
Berkeley - OCHEM - xb36B
Organic Chemistry II Week 12 worksheet Not for credit Draw the structure of each amino acid below. Show the correct stereochemistry and the correct protonation and charges for the amino acid at pH 7.0. L-Glutamine L-Aspartic Acid L-Arginine D-CysteineWhi
Washington - CHEM - 142
CHEMISTRY 142 A (SLN 11641), WINTER 2011SYLLABUS, POLICIES, AND PROCEDURESLectures: M, W, F 9:30 AM 10:20 AM, KNE 130 Course Web Site: https:/catalyst.uw.edu/workspace/chemwi12/26378/ (This page can also be reached via the departmental website: http:/de
Washington - CHEM - 142
2/6/2012Demo: Activity SeriesMg(s) + 2 HCl(aq) Mg2+(aq) + 2 Cl(aq) + H2(g). Mg is a very active metal (reduces H in both water and acid). Zn(s) + 2 HCl(aq) Zn2+(aq) + 2 Cl(aq) + H2(g). Zn is an active metal (reduces H in acid but not in water). Cu(s) +
Washington - CHEM - 142
2/5/2012Chapter 5: Gases5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.10-11 Definitions The First Laws The Ideal Gas Law Stoichiometry and Gases Mixtures of Gases (Partial Pressures) Kinetic Molecular Theory Effusion and Diffusion Collisions with Container Walls Re
Washington - CHEM - 142
2/13/2012KINETIC MOLECULAR THEORY of GASES (abbreviated)is a model that tries to explain the properties of ideal gases and speculates about behavior of individual gas particles.This model assumes: gas molecules are small (negligible volume) gas molecul
Washington - CHEM - 142
What if you forget Boyle's Law?A gas sample at a pressure of 1.23 atm has a volume of 15.8 cm3, what will be the volume (in L) if the pressure is increased to 3.16 atm?Example of Avogadro's LawIf the volume of 2.67 g of SF6 gas at 1.143 atm and 28.5C i
Washington - CHEM - 142
The Equilibrium Constant The equilibrium constant is then expressed as a ratio of activities of products versus reactants as follows:bB + cC dD + eE = This definition of the equilibrium constant supersedes the definition provided by Zumdahl in
Washington - CHEM - 142
2/14/2012Chapter 6: Chemical Equilibrium6.1 6.4 6.2 6.3 6.5 6.6 6.7 6.8 The Equilibrium Condition The Concept of Activity The Equilibrium Constant Equilibrium Expressions Involving Pressures Heterogeneous Equilibria Applications of the Equilibrium Const
Washington - CHEM - 142
2/16/2012Equilibrium Calculations The reaction quotient (Q) is defined as the value of the expression for K (known as the "law of mass action") at any time during the reaction.TIME We can compare Q to K to determine in which direction the reaction is p
Washington - CHEM - 142
2/18/2012Equilibrium PositionFactors that control the position of chemical equilibria are: Concentration Pressure (as a result of a volume change) TemperatureNOTE: catalysts influence rate, not position of equilibriumChanges in ConcentrationConsider
Washington - CHEM - 142
Chem 142, Winter 2012Name _Group Activity 4: Oxidation-Reduction Reactions and Introduction to Gas Laws1. Assign oxidation states to all of the following atoms: a. As4 b. UO22+c. Ca(NO3)2d. H3AsO42. In the following oxidation-reduction reactions, id
UC Riverside - MATH - 9c
University of California, Riverside Department of MathematicsFinal ExamMathematics 9C - First Year of Calculus Sample 1Instructions: This exam has a total of 100 points. You have 3 hours. You must show all your work to receive full credit. You may use
UC Riverside - MATH - 9c
University of California, Riverside Department of MathematicsFinal ExamMathematics 9C - First Year of Calculus Sample 2Instructions: This exam has a total of 100 points. You have 3 hours. You must show all your work to receive full credit. You may use
UC Riverside - MATH - 9c
University of California, Riverside Department of MathematicsFinal ExamMathematics 9C - First Year of Calculus Sample 3Instructions: This exam has a total of 100 points. You have 3 hours. You must show all your work to receive full credit. You may use
UC Riverside - MATH - 9c
Math 9CFinal exam Study guideC. Pro - Fall 20111Concept questionsWhat is the difference between a sequence and a series? Can you give the definition of what it means for a sequence to converge? What is the definition for a series to converge? If the
UC Riverside - MATH - 9c
Final ExamMath 9C 7/23/2011Name:Make sure I can read thisRead all of the following information before starting the exam: NO CALCULATORS! Show all work, clearly and in order, if you want to get full credit. I reserve the right to take off points if I c
UC Riverside - MATH - 9c
Math 9CFinal exam Study guideC. Pro - Fall 2011The following document consists of the first two study guides and a new study guide in section 3.1Concept questionsWhat is the difference between a sequence and a series? There is no difference, a seque
UC Riverside - MATH - 9c
sampleFinal ExamMath 9C 7/23/2011Name:Make sure I can read thisRead all of the following information before starting the exam: NO CALCULATORS! Show all work, clearly and in order, if you want to get full credit. I reserve the right to take off points
UC Riverside - MATH - 9c
CONVERGENCE TESTS FOR INFINITE SERIESNAME Geometric series Divergence test (nth Term test) a ! ark = 1 r , if 1 < r < 1COMMENTSSTATEMENT Geometric series converges if 1 < r < 1 and diverges otherwise If lim ak = 0, !ak may or may not converge. k!If li
UC Riverside - MATH - 9c
Infinite SequencesIf you remember all of the paradoxes brought up last time, the key problem was dealing with an infinite number of things. An infinite number of things should not be news to you. For example, the real line contains infinitely many points
UC Riverside - MATH - 9c
Monotone SequencesMaybe you remember hearing about how the real numbers can be broken up into two types of numbers. There are algebraic numbers such as 1, 3, 2, 1/ 2, 2 + 3 i.e., numbers from some sort of algebraic manipulation and then there are transce
UC Riverside - MATH - 9c
Infinite SeriesThis is where the fun begins. If we have an infinite sequence cfw_ak we k=0 can get a brand new sequence cfw_sn by defining n=0 s0 = a0 s1 = a0 + a1 s2 = a0 + a1 + a2 s3 = a0 + a1 + a2 + a3 . . . sn = a0 + a1 + a2 + + an . . .Math 9C Su
UC Riverside - MATH - 9c
Tests for convergence INow we're focused on finding out when an infinite seriesakk=0converges or diverges. So far we know only about one kind of infinite series, the geometric seriesrk.k=0This converges if |r | < 1 and diverges if |r | 1. We even k
UC Riverside - MATH - 9c
Improper integrals and an introduction to the integral testSo far, if we're given an infinite series and we want to know if converges or diverges there are only five different things we can say: It's geometric and converges, it's geometric and diverges,
UC Riverside - MATH - 9c
Tests for Convergence IILast time we noticed how we could find an upper bound for cfw_sn provided that all the ak 's were not negative. By finding a decreasing continuous function f (x) such that f (k) = ak and integrating it we saw,nsn <0f (x)dx.A
UC Riverside - MATH - 9c
The comparison testMotivation: We now know, for example, k=11 k3converges by the p-test. What can we say about, for example k=11 ? k 3 + 10Since k 3 + 10 > k 3 for every k, we know 1 1 < 3 k 3 + 10 k for every k.Math 9C Summer 2011 (UCR) Pro-Notes
UC Riverside - MATH - 9c
Tests for Convergence IVLast time we learned about the Integral, p, comparison and limit comparison tests. The down side of these tests is that they can only be used if the terms ak in the series are not negative. The fist test we might be able to use wh
UC Riverside - MATH - 9c
The ratio testThe next test we'll learn about is called the ratio test. It's really the best test out there. And we'll see later that it's also a very important test when we start to study power series. The idea behind the ratio test is this: In a geomet
UC Riverside - MATH - 9c
Polynomial ApproximationsIn comparison, polynomials are really simple. For example, without a calculator, you can compute every value of the polynomial p(x) = 1 + x + x 2 All you have to do is add and multiply. It may be hard if the numbers are big, but
UC Riverside - MATH - 9c
Functions as Power Series.Last time we began the study of Power Series and the values for which they converge. In summary, we looked at the functionf (x) =k=0ak (x - a)kand asked, "what is the domain of this function?". The answer was, every x that i