Chapter9ed09

Chapter9ed09 - Chapter 9 Test Bank INDIRECT AND MUTUAL...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 9 Test Bank INDIRECT AND MUTUAL HOLDINGS Multiple Choice Questions LO1 1. Pallet Corporation owns 80% of Adelt Corporation and Adelt owns 60% of Bajo Inc. Which of the following is correct? a. Bajo should not be consolidated because minority interests hold 52% b. Bajo should be consolidated because the 60% of Bajo stock is held in the affiliate structure c. Pallet has 8% indirect ownership of Bajo d. Pallet has 80% indirect ownership of Bajo LO1 2. Page Corporation acquired a 60% interest in Ace Corporation at a price $40,000 in excess of book value and fair value on January 1, 2005. On the same date, Ace acquired a 70% interest in Bader Corporation at a price $30,000 in excess of book value and fair value. The excess purchase cost paid by Page and Ace was attributed to goodwill. Separate incomes (excluding investment income) for the three affiliates for 2005 are as follows: Page, $500,000, Ace, $300,000, and Bader, $400,000. Page’s net income for 2005 is: a. $808,000 b. $848,000 c. $920,000 d. $960,000 Use the following information in answering questions 3, 4, and 5. Paint Corporation owns 82% of Achille corporation and Achille Corporation owns 80% of Badrack Corporation. For the current year, the separate incomes of Paint, Achille, and Badrack are $120,000, $100,000, and $50,000, respectively. LO1 3. Noncontrolling interest expense from Badrack is: a. $9,000. b. $10,000. c. $20,000. d. $40,000. 217
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
LO1 4. Noncontrolling interest expense from Achille is: a. $18,000. b. $25,200. c. $36,200. d. $72,000. LO1 5. Consolidated net income for Paint Corporation and Subsidiaries can be determined by the equation: a. $334,000. b. $344,800. c. $360,000. d. $370,000. LO1 6. Pabari Corporation owns an 80% interest in Alders Corporation and Alders owns a 60% interest in Babao Corporation. Both interests were acquired at book value equal to fair value. During 2005, Alders sells land to Babao at a profit of $12,000. Babao still holds the land at December 31, 2005. Profits and (losses) of the three companies for 2005 are: Pabari Corporation $180,000 Alders Corporation 72,000 Babao Corporation (30,000) Consolidated net income and noncontrolling interest (loss), respectively, for 2005 are: a. $211,200 and ($1,200). b. $211,200 and ($3,600). c. $213,600 and ($1,200). d. $213,600 and ($3,600). 218
Background image of page 2
LO1 7. Pablo Corporation acquired 60% of Abagia Corporation on January 1, 2004, at a cost of $20,000 in excess of book value. Also, on July 1, 2004, Pablo acquired 60% of Babin Corporation at book value. On January 1, 2005, Abagia acquired a 20% interest in Babin at a cost of $10,000 in excess of book value. The excess purchase costs paid by Pablo and Abagia were attributed to goodwill. On July 1, 2005, Pablo sold land with a book value of $20,000
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 21

Chapter9ed09 - Chapter 9 Test Bank INDIRECT AND MUTUAL...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online