LO1
3.
There were no dividends in arrears on the date of the business
combination. The goodwill from Pardy’s investment in Salter on
January 1, 2005 is:
a. $
0.
b. $ 35,000.
c. $ 70,000.
d. $105,000.
LO1
4.
Salter has a 2005 net loss of $200,000. Pardy’s share of
Salter’s net loss is:
a. $ 50,000.
b. $ 70,000.
c. $140,000.
d. $210,000.
LO1
5.
If Salter’s net income is $220,000, what is Pardy’s share of
Salter’s net income?
a. $ 84,000
b. $119,000
c. $154,000
d. $189,000
LO1
6.
Pamplin Corporation stockholders’ equity consists of $1,000,000
of $10 par value Common Stock, $750,000 of Additional Paid-in
Capital, and $3,000,000 of Retained Earnings on January 1,
2005. On this date, Pamplin purchased 90% of the outstanding
common stock of Sage Corporation for $1,500,000 with all excess
purchase cost assigned to goodwill. The stockholders’ equity of
Sage on this date consists of $800,000 of $100 par value, 8%
non-cumulative, preferred stock callable at $105, $900,000 of
$10 par value common stock and $500,000 of Retained Earnings.
Sage’s net income for 2005 is $100,000.
In a separate transaction on January 1, 2005, Pamplin purchased
70% of Sage’s preferred stock for $600,000.
At the end of
2005, the amount of Pamplin’s income from Sage (excluding
dividends from preferred stock) and the balance in its
Additional Paid-in Capital account, respectively, are:
a. $62,400 and $710,000.
b. $62,400 and $750,000.
c. $90,000 and $710,000.