Chapter6_Day2_ReviewProblems_Solu

Chapter6_Day2_ReviewProblems_Solu - E5-1 Multiple-Choice...

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Unformatted text preview: E5-1 Multiple-Choice Questions on Consolidation Process 1. d 2. d 3. b 4. d [AICPA Adapted] E5-2 Multiple-Choice Questions on Consolidation [AICPA Adapted] 1. b 2. c 3. a 4. c 5. c $650,000 = $500,000 + $200,000 - $50,000 $95,000 = ($956,000 / .80) - $1,000,000 - $100,000 $251,000 = .20[($956,000 + $239,000) + ($190,000 - $5,000 - $125,000)] P5-35 Comprehensive Problem: Differential Apportionment a. Journal entries recorded by Mortar Corporation: (1) Investment in Granite Company Stock Cash Purchase of Granite Company stock. Cash Investment in Granite Company Stock Record dividends from Granite Company: $20,000 x .80 Investment in Granite Company Stock Income from Subsidiary Record equity-method income: $60,000 x .80 Income from Subsidiary Investment in Granite Company Stock Amortize differential assigned to depreciable assets: [($191,250 - $150,000) x .80] / 11 years 173,000 173,000 16,000 16,000 (2) (3) 48,000 48,000 (4) 3,000 3,000 P5-35 (continued) b. Eliminating entries: E(1) Income from Subsidiary Dividends Declared Investment in Granite Company Stock Eliminate income from subsidiary. Income to Noncontrolling Interest Dividends Declared Noncontrolling Interest Assign income to noncontrolling interest: $11,250 = [$60,000 – ($41,250 / 11)] x .20 Common Stock — Granite Company Retained Earnings, January 1 Differential Investment in Granite Company Stock Noncontrolling Interest Eliminate beginning investment balance: $66,250 = ($173,000 + $43,250) - $150,000 Goodwill Buildings and Equipment Differential Assign beginning differential: $41,250 = $191,250 - $150,000 $25,000 = $66,250 - $41,250 Depreciation Expense Accumulated Depreciation Amortize differential related to depreciable assets: $41,250 / 11 years Accounts Payable Accounts Receivable Eliminate intercorporate receivable/payable. 45,000 16,000 29,000 11,250 4,000 7,250 E(2) E(3) 50,000 100,000 66,250 173,000 43,250 E(4) 25,000 41,250 66,250 E(5) 3,750 3,750 E(6) 16,000 16,000 ...
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This note was uploaded on 10/14/2009 for the course MGMT 503 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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Chapter6_Day2_ReviewProblems_Solu - E5-1 Multiple-Choice...

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