Ch4 Solutions

Ch4 Solutions - Chapter 04 - Consolidated Financial...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 04 - Consolidated Financial Statements and Outside Ownership 4-1 CHAPTER 4 CONSOLIDATED FINANCIAL STATEMENTS AND OUTSIDE OWNERSHIP Answers to Problems 1. C 2. D At the date control is obtained, the parent consolidates subsidiary assets at fair value ($500,000 in this case) regardless of the parent’s percentage ownership. 3. D In consolidating the subsidiary's figures, all intra-entity balances must be eliminated in their entirety for external reporting purposes. Even though the subsidiary is less than fully owned, the parent nonetheless controls it. 4. C An asset acquired in a business combination is initially valued at 100% acquisition-date fair value and subsequently amortized its useful life. Patent fair value at January 1, 2011 . .............................................. $45,000 Amortization for 2 years (10 year life) . ........................................... (9,000 ) Patent reported amount December 31, 2012 . ................................ $36,000 5. C 6. B Combined revenues . ....................................................................... $1,100,000 Combined expenses . ....................................................................... (700,000) Excess acquisition-date fair value amortization . .......................... (15,000 ) Consolidated net income . ............................................................... $385,000 Less: noncontrolling interest ($85,000 × 40%). ............................. (34,000 ) Consolidated net income to controlling interest . ......................... $351,000 7. B 8. A Amie, Inc. fair value at July 1, 2012: 30% previously owned fair value (30,000 shares × $5) . ............... $150,000 60% new shares acquired (60,000 shares × $6) . ........................... 360,000 10% NCI fair value (10,000 shares × $5) . ........................................ 50,000 Acquisition-date fair value . ............................................................. $560,000 Net assets' fair value . ...................................................................... 500,000 Goodwill . ......................................................................................... $60,000 9. C 10. B Fair value of 30% noncontrolling interest on April 1 . ................... $165,000 30% of net income for remainder of year ($240,000 × 30%) . ........ 72,000 Noncontrolling interest December 31 . ........................................... $237,000
Background image of page 1

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

View Full DocumentRight Arrow Icon
Chapter 04 - Consolidated Financial Statements and Outside Ownership 4-2 11. C Proceeds of $80,000 less $64,000 ( × $192,000) book value = $16,000 Control is maintained so excess proceeds go to APIC. 12. B Combined revenues . ....................................................................... $1,300,000 Combined expenses . ....................................................................... (800,000) Trademark amortization . ................................................................. (6,000) Patented technology amortization . ................................................ (8,000
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/10/2010 for the course ACCT 401 taught by Professor C.p.carter during the Fall '10 term at UMass Lowell.

Page1 / 42

Ch4 Solutions - Chapter 04 - Consolidated Financial...

This preview shows document pages 1 - 3. Sign up to view the full document.

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