Ch4 - Ch4 Student: _ Green Company purchased 100 percent of...

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Ch4 Student: ___________________________________________________________________________ Green Company purchased 100 percent of the common shares of White Company for $880,000. Selected accounts from Green's balance sheet at the date of combination are as follows: Selected accounts from the balance sheet of White at acquisition are as follows: On the date of purchase, White inventory and buildings and equipment had fair values of $280,000 and $860,000, respectively. 1. Based on the information given above, the amount to be reported for inventory in the consolidated balance sheet immediately after the combination is: A. $1,000,000. B. $960,000. C. $760,000. D. $720,000. 2. Based on the information given above, the amount to be reported in the consolidated balance sheet for buildings and equipment (net) immediately after the combination is: A. $1,880,000. B. $1,860,000. C. $1,800,000. D. $1,000,000. 3. Based on the information given above, the amount to be reported in the consolidated balance sheet for the investment in White Company common stock is: A. $0. B. $350,000. C. $740,000. D. $880,000.
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4. Based on the information given above, the balance to be reported as goodwill in the consolidated balance sheet prepared immediately after the combination is: A. $0. B. $600,000. C. $120,000. D. $140,000. 5. Based on the information given above, the balance to be reported for common stock in the consolidated balance sheet prepared immediately after the combination is: A. $840,000. B. $1,190,000. C. $1,580,000. D. $1,640,000. 6. Based on the information given above, the balance to be reported for retained earnings in the consolidated balance sheet prepared immediately following the combination is: A. $1,040,000. B. $1,100,000. C. $1,160,000. D. $1,840,000. 7. Parent Company acquires 100 percent of the outstanding voting stock of Subsidiary company in a business combination treated as a purchase. Acquisition cost exceeded the book value of Subsidiary's net assets. The excess is attributable to equipment with a remaining life of five years. Parent uses the equity method of accounting for its investment, and there have been no intercompany transactions. Consolidated net income for the year following acquisition should equal A. Parent's net operating income minus differential amortization. B. Parent's net income plus Subsidiary's net income. C. Parent's net income. D. Parent's net operating income plus Subsidiary's net income. 8. Parent Company acquires 100 percent of the outstanding voting stock of Subsidiary Company in a business combination treated as a purchase. Acquisition cost exceeded the book value of Subsidiary's net assets. The excess is attributable to equipment with a remaining life of five years. Parent uses the equity method of accounting for its investment, and there have been no intercompany transactions. Consolidated retained earnings at the end of the first year following acquisition should equal A. Parent's retained earnings. B. Parent's retained earnings plus Subsidiary's retained earnings.
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This note was uploaded on 05/26/2011 for the course ACCT 410 taught by Professor Khalib during the Spring '11 term at Strayer.

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Ch4 - Ch4 Student: _ Green Company purchased 100 percent of...

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