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MODIFIED TO INCLUDE “NEW” GAAP Exam II Modified from:   Autumn 2008 Instructions: 1. Read each question carefully and answer fully.   Unless otherwise  specified,   subsidiaries   do   not   use   the   push-down   method   of  accounting.  All consolidations are handled as purchases (not pooling)  unless indicated.  All firms use a calendar year.  2. Problems not supported by relevant and readable computations are  subject to point loss.  Where appropriate, terms like “net income,” “net  loss,” etc. must be included with number answers. 3. Budget your time carefully.  It is generally better to finish half of each  problem than to complete all of half the problems.   Students who  continue to work on exams after instructed to stop will receive a zero  on this exam. 4. It is the student's responsibility to verify that all the listed problems  and   pages   are   contained   is   this   booklet.     Unanswered   questions  receive zero points regardless of reason. Problem Pages Approximate Points Approximate Time I 2-3 II 4-6 III 7-9 IV 10 Total
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Page 2 of 11 P ROBLEM  I Parent purchased 100% of Sub on 1/1/20x1 for cash.  A worksheet, presented below,  was   prepared   immediately   after   purchase.     The   purchase   price   reflects   the   following  information.  All current values and book values of Sub’s assets and liabilities are the same  except as follows. Inventory is undervalued by $25.   Buildings and Equipment has a  current value of $90.  Land has a current value of $115.  Liabilities have a current value of  $210.  A covenant not to compete was obtained and valued at $40.   [Note:  you need not  complete the worksheet.] At Purchase Parent Sub Adjustments Consolidated Cash 35 40 Inventory
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This note was uploaded on 08/06/2011 for the course AMIS 624 taught by Professor Wallin during the Summer '11 term at Ohio State.

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