goodwill - 25 On Giant-Petrel Corporations Investment in...

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account had a balance of $525,000. The balance consisted of 80% of Penguin’s $600,000 stockholders' equity on that date and $45,000 of goodwill. On January 2, 2007, Penguin increased its outstanding common stock from 15,000 to 18,000 shares. Assume instead that Penguin sold the additional 3,000 shares to outside interests for $150,000 on January 2, 2007. Giant-Petrel’s percentage ownership immediately after the sale of stock would be: 66-2/3%. 75%. 80%. 83-1/3%. 26. Which of the following is correct about the treatment of preacquisition earnings on consolidated financial statements? I.Exclude the subsidiary sales and expenses prior to acquisition from consolidated sales and expenses II.Include the subsidiary sales and expenses prior to acquisition and deduct preacquisition income as a separate item I only II only I or II Neither I nor II 27. Bowerbird Corporation purchased a 70% interest in Stage Corporation on June 1, 2006 at a purchase price of $390,400. On this date, Stage’s book values were equal to its fair values except for an unrecorded copyright, and its stockholders’ equity consisted of $290,000 of Common Stock and $210,000 of Retained Earnings. All cost-book differentials were attributed to the copyright, which had an estimated economic life of ten years. During 2006, Stage earned $120,000 of net income earned uniformly throughout the year and paid $6,000 of dividends on March 1 and another $6,000 on September 1. 1
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This note was uploaded on 09/11/2011 for the course ACCT 406 taught by Professor Price during the Spring '11 term at American University of Beirut.

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goodwill - 25 On Giant-Petrel Corporations Investment in...

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