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Solution to Chapter 4 Sample Quiz

Solution to Chapter 4 Sample Quiz - Indiana University of...

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Indiana University of Pennsylvania Department of Accounting ACCT 401/501: Advanced Accounting Dr. Rahman Solution to Sample Quiz for Chapter 4 Part I. 1 b 2 d 3 c 4 d Parent’s inventory of $132,000 plus subsidiary’s book value of inventory of $38,000 plus 22,000 excess of the fair value over the book value = $132,000+$38,000 +$22,000 = $192,000 5 d Purchase price $392,000/.75 = Implied fair value of $522,667. Minus book value of Grass – (400,000) Unamortized excess $122,667 Assigned to inventory 22,000 Remainder to goodwill $100,667 6 d Just add the liability amounts together 7 c $522,667 X .25 = 130,667. 8 a The parent’s Retained Earnings is the amount of consolidated Retained Earnings 9 d Cash $230,000 Accounts Receivable 170,000 Inventory $66,000+$19,000 + 22,000 = 192,000 Land 100,000 Plant assets-net 700,000 Goodwill 100,667 Total assets $1,492,667 10 b 11 c Pigeon’s separate income $150,000 Less: 60% of Home’s $10,000 loss = ( 6,000) Less:Equipment depreciation $20,000/ 10 years = $2,000 X .6 (1,200) Consolidated net income $142,800 12 c 1
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Part II Koel Corporation and Subsidiary Consolidated Balance Sheet Working Papers at December 31, 2017 Koel Rain Eliminations Balance Sheet Debit Credit INCOME STATEMENT
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