Week 4 Midterm ACCT 405

Week 4 Midterm ACCT 405 - Week 4 Consolidation and...

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Week 4 : Consolidation and Noncontrolling Interests - Midterm Time Remaining: Page: 1 2 midterm 1. (TCO 3) When a parent uses the equity method throughout the year to account for investment in a subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet? (Points : 3) Parent company net income equals controlling interest in consolidated net income Parent company retained earnings equals consolidated retained earnings Parent company total assets equals consolidated total assets Parent company dividends equals consolidated dividends Goodwill may need to be recorded 2. (TCO 3) When a parent uses the partial equity method throughout the year to account for investment in a subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet? (Points : 3) Parent company net income will equal controlling interest in consolidated net income when initial value, book value and fair value of the investment are equal Parent company net income will exceed controlling interest in consolidated net income when fair value acquired exceeds book value Parent company net income will be less than controlling interest in consolidated net income when fair value acquired exceeds book value Goodwill will be recognized if acquisition value exceeds fair value Subsidiary net assets are valued at their book values 3. (TCO 3) According to SFAS 160, Non-controlling Interests and Consolidated Financial Statements, a non-controlling interest is most likely to be shown as part of equity under the (Points : 3) Partial equity concept Proportionate consolidation concept Economic unit concept Parent company concept Proprietary concept 4. (TCO 3) Kordel Inc. holds 75% of the outstanding common stock of Raxston Corp. Raxston currently owes Kordel $500,000 for inventory acquired over the past few months. In preparing consolidated financial statements, what amount of this debt should be eliminated? (Points : 3) $375,000 $125,000 $300,000 $500,000 $0 5. (TCO 1) On January 1, 2007, Jordan Inc. acquired 30% of Nico Corp. Jordan used the equity method to account for the investment. On January 1, 2008, Jordan sold 2/3 of its investment in Nico. It no longer had the ability to exercise significant
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This note was uploaded on 11/19/2011 for the course ACCT 405 taught by Professor Coreyhaltz during the Spring '11 term at Community College of Denver.

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Week 4 Midterm ACCT 405 - Week 4 Consolidation and...

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