Quiz 4 Ch 5 and Ch 6(2)

Quiz 4 Ch 5 and Ch 6(2) - Quiz Ch 5 and Ch 6 1 On November...

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1 Quiz Ch 5 and Ch 6 1. On November 8, 2011, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized? A. Proportionately over a designated period of years. B. When Wood Co. sells the land to a third party. C. No gain can be recognized. D. As Wood uses the land. E. When Wood Co. begins using the land productively. 2. Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011, Edgar made several sales of inventory to Stendall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2011. Consolidated cost of goods sold for 2011 was $2,140,000 because of a consolidating adjustment for intra-entity sales less the entire profit remaining in Stendall's ending inventory. How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Stendall to Edgar? A. Consolidated cost of goods sold would have remained $2,140,000. B. Consolidated cost of goods sold would have been more than $2,140,000 because of the controlling interest in the subsidiary. C. Consolidated cost of goods sold would have been less than $2,140,000 because of the noncontrolling interest in the subsidiary. D. Consolidated cost of goods sold would have been more than $2,140,000 because of the noncontrolling interest in the subsidiary. E. The effect on consolidated cost of goods sold cannot be predicted from the information provided.
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