98. On January 1, 2011, Bast Co. had a net book value of $2,100,000 as follows:
Fisher Co. acquired all of the outstanding preferred shares for $148,000 and 60% of the
common stock for $1,281,000. Fisher believed that one of Bast's buildings, with a twelv
84. Johnson, Inc. owns control over Kaspar, Inc. Johnson reports sales of $400,000 during 2011
while Kaspar reports $250,000. Kaspar transferred inventory during 2011 to Johnson at a price
of $50,000. On December 31, 2011, 30 percent of the transferred go
81. Franklin Corporation owns 90 percent of the outstanding voting stock of Georgia Company.
On January 2, 2009, Georgia sold 7 percent bonds payable with a $5,000,000 face value
maturing January 2, 2029 at a premium of $500,000. On January 1, 2011, Frank
78. A parent company owns a 70 percent interest in a subsidiary whose stock has a book value
of $27 per share. The last day of the year, the subsidiary issues new shares for $27 per share,
and the parent buys its 70 percent interest in the new shares. Whi
75. How do subsidiary stock warrants outstanding affect consolidated earnings per share?
A. They will be included in both basic and diluted earnings per share if they are dilutive.
B. They will only be included in diluted earnings per share if they are di
The balance sheets of Butler, Inc. and its 70 percent-owned subsidiary, Cassie Corp., are
Additional information for 2011:
73. Net cash flow from operating activities was:
Anderson, Inc. has owned 70% of its subsidiary, Arthur Corp., for several years. The
consolidated balance sheets of Anderson, Inc. and Arthur Corp. are presented below:
Additional information for 2011:
71. Net cash flow from operating activities was:
68. MacDonald, Inc. owns 80 percent of the outstanding stock of Stahl Corporation. During the
current year, Stahl made $125,000 in sales to MacDonald. How does this transfer affect the
consolidated statement of cash flows?
A. Include 80 percent as a decre
65. A parent acquires all of a subsidiary's common stock and 60 percent of its preferred stock.
The preferred stock has a cumulative dividend. No dividends are in arrears. How is the
noncontrolling interest in the subsidiary's net income assigned?
87. Parent Corporation acquired some of its subsidiary's bonds on the open bond market. The
remaining life of the bonds was eight years, and Parent expected to hold the bonds for the full
eight years. How would the acquisition of the bonds affect the cons
91. During 2011, Parent Corporation purchased at book value some of the outstanding bonds of
its subsidiary. How would this acquisition have been reflected in the consolidated statement of
92. On January 1, 2011, Parent Corporation acquired a
110. Allen Co. held 80% of the common stock of Brewer Inc. and 40% of this subsidiary's
convertible bonds. The following consolidated financial statements were for 2010 and 2011.
Bonds were issued during 2011 by the parent for cash
ending December 31, 2011. Either the direct method or the indirect method may be used.
Panton, Inc. acquired 18,000 shares of Glotfelty Corp. several years ago. At the present time,
Glotfelty is reporting the following stockholders' equity:
109. Jet Corp. acquired all of the outstanding shares of Nittle Inc. on January 1, 2009, for
$644,000 in cash. Of this price, $42,000 was attributed to equipment with a ten-year remaining
useful life. Goodwill of $56,000 had also been identified. Jet appl
105. What was the noncontrolling interest's share of consolidated net income for the year
106. What is the controlling interest share of Thomas' net income for the year ended December
107. What was Kuried's balance in the Investment in Tho
103. Skipen Corp. had the following stockholders' equity accounts:
The preferred stock was participating and is therefore considered to be equity. Vestin Corp.
acquired 90% of this common stock for $2,250,000 and 70% of the preferred stock for
100. What consolidation entry would be recorded in connection with these intra-entity bonds on
December 31, 2012?
101. What consolidation entry would be recorded in connection with these intra-entity bonds on
December 31, 2013?
102. What consolidation ent
94. Parent Corporation acquired some of its subsidiary's outstanding bonds. Why might Parent
purchase the bonds, rather than the subsidiary buying its own bonds?
95. Parent Corporation had just purchased some of its subsidiary's outstanding bonds on the
61. Which of the following characteristics is not indicative of an enterprise qualifying as a
primary beneficiary with a controlling financial interest in a variable interest entity?
A. The power to direct the most significant economic performance activit
57. When Ryan's new percent ownership is rounded to a whole number, what adjustment is
needed for Ryan's investment in Chase account?
A. $16,000 decrease.
B. $60,000 decrease.
C. $64,000 increase.
D. $64,000 decrease.
E. No adjustment is necessary.
These questions are based on the following information and should be viewed as independent
Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 2009, when Cocker
had the following stockholders' equity accounts.
To acquire th
22. On January 1, 2012, Cocker reacquired 8,000 of the outstanding shares of its own common
stock for $34 per share. None of these shares belonged to Popper. How would this transaction
have affected the additional paid-in capital of the parent company?
16. Tray Co. reported current earnings of $560,000 while paying $56,000 in cash dividends.
Sparrish Co. earned $140,000 in net income and distributed $14,000 in dividends. Tray held a
70% interest in Sparrish for several years, an investment that it origi
8. How would consolidated earnings per share be calculated if the subsidiary has no convertible
securities or warrants?
A. Parent's earnings per share plus subsidiary's earnings per share.
B. Parent's net income divided by parent's number of shares outsta
13. Stoop's diluted earnings per share (rounded) is calculated to be
14. Campbell Inc. owned all of Gordon Corp. For 2011, Campbell reported net income (without
consideration of its investment in Gordon) o
10. What is the balance in Noncontrolling Interest in Garvin Co. after the sale of the 10,000
shares of common stock?
11. Rojas Co. owned 7,000 shares (70%) of the outstanding 10%, $100 par
18. Cadion Co. owned a controlling interest in Knieval Inc. Cadion reported sales of $420,000
during 2011 while Knieval reported $280,000. Inventory costing $28,000 was transferred from
Knieval to Cadion (upstream) during the year for $56,000. Of this amo
4. Where do dividends paid to the noncontrolling interest of a subsidiary appear on a
consolidated statement of cash flows?
A. Cash flows from operating activities.
B. Cash flows from investing activities.
C. Cash flows from financing activities.
25. Which of the following statements is true concerning the acquisition of existing debt of a
consolidated affiliate in the year of the debt acquisition?
A. Any gain or loss is deferred on a consolidated income statement.
B. Any gain or loss is recognize