quiz 2 chpts 3 4[1]

7/14/2019 Quiz 2 Chpts 3 4[1]

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ACCT 450, Fall 2010 Name ______________________________ Quiz #2, Chpts. 3 & 4

Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2010. Janex'sreported earnings for 2010 totaled $432,000, and it paid $120,000 in dividends during the year. Theamortization of allocations related to the investment was $24,000. Cashen's net income, not including theinvestment, was $3,180,000, and it paid dividends of $900,000.

1. On the consolidated financial statements for 2010, what amount should have been shown for Equity in

Subsidiary Earnings?A. $432,000.B. $-0-.C. $408,000.D. $120,000.E. $288,000.

2. What is the amount of consolidated net income for the year 2010?A. $3,180,000.B. $3,612,000.C. $3,300,000.D. $3,588,000.E. $3,420,000.

3. Red Co. acquired 100% of Green, Inc. on January 1, 2010. On that date, Green had inventory with a book value of $42,000 and a fair value of $52,000. This inventory had not yet been sold at December 31, 2010. Also,on the date of acquisition, Green had a building with a book value of $200,000 and a fair value of $390,000.Green had equipment with a book value of $350,000 and a fair value of $280,000. The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life. How much total expense will be inthe consolidated financial statements for the year ended December 31, 2010 related to the acquisition

allocations of Green?A. $43,000.B. $33,000.C. $ 5,000.D. $15,000.E. 0.

7/14/2019 Quiz 2 Chpts 3 4[1]


Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance;

Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with anindefinite life. FIFO inventory valuation method is used.

4. Compute goodwill, if any, at January 1, 2010.A. $150.B. $250.C. $700.D. $1,200.E. $550.

5. Compute the amount of total expenses reported in an income statement for the year ended December 31,2010, in order to recognize acquisition-date allocations of fair value and book value differences.A. $140.B. $190.C. $260.D. $285.E. $310.

7/14/2019 Quiz 2 Chpts 3 4[1]


Following are selected accounts for Green Corporation and Vega Company as of December 31, 2013. Severalof Green's accounts have been omitted.

Green acquired 100% of Vega on January 1, 2009, by issuing 10,500 shares of its $10 par value common stock

with a fair value of $95 per share. On January 1, 2009, Vega's land was undervalued by $40,000, its buildingswere overvalued by $30,000, and equipment was undervalued by $80,000. The buildings have a 20-year life andthe equipment has a 10-year life. $50,000 was attributed to an unrecorded trademark with a 16-year remaininglife. There was no goodwill associated with this investment.

6. Compute the December 31, 2013, consolidated total expenses.A. $620,000.B. $280,000.C. $900,000.D. $909,625.

E. $299,625.

Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2010. During 2010,Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of excess cost allocationstotaled $60,000 in 2010.

7. The noncontrolling interest's share of the earnings of Harbor Corp. is calculated to beA. $132,000.B. $150,000.C. $168,000.D. $160,000.

E. $0.

8. What is the effect of including Harbor in consolidated net income for 2010?A. $350,000.B. $308,000.C. $500,000.D. $440,000.E. $290,000.

7/14/2019 Quiz 2 Chpts 3 4[1]


Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2010 when Park's book value was$560,000. The Royce stock was not actively traded. On the date of acquisition, Park had equipment (with a ten-year life) that was undervalued in the financial records by $140,000. One year later, the following selectedfigures were reported by the two companies. Additionally, no dividends have been paid.

9. What is consolidated net income for 2011 attributable to Royce's controlling interest?A. $686,000.B. $560,000.C. $644,000.D. $635,600.E. $691,600.

10. What is the noncontrolling interest's share of the subsidiary's net income for the year ended December 31,2011 and what is the ending balance of the noncontrolling interest in the subsidiary at December 31, 2011?

A. $56,000 and $280,000.B. $50,400 and $218,400.C. $56,000 and $224,000.D. $56,000 and $336,000.E. $50,400 and $330,400.

7/14/2019 Quiz 2 Chpts 3 4[1]


On January 1, 2010, Palk Corp. and Spraz Corp. had condensed balance sheets as follows:

On January 2, 2010, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding commonshares of Spraz. The loan was to be paid in ten equal annual principal payments, plus interest, beginningDecember 31, 2010. The excess consideration transferred over the underlying book value of the acquired netassets was allocated 60% to inventory and 40% to goodwill.

11. What is consolidated current assets at January 2, 2010?A. $127,000.B. $129,800.C. $143,800.D. $148,000.E. $135,400.

12. What is consolidated stockholders' equity at January 2, 2010?

A. $112,000.B. $133,000.C. $168,000.D. $182,000.E. $203,000.

7/14/2019 Quiz 2 Chpts 3 4[1]


a Key

Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2010. Janex's

reported earnings for 2010 totaled $432,000, and it paid $120,000 in dividends during the year. Theamortization of allocations related to the investment was $24,000. Cashen's net income, not including theinvestment, was $3,180,000, and it paid dividends of $900,000.

Hoyle - Chapter 03

1. On the consolidated financial statements for 2010, what amount should have been shown for Equity in

Subsidiary Earnings?A. $432,000.B. $-0-.C. $408,000.D. $120,000.E. $288,000.

AACSB: Analytic

AICPA FN: Measurement

Bloom's: Application

Difficulty: Medium

Hoyle - Chapter 03 #18 Learning Objective: 03-01 Recognize the complexities in preparing consolidated financial reports that emerge from the passage of time.

Learning Objective: 03-03 Understand that a parent's internal accounting method for its subsidiary investments has no effect on the resulting consolidated financial statements.

Learning Objective: 03-04 Prepare consolidated financial statements subsequent to acquisition when the parent has applied in its internal records.

2. What is the amount of consolidated net income for the year 2010?A. $3,180,000.B. $3,612,000.C. $3,300,000.D. $3,588,000.E. $3,420,000.

AACSB: Analytic



Difficulty: Medium Hoyle - Chapter 03 #20

Learning Objective: 03-01 Recognize the complexities in preparing consolidated financial reports that emerge from the passage of time.

Learning Objective: 03-03 Understand that a parent's internal accounting method for its subsidiary investments has no effect on the resulting consolidated financial

statements.


7/14/2019 Quiz 2 Chpts 3 4[1]


3. Red Co. acquired 100% of Green, Inc. on January 1, 2010. On that date, Green had inventory with a book value of $42,000 and a fair value of $52,000. This inventory had not yet been sold at December 31, 2010. Also,on the date of acquisition, Green had a building with a book value of $200,000 and a fair value of $390,000.Green had equipment with a book value of $350,000 and a fair value of $280,000. The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life. How much total expense will be inthe consolidated financial statements for the year ended December 31, 2010 related to the acquisitionallocations of Green?A. $43,000.

B. $33,000.C. $ 5,000.D. $15,000.E. 0.

AACSB: Analytic


Bloom's: Application Difficulty: Medium

Hoyle - Chapter 03 #23



statements. Learning Objective: 03-04 Prepare consolidated financial statements subsequent to acquisition when the parent has applied in its internal records.

7/14/2019 Quiz 2 Chpts 3 4[1]


Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance;

Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with anindefinite life. FIFO inventory valuation method is used.

Hoyle - Chapter 03

7/14/2019 Quiz 2 Chpts 3 4[1]


4. Compute goodwill, if any, at January 1, 2010.A. $150.B. $250.C. $700.D. $1,200.E. $550.

AACSB: Analytic

AICPA FN: Measurement Bloom's: Application

Difficulty: Medium



5. Compute the amount of total expenses reported in an income statement for the year ended December 31,2010, in order to recognize acquisition-date allocations of fair value and book value differences.A. $140.B. $190.C. $260.D. $285.E. $310.

AACSB: Analytic


Difficulty: Medium



Learning Objective: 03-03 Understand that a parent's internal accounting method for its subsidiary investments has no effect on the resulting consolidated financial statements.


7/14/2019 Quiz 2 Chpts 3 4[1]


Following are selected accounts for Green Corporation and Vega Company as of December 31, 2013. Severalof Green's accounts have been omitted.

Green acquired 100% of Vega on January 1, 2009, by issuing 10,500 shares of its $10 par value common stock

with a fair value of $95 per share. On January 1, 2009, Vega's land was undervalued by $40,000, its buildingswere overvalued by $30,000, and equipment was undervalued by $80,000. The buildings have a 20-year life andthe equipment has a 10-year life. $50,000 was attributed to an unrecorded trademark with a 16-year remaininglife. There was no goodwill associated with this investment.

Hoyle - Chapter 03

6. Compute the December 31, 2013, consolidated total expenses.A. $620,000.

B. $280,000.C. $900,000.D. $909,625.E. $299,625.

AACSB: Analytic


Difficulty: Hard




statements. Learning Objective: 03-04 Prepare consolidated financial statements subsequent to acquisition when the parent has applied in its internal records.

Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2010. During 2010,Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of excess cost allocationstotaled $60,000 in 2010.

Hoyle - Chapter 04

7/14/2019 Quiz 2 Chpts 3 4[1]


7. The noncontrolling interest's share of the earnings of Harbor Corp. is calculated to beA. $132,000.B. $150,000.C. $168,000.D. $160,000.E. $0.

AACSB: Analytic


Difficulty: Medium


Learning Objective: 04-04 Allocate consolidated net income across the controlling and noncontrolling interests.

8. What is the effect of including Harbor in consolidated net income for 2010?A. $350,000.B. $308,000.C. $500,000.D. $440,000.E. $290,000.

AACSB: Analytic



Difficulty: Medium Hoyle - Chapter 04 #14


Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2010 when Park's book value was

$560,000. The Royce stock was not actively traded. On the date of acquisition, Park had equipment (with a ten-year life) that was undervalued in the financial records by $140,000. One year later, the following selectedfigures were reported by the two companies. Additionally, no dividends have been paid.

Hoyle - Chapter 04

7/14/2019 Quiz 2 Chpts 3 4[1]


9. What is consolidated net income for 2011 attributable to Royce's controlling interest?A. $686,000.B. $560,000.C. $644,000.D. $635,600.E. $691,600.

AACSB: Analytic


Difficulty: Medium



10. What is the noncontrolling interest's share of the subsidiary's net income for the year ended December 31,2011 and what is the ending balance of the noncontrolling interest in the subsidiary at December 31, 2011?A. $56,000 and $280,000.B. $50,400 and $218,400.C. $56,000 and $224,000.D. $56,000 and $336,000.E. $50,400 and $330,400.

AACSB: Analytic


Difficulty: Medium



Learning Objective: 04-05 Identify and calculate the four noncontrolling interest figures that must be included within the consolidation process and prepare aconsolidation worksheet in the presence of a noncontrolling interest.

On January 1, 2010, Palk Corp. and Spraz Corp. had condensed balance sheets as follows:

On January 2, 2010, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding commonshares of Spraz. The loan was to be paid in ten equal annual principal payments, plus interest, beginningDecember 31, 2010. The excess consideration transferred over the underlying book value of the acquired netassets was allocated 60% to inventory and 40% to goodwill.

Hoyle - Chapter 04

7/14/2019 Quiz 2 Chpts 3 4[1]


11. What is consolidated current assets at January 2, 2010?A. $127,000.B. $129,800.C. $143,800.D. $148,000.E. $135,400.

AACSB: Analytic


Difficulty: Medium


Learning Objective: 04-01 Understand that complete ownership is not a prerequisite for the formation of a business combination.

12. What is consolidated stockholders' equity at January 2, 2010?A. $112,000.B. $133,000.C. $168,000.D. $182,000.E. $203,000.

7/14/2019 Quiz 2 Chpts 3 4[1]


ACCT 450, Fall 2010 Name ______________________________ Quiz #2, Chpts. 3 & 4

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2.

3.

4.

5.

6.

7.

8.

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12.

quiz 2 chpts 3 4[1]

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