Beechy 7e tif ch06 - problems with solutions PDF

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Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 1 )Chandl e rLt d.owns65 % ofSt or kCo.a ndac c ount sf ori t si nve s t me ntus i ngt hec os tme t hod.Dur i ng 2 0X3 ,Chandl ers ol di t sonl yl andhol di ngt oSt or kf ora$2 5, 000pr ofit .Att heendof20 X4 , St or ks howed t hel a ndoni t ss i ngl e e nt i t yfina nc i a ls t a t e me nta taval ueof$ 1 00 , 0 00. Wha tba l anc es houl dChandl e r s how oni t sc ons ol i da t e ds t a t e mentoffina nc i a lpos i t i onf ort hel a nd? A)$ 0 B)$7 5, 00 0 C)$ 100 , 0 00 D)$ 125 , 000 Ans we r :B Pa geRe f :2 98 299 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e 2 )S i nghLt d.i sawhol l yo wne ds ubs i di a r yofRos sCo.Att hebe gi nni ngof20X4 ,Ros sac qui r e damac hi ne f o r$3 50 , 0 00a nds ol di tt oS i nghf or$ 4 37, 50 0. Thema c hi newi l lbede pr e c i a t edove rfiveye a r sus i ngt he s t r a i ght l i neme t hodwi t hnor e s i dualva l ue .I npr e pa r i ngt hec ons ol i da t e dfinanc i a ls t a t e me nt sf o rt he s ec ondye ara f t e rt hes al et oSi ngh, Ros smadet hef ol l owi ngj our nale nt r y: DRAc c umul a t e ddepr e c i a t i on– ma c hi ne CRDe pr e c i a t i one x pe ns e– mac hi ne

1 7, 500 1 7, 50 0

Wha tot he ra dj us t me ntmus tbema dei npr e par i ngt hec ons ol i da t e dfinanc i a ls t a t e me nt s ? A) DROpe ni ngr e t ai ne de ar ni ngs 87 , 5 00 CRMac hi ne 8 7, 50 0 B) DROpe ni ngr e t ai ne de ar ni ngs DRAc c umul a t e ddepr e c i a t i on– ma c hi ne CRMac hi ne

70 , 0 00 1 7, 500 8 7, 50 0

C) DRAc c umul a t e ddepr e c i a t i on– ma c hi ne CRMac hi ne

8 7, 500 8 7, 50 0

D) DRCl os i ngr e t ai ne de a r ni ngs DRDe pr e c i a t i one xpe ns e CRMac hi ne

7 0, 00 0 17 , 5 00 8 7, 50 0

Ans we r :B Pa geRe f :2 97 299 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Di ffic ul t 3 )TLCHome c a r eLt d.o wns1 00 % ofEr r a ndSe r vi c ef orSe ni or sLt d. ( ESS) .OnJ a nuar y2 ,2 0X1 ,TLC bought1 2i dent i c alc ar sf or$ 30 0, 000 .I tpr ompt l ys ol df ouroft hec a r st oESSf or$11 2, 00 0.ESSwi l l a mor t i zet hec a r sove rfiveye a r sus i ngt hes t r a i ght l i neme t hod.AtDe c e mbe r31 ,2 0X2, wha ti st hene t a dj us t mentt ha ts houl dbemadet oac c umul a t e ddepr e c i a t i oni nTLC' sc ons ol i da t e dfinanc i a ls t a t e me nt s ? I gnor ei nc omet a x e s . A)$ 0 B)Re duc t i onof$2 , 400 Copyright © 2014 Pearson Canada Inc.

6-1

Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach C)Re duc t i onof$ 4, 80 0 D)Re duc t i onof$5, 60 0 Ans we r :C Pa geRe f : 29 82 99 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e 4 )S i nghLt d. i sawhol l yowne ds ubs i di ar yofRos sCo. Att hebe gi nni ngof20 X4,Ros sa c qui r e damac hi ne f o r$3 50 , 0 00a nds ol di tt oSi nghf or$4 37 , 5 00. Themac hi newi l lbede pr e c i a t edove rfiveye a r sus i ngt he s t r a i ght l i neme t hodwi t hnor e s i dua lval ue . Se v enye a r saf t e rSi nghboughtt hema c hi nef r om Ros s , t he mac hi nei ss t i l li nus e .I npr e par i ngi t sc ons ol i da t e dfina nc i a ls t a t e me nt s , wha tent r ys houl dRos smake ? A) DRRe t a i ne de ar ni ngs 8 7, 50 0 CRMa c hi ne 87, 5 00 B) DRAc c umul a t e ddepr e c i a t i on– ma c hi ne CRMa c hi ne

87 , 5 00 87, 5 00

C) DRRe t a i ne de ar ni ngs CRAc c umul a t e dde pr e c i a t i on

8 7, 50 0 87, 5 00

D)Noe nt r yi sr e qui r e da tt hi st i me . Ans we r :B Pa geRe f : 30 0 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e

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6-2

Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 5 )Be l z e rCo.o wns70% ofSa boLt d. Att hebe gi nni ngof20 X7 ,S abos ol dapi e c eofe qui pme ntt oBe l z e rf or aga i nof$35 , 0 00 .Att ha tt i me , t hee qui pmenthada ne s t i ma t e dus e f ull i f eofs e ve nye ar s .Whi c hoft he f ol l owi ngs t a t e me nt si st r ueaboutc a l c ul a t i ngt heNCIf ort hec ons ol i da t e dSFP? A)Theunr e al i z edpr ofita tt hee ndof20X7mus tbede duc t e df r om t hes ubs i di ar y' sne tc a r r yi ngva l ue be f or ec al c ul a t i ngt heNCI . B)Theunr e a l i ze dpr ofita tt hee ndof2 0X7mus tbeadde dt ot hes ubs i di ar y' sne tc ar r yi ngval uebe f or e c a l c ul a t i ngt heNCI . C)Theunr e a l i ze dpr ofitdoe snota ffe c tt heNCIc a l c ul a t i onbe c a us et hi si sa nups t r e a ms al e . D)Ther ei snounr e al i z e dpr ofiti nt het r ans ac t i on. Ans we r :A Pa geRe f : 30 0 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e 6 )Di x onLt d.o wns6 0% oft hec ommons har e sofKe l l yCo .Att hebe gi nni ngof20X1, Ke l l ys ol dama c hi ne wi t habookval ueof$ 350 , 000t oDi x onf or$41 0, 00 0.Whe nDi x onpr e pa r e si t sc ons ol i da t e dfina nc i a l s t a t e ment sf or20X1 ,i tc r e di t st hemac hi nea c c ountby$ 60, 00 0. Wha tac c ount ( s )s houl di td e b i ti nt hi s j our nale nt r y? A)Re t a i ne de ar ni ngsby$6 0, 00 0 B)I nve s t me nti nKe l l yby$60 , 0 00 C)Re t a i ne de ar ni ngsby$3 6, 00 0andNCIb y$2 4, 00 0 D)I nv es t me nti nKe l l yby$2 4, 00 0andNCIby$2 4, 000 Ans we r :C Pa geRe f : 30 03 01 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e 7 )Be l z e rCo.o wns70% ofSa boLt d. Att hebe gi nni ngof20 X7 ,S abos ol dapi e c eofe qui pme ntt oBe l z e rf or aga i nof$35 , 0 00 .Att ha tt i me , t hee qui pmenthada ne s t i ma t e dus e f ull i f eofs e ve nye ar s .Te nye ar sl a t e r , Be l ze ri ss t i l lus i ngt hee qui pment .I npr e par i ngi t sc ons ol i da t e dfinanc i a ls t a t eme nt s , Be l z e rs houl dc r e di t t hee qui pme ntac c ountby$35 , 0 00 .Wha tac c ount ( s )s houl dbede bi t e di nt hi sj our na le nt r y? A)Ope ni ngc ons ol i da t e dr e t ai ne de a r ni ngsby$3 5, 000 B)Ope ni ngc ons ol i da t e dr et a i nede ar ni ngsb y$2 4, 500andNCIb y$10 , 5 00 C)De pr ec i a t i one xpe ns eby$3 5, 000 D)Ac c umul a t e dde pr ec i a t i onby$ 35, 00 0 Ans we r :D Pa geRe f : 30 23 03 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e

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Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 8 )Pa lCo.owns70 % oft heout s t andi ngc ommons ha r e sofSaddLt d. Sadds ol danas s e tt oPala tal os s . Ther ei snoe vi denc eofi mpa i r me nti nt heval ueoft heas s e ts ol dt oPa l .Whi c hoft hef ol l owi ngs t a t e me nt s a boutt hel os si st r ue ? A)Thel os ss houl dnotbee l i mi na t e dbe c aus et hi si sanups t r e am s a l e . B)Thel os ss houl dnotbee l i mi na t e dbe c a us et he r ei snoi mpa i r me nti nt heval ueoft hea s s e t . C)Thel os ss houl dnotbee l i mi na t e dbe c aus ePa ldoesnotown1 00% ofSadd. D)Thel os ss houl dbee l i mi na t e d. Ans we r :D Pa geRe f : 30 3 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Di ffic ul t 9 )Whi c hoft hef ol l o wi nga dj us t me nt si sno tac umul a t i veope r a t i onsa dj us t me nti nt hec ons ol i da t i on pr oc es s ? A)Re c ogni z et heNCI ' ss har eoft hes ubs i di a r y' sr e t a i ne de ar ni ngsf r om t hea c qui s i t i onda t et ot he be gi nni ngoft heye a roft hec ons ol i da t e dfina nc i a ls t a t eme nt s . B)El i mi na t et hegai nsandl os s e sf r om i nt e r c ompa nyt r ans ac t i onst ha tha v enotbee nr e al i ze da tt he be gi nni ngoft heye a roft hec ons ol i da t e dfina nc i a ls t a t eme nt s . C)El i mi na t et heflowt hr ought or e t a i ne de a r ni ngsoff a i r v al ue da s s e t sandl i abi l i t i e soni nt e r c ompany t r ans a c t i onst ha tha ves i nc ebe e ns ol dt oe x t e r na lpa r t i e s . D)Re c ogni z et heNCIi ne a r ni ngs . Ans we r :D Pa geRe f : 30 5 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e 1 0)Af e w ye a r sa go ,Loc keLt d. pur c ha s e dama c hi nef r om i t swhol l yowneds ubs i di ar y ,Duboi sLt d. ,f o r $ 90 , 0 00. Loc kehasj us ts ol dt hemac hi net oanunr e l a t e dpar t yf ora$ 15, 0 00gai n.Att het i meoft hes a l e , t he r ewass t i l lanunr e al i z edgai nof$50 , 000f r om t hepur c has ef r om Duboi s .Wi t ht hi ss a l eoft hea s s e tt o t heunr e l a t e dpar t y ,wha ti st hea mountofgai nt ha ts houl dber ec ogni z edonLoc ke ' sc ons ol i da t e d financ i a ls t a t e me nt s ? A)$ 15, 00 0 B)$5 0, 00 0 C)$ 55, 00 0 D)$ 65, 0 00 Ans we r :D Pa geRe f : 30 33 04 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e

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Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 1 1)Ros l ynnLt d.i sas ubs i di ar yofGoodal eCo.Ros l ynns ol dama c hi net oGoodal ef ora$5 0, 000ga i n. Goodal eha snow s ol dt hema c hi net oa nunr e l a t e dpar t yf ora$ 20 , 0 00gai n.Att het i meoft hes al e , $ 35 , 0 00oft hepr ofitont hes a l ef r om Ros l ynnwa ss t i l lunr e al i z e d.F orc ons ol i da t i onpur pos e s ,wha ti st he a mountofgai nt ha tmus tber e c ogni z edont hes al eoft hemac hi ne ? A)$ 15, 00 0 B)$2 0, 00 0 C)$ 30, 00 0 D)$ 55, 0 00 Ans we r :D Pa geRe f : 30 33 04 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Mode r a t e 1 2)Gr a ys onLt d.ac qui r e d6 0% oft heout s t andi ngc ommons ha r e sofGol dbe r gLt d.f or$ 48 0, 000 .Att he da t eofa c qui s i t i on, Gol dber g' ss har e hol der s ' e qui t ywas$62 5, 00 0.Thegoodwi l la t1 00% ha sbe e n de t e r mi ne dt obe$ 90, 00 0unde rt hee nt i t ymet hod. Wha ti st hea mountofGol dbe r g' sf a i rval ue i nc r e me nt s ? A)$ 54, 00 0 B)$7 0, 00 0 C)$ 85, 00 0 D)$ 121 , 000 Ans we r :C Pa geRe f : 30 63 07 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e 1 3)Gr a ys onLt d.ac qui r e d6 0% oft heout s t andi ngc ommons ha r e sofGol dbe r gLt d.f or$ 48 0, 000 .Att he da t eofa c qui s i t i on, Gol dber g' ss har e hol der s ' e qui t ywas$62 5, 00 0.Thegoodwi l la t1 00% ha sbe e n de t e r mi ne dt obe$ 90, 00 0unde rt hee nt i t ymet hod. Wha ti st hea mountoft henonc ont r ol l i ngi nt e r es tt ha t s houl dber epor t e dunde rt hee nt i t yme t hod? A)$ 192 , 0 00 B)$2 50, 0 00 C)$ 304 , 0 00 D)$ 320 , 000 Ans we r :D Pa geRe f : 30 73 08 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e

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Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 1 4)Ar ne zLt d. a c qui r e d7 0% oft heout s t a ndi ngc ommons har e sofBe dar dLt d. Att hea c qui s i t i onda t e , Be dar d' sne ti dent i fia bl eas s e t sha dac a r r yi ngva l ueof$ 82 5, 000a ndaf ai rmar ke tva l ueof$1 , 0 00, 00 0. Ar ne zpa i d$ 91 0, 000f ort heac qui s i t i on. Undert hee nt i t yme t hod, wha tamounts houl dber e por t e df or t henonc ont r ol l i ngi nt e r e s tont hec ons ol i da t e ds t a t e me ntoffina nc i a lpos i t i on? A)$ 210 , 0 00 B)$2 47, 0 00 C)$ 300 , 0 00 D)$ 390 , 000 Ans we r :D Pa geRe f : 30 73 08 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e 1 5)Mal l a r dLt d.a c qui r ed75% oft heout s t a ndi ngc ommons har e sofTe alLt d. a tDe c embe r31, 20X1 ,f or $ 90 0, 000 .Mal l a r dhasr e c or de di t si nve s t me ntus i ngt hec os tme t hod.I n2 00 8,Te alpai doutdi vi de ndsof $ 10 0, 000 .I npr e par i ngMal l a r d' sc ons ol i da t e dfinanc i a ls t a t e me nt s , wha te l i mi na t i oni sr e qui r e df ort he di vi de nds ? A)Re duc edi vi de ndsde c l a r e dby$7 5, 00 0;r e duc edi vi dendi nc omeby$7 5, 000 . B)Re duc edi vi dendsde c l ar e dby$10 0, 00 0;r e duc edi vi dendi nc omeby$1 00 , 0 00. C)Re duc edi vi dendsde c l ar e dby$1 00, 00 0; r e duc edi vi dendi nc omeb y$75 , 000 ;r e duc enonc ont r ol l i ng i nt e r e s tby$2 5, 00 0. D)Re duc edi vi de ndde c l a r e dby$1 00 , 0 00; r e duc edi vi dendi nc omeby$ 75 , 0 00; i nc r e as enonc ont r ol l i ng i nt e r e s tby$2 5, 00 0. Ans we r :C Pa geRe f : 31 73 20 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e

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6-6

Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 1 6)Mal l a r dLt d.a c qui r ed75% oft heout s t a ndi ngc ommons har e sofTe alLt d. a tDe c embe r31, 20X1 ,f or $ 90 0, 000 .Mal l a r dhasr e c or de di t si nve s t me ntus i ngt hec os tme t hod.Att hee ndof2 0 X7 ,Mal l a r ds t i l lhad $ 40 , 0 00ofgoodspur c ha s e df r om Te a li ni t si nve nt or ya ndTe alhad$ 50 , 0 00ofgoodspur c has edf r om Ma l l ar di ni t si nve nt or y . Bot hc ompani esha dgr os smar gi nsof5 0% i nt he i rs a l e sofgoodst oe ac hot he r a ndbot hc ompani ess ol dt he s egoodsi n20 X8 . Wha tj our na le nt r ys houl dbemadef orMa l l a r d' s2 0 X8 c ons ol i da t e dfina nc i a ls t a t e me nt swi t hr e s pe c tt ot hegoodspur c ha s e df r om Te alt ha twe r es t i l li n Ma l l ar d' sope ni ngi nve nt or y? A) DROpe ni ngr e t ai ne de ar ni ngs 15 , 0 00 CROpe ni ngNCI 5 , 0 00 CRCos tofs al e s 2 0, 00 0 B) DROpe ni ngr e t ai ne de ar ni ngs CROpe ni ngNCI CRCos tofs al e s

30 , 0 00 10, 0 00 4 0, 00 0

C) DROpe ni ngr e t ai ne de ar ni ngs CRCos tofs al e s

40 , 0 00 4 0, 00 0

D)Noadj us t me nti sr e qui r edast hepr ofit sha vebe e nr e al i z e d. Ans we r :A Pa geRe f : 31 1 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e 1 7)Mal l a r dLt d.a c qui r ed75% oft heout s t a ndi ngc ommons har e sofTe alLt d. a tDe c embe r31, 20X1 ,f or $ 90 0, 000 .Mal l a r dhasr e c or de di t si nve s t me ntus i ngt hec os tme t hod.I n2 0X8, Mal l ar ds ol dgoodst oT e a l f o r$2 60 , 0 00a tagr os sma r gi nof3 0% andTe als ol dgoodst oMal l a r df or$1 80, 00 0a tagr os smar gi nof 5 0%. Att heendof20 X8 , Ma l l ar ds t i l lha d$6 0, 00 0i ni nve nt or yofgoodspur c ha s e df r om Te a landTe als t i l l had$4 5, 000i ni nve nt or yofgoodspur c ha s e df r om Mal l a r d. Wha tadj us t me nts houl dbema def or Ma l l ar d' s20 X8c ons ol i da t e dfina nc i a ls t a t e me nt swi t hr e s pe c tt ogoodss ol dt oT e a lt ha ta r es t i l li ne ndi ng i nve nt or y? A)De c r e a s ec os tofs a l e sby$ 13 , 5 00; de c r e as ee ndi ngi nve nt or yb y$ 10, 12 5; i nc r e as enonc ont r ol l i ng i nt e r e s tby$3 , 375 . B)I nc r e as ec os tofs al e sb y$ 13, 50 0; de c r e a s ee ndi ngi nve nt or yby$ 10, 1 25; i nc r e as enonc ont r ol l i ngi nt e r e s t b y$3 , 3 75 . C)De c r e a s ec os tofs al e sby$ 13 , 5 00; de c r e as ee ndi ngi nve nt or yby$ 13 , 5 00. D)I nc r e as ec os tofs al e sby$ 13, 5 00; de c r e as ee ndi ngi nve nt or yby$ 13 , 5 00. Ans we r :D Pa geRe f : 31 1 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e

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6-7

Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 1 8)Li nvi l l eLt d. owns80 % oft heout s t andi ngs har e sofChanc eCo. OnJ a nuar y2, 20 X1,Chanc es ol da mac hi net oLi nvi l l ef or$2 70, 00 0.Chanc er e c or de da$ 45, 0 00gai nont hes al e .Att het i meoft hes a l e ,t he mac hi nehadar e mai ni ngus e f ull i f eoft hr e eye a r s .Bot hc ompani esus et hes t r ai ght l i neme t hodof de pr ec i a t i on.Wha tamounts houl dbes hownf orde pr e c i a t i one xpe ns eonLi nvi l l e ' sc ons ol i da t e d s t a t e mentofc ompr e he ns i vei nc omea tDec e mbe r31, 20 X1 ? A)$ 15, 00 0 B)$7 2, 00 0 C)$ 75, 00 0 D)$ 90, 0 00 Ans we r :C Pa geRe f : 31 23 13 Le ar ni ngObj . :6 . 1 ,6 . 2 Di ffic ul t y:Mode r a t e 1 9)Coope rLt d. ac qui r e d7 0% oft hec ommons har e sofEffyLt d.a tJ a nuar y2 ,2 0X1 .AtDe c e mbe r31 , 2 0X3 ,Effys ol damac hi net oCoope rf or$ 180 , 0 00. Effyhadpur c ha s e dt hemac hi neaf e w ye a r se a r l i e rf or $ 25 0, 000 .Att het i meofs a l et oCoope r ,t hema c hi neha dac a r r yi ngva l ueof$1 50 , 0 00andar e ma i ni ng us e f ull i f eofs i xye ar s . Bot hc ompani esdonotc l ai m de pr ec i a t i onf oras s e t spur c ha s e di nt hes e c ondha l f oft heye a r . ForCoope r ' sDe c embe r3 1, 20X3 ,s e par a t e e nt r yfina nc i als t a t e me nt s ,wha tne tbookval ue s houl dbes hownf ort hemac hi ne ? A)$ 125 , 0 00 B)$1 50, 0 00 C)$ 180 , 0 00 D)$ 250 , 000 Ans we r :C Pa geRe f : 31 23 13 Le ar ni ngObj . :6 . 1 Di ffic ul t y:Eas y 2 0)TookerCo.a c qui r e d8 0% oft heout s t andi ngc ommons ha r e sofVuLt d.The r ewe r enof a i rval ue i nc r e me nt sorgoodwi l lt ha tar os ewi t ht hepur c has e . Dur i ng20X1 ,Tooke rs ol d$7, 00 0ofi nve nt or yt oVu f o ragr os spr ofitof4 0%.Att hee ndof20 X1 , $3, 000oft hei nve nt or yi ss t i l li nVu' si nve nt or y . Ont he i r s epar a t e e nt i t yi nc omes t a t eme nt sf or20 X1,T ooke randVur e por t e dne ti nc omeof$ 4, 200and$3 , 1 00 , r e s pe c t i ve l y .Wha ti st henonc ont r ol l i ngi nt e r es t ' ss har eofc ons ol i da t edne ti nc omea tt hee ndof20X1 ? A)$ 620 B)$8 40 C)$ 1, 220 D)$ 1, 46 0 Ans we r :A Pa geRe f : 31 1, 318 ,3 19 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e

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6-8

Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 6 Subsequent-Year Consolidations: General Approach 2 1)Coope rLt d. ac qui r e d7 0% oft hec ommons har e sofEffyLt d.a tJ a nuar y2 ,2 0X1 .AtDe c e mbe r31 , 2 0X3 ,Effys ol damac hi net oCoope rf or$ 180 , 0 00. Effyhadpur c ha s e dt hemac hi neaf e w ye a r se a r l i e rf or $ 25 0, 000 .Att het i meofs a l et oCoope r ,t hema c hi neha dac a r r yi ngva l ueof$1 50 , 0 00andar e ma i ni ng us e f ull i f eofs i xye ar s . Bot hc ompani esdonotc l ai ma mor t i za t i onf ora s s e t spur c ha s e di nt hes e c ondha l f oft heye a r . ForCoope r ' sDe c embe r3 1, 20X3 ,c ons ol i da t e dfinanc i a ls t a t e me nt s ,wha tne tbookval ue s houl dbes hownf ort hemac hi ne ? A)$ 125 , 0 00 B)$1 50, 0 00 C)$ 180 , 0 00 D)$ 250 , 000 Ans we r :B Pa geRe f : 31 2 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e 2 2)TookerCo.a c qui r e d8 0% oft heout s t andi ngc ommons ha r e sofVuLt d.The r ewe r enof a i rval ue i nc r e me nt sorgoodwi l lt ha tar os ewi t ht hepur c has e . Dur i ng20X1 ,Tooke rs ol d$7, 00 0ofi nve nt or yt oVu f o ragr os spr ofitof4 0%.Att hee ndof20 X1 , $3, 000oft hei nve nt or yi ss t i l li nVu' si nve nt or y . Ont he i r s epar a t e e nt i t yi nc omes t a t eme nt sf or20 X1,T ooke randVur e por t e dt hef ol l owi ng:

S al e s Cos tofs a l e s Ope r a t i nge xpe ns e s Ne ti nc ome

Tooke r $ 38, 0 00 26, 40 0 5, 200 $6, 40 0

Vu $ 15 , 0 00 8, 50 0 3, 60 0 $2, 90 0

Vus ol dal lt hegoodsf r om Tooke rt ha twe r ei ni t sope ni ngi nve nt or y .The r ewe r enos al e sbe t wee nTooke r a ndVui n2 0X2 .Wha ti st henonc ont r ol l i ngi nt e r e s t ' ss ha r eofc ons ol i da t e dne ti nc omea tt hee ndof 2 0X2 ? A)$ 580 B)$1 , 6 20 C)$ 1, 860 D)$ 2, 10 0 Ans we r :A Pa geRe f : 31 33 17 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e 2 3)I nc a l c ul a t i ngt henonc ont r ol l i ngi nt e r e s ti ne ar ni ngs ,wha ti soneoft headj us t me nt st ha tmus tbe madet ot hes ubs i di a r y' ss epar a t e e nt i t ye a r ni ngsbe f or et heNCIpe r c ent a gec anbeappl i e d? A)Adj us tf oronl yr e al i z edpr ofit sf r om ups t r e am s al e s . B)Adj us tf oronl yunr e a l i ze dpr ofit sf r om ups t r e am s al e s . C)Adj us tf orbot hr e al i z e dandunr e a l i ze dpr ofit sf r om ups t r e a ms al e s . D)Adj us tf orbo t hr e al i z e dandunr e a l i ze dpr ofit sf r om downs t r e am s al es . Ans we r :C Pa geRe f : 31 7 Le ar ni ngObj . :6 . 2 Di ffic ul t y:Mode r a t e 2 4)Thec a l c ul a t i onoft heNCIont hec ons ol i da t e dSFPs t a r t swi t ht heNCI ' ss har eoft hes ubs i di a r y' sne t a s s e t sa tt heSFPda t e . Whi c hof...