Connect 5 PDF

Preview

Summary

Connect Questions...

Description

Young Resources Corp. purchased 50% of the common shares of Miller Networks Inc. for $900,000 in 20X4. During 20X5, Miller Networks sold land for $250,000. The acquisition differential relating to the land recorded in Young Resources Investment in Miller Networks account is $16,000. Miller Networks had originally purchased the land for $175,000. What is Young Resources share of the reported gain? Multiple choice question. $16,000 $75,000 $37,500 $50,000 Trueware International Inc. purchased 30% of Clark Chemical Corp.’s common shares for $135,000. On the acquisition date, the book value of the assets of Clark Chemical was $350,000. The acquisition differential amount is related to assets undervalued on Clarks’ books (land undervalued by $60,000 and equipment undervalued by $20,000). How much of the acquisition differential relates to goodwill? Multiple choice question. $20,000 $90,000 $75,000 $25,000 Tested for impairment Annually Intangible assets wit indefinite lives Goodwill Tested only if events and circumstances indicate: PPE & Intangible assets with finite lives

The discounted cash flows from the use and disposal of an asset is referred to as Multiple choice question. recoverable amount fair value less costs of disposal

value in use impairment loss

Which of the following is the journal entry to record the amortization of the acquisition differential (where the fair value exceeds book value)? Multiple choice question. Debit Equity Method Income from Subsidiary; Credit Investment in Subsidiary Debit Investment in Subsidiary; Credit Equity Method Income from Subsidiary Debit Investment in Subsidiary; Credit Cash Debit Equity Method Income from Subsidiary; Credit Cash Thomas Foods Inc. purchases 40% of common shares of Clark Foods Corp. for $550,000. The excess of fair value of the net assets Clark Foods over the book value of the net assets is $125,000. The acquisition differential can be traced to land of $90,000, equipment of $35,000, and goodwill of $75,000. What is Thomas Foods Inc.'s share of goodwill? Multiple choice question. $30,000 $90,000 $125,000 $75,000 Taylor Energy Inc. purchases 50% of the common shares of Walker Health Corp. on January 1, 20X1, for $500,000. The book value of the net assets of Walker Health as of the acquisition date is $800,000, and the fair value of the net asset is $875,000. The market value of the common shares of Walker Health is $1,000,000. What is the value of Taylor Energy's share of acquisition differential? Multiple choice question. $500,000 $100,000

$400,000 $900,000 If an investor purchases the common shares of another company and the price at which the common shares are acquired is different from the book value of the investee's net assets, the difference is referred to as a(n) Multiple choice question. amortization. acquisition differential. implicit cost. impairment. Tom Devices Inc. purchases 50% of the common shares of Wilt Systems Corp. on January 1, 20X1, for $500,000. The book value of the net assets of Wilt Systems as of the same date is $800,000 and the fair value of the net asset is $875,000. The market value of the common shares of Wilt Systems is $1,000,000. What is the value of total acquisition differential? Multiple choice question. $800,000 $1,000,000 $400,000 $200,000 Which of the following is true of the accounts affected by the amortization of the acquisition differential? Multiple choice question. An entry is made to an income statement account, but not to a balance sheet account. An entry is made to a balance sheet account but not to an income statement account. Entries are made to both a balance sheet account and an income statement account. Neither a balance sheet account nor an income statement account is affected.

Taylor Energy Inc. purchases 50% of the common shares of Walker Health Corp. on January 1, 20X1, for $500,000. The book value of the net assets of Walker Health as of the acquisition date is $800,000, and the fair value of the net asset is $875,000. The market value of the common shares of Walker Health is $1,000,000. What is the value of Taylor Energy's share of acquisition differential? Multiple choice question. $900,000 $500,000 $100,000 $400,000 Consolidated net income is Multiple choice question. always greater than the sum of the parent's separate-entity net income plus the subsidiary's separate-entity net income. always equal to the difference between consolidated revenues and consolidated expenses. always equal to the sum of the parent's separate-entity net income plus the subsidiary's separate-entity net income. always less than the sum of the parent's separate-entity net income plus the subsidiary's separate-entity net income. In the absence of transactions between companies included in the consolidation, consolidated net income is equal to the parent’s income from its own operations, Multiple choice question. including any investment income from consolidated subsidiaries, less the net income from each of the consolidated subsidiaries. including any investment income from consolidated subsidiaries, plus the net income from each of the consolidated subsidiaries. excluding any investment income from consolidated subsidiaries, plus the net income from each of the consolidated subsidiaries. excluding any investment income from consolidated subsidiaries, less the net income from each of the consolidated subsidiaries.

On January 1, 20X1, a company acquired 100% of the common shares of a subsidiary company for $400,000. At the beginning of 20X1, the parent company's retained earnings was $100,000. In 20X1, net income earned by the parent company was $150,000. It also declared dividends of $40,000. Net income reported by the subsidiary was $80,000. The subsidiary's goodwill was deemed to be impaired by $10,000. Calculate the balance of consolidated retained earnings on December 31, 20X1. Multiple choice question. $280,000 $330,000 $400,000 $190,000 An investor company acquired the common shares of another company for $600,000. The investor company issued $350,000 of bonds and paid cash for the remaining amount. Calculate the amount paid in cash to acquire the investee company. Multiple choice question. $350,000 $950,000 $450,000 $250,000 A parent company holds 80% of the common shares of a subsidiary. The NCI shareholders' share of net income is $50,000. Calculate total net income of the subsidiary. Multiple choice question. $62,500 $50,000 $200,000 $250,000 Goldenrod Corp. holds 85% of the common shares of Orchid Inc. The parent's revenues are $500,000 and the subsidiary's are $200,000. The parent's expenses are $350,000 and the

subsidiary's are $150,000. Calculate the consolidated net income attributable to the controlling interest. Multiple choice question. $7,500 $157,500 $192,500 $200,000 Jupiter Electrical Inc. acquired 100% of Synergy Electrical Inc.'s common shares for $850,000. The consideration for the acquisition includes the issuance of $500,000 in bonds and the remaining $350,000 was paid in cash. Which of the following is the journal entry to record the acquisition? Multiple choice question. Debit Bonds Payable for $500,000 and Cash for $350,000; Credit Investment in Synergy for $850,000. Debit Investment in Synergy for $850,000; Credit Bonds Payable for $500,000 and Cash for $350,000. Debit Bonds Payable for $500,000; Credit Investment in Synergy for $500,000. Debit Common Shares for $850,000; Credit Investment in Synergy for $850,000. Which of the following statements is true of consolidated income attributable to the noncontrolling interest? Multiple choice question. It is based on its relative bonds ownership of the subsidiary. It is based on its relative investment income of the parent. It is based on its relative common share ownership of the subsidiary. It is based on its relative bonds ownership of the parent.

Consolidated net income is Multiple choice question. always equal to the difference between consolidated revenues and consolidated expenses. always equal to the sum of the parent's separate-entity net income plus the subsidiary's separate-entity net income. always less than the sum of the parent's separate-entity net income plus the subsidiary's separate-entity net income. always greater than the sum of the parent's separate-entity net income plus the subsidiary's separate-entity net income.

A parent company holds 85% of the common shares of a subsidiary. The subsidiary has net income of $250,000. Calculate the NCI shareholders' share of net income. Multiple choice question. $20,500 $212,500 $15,000 $37,500 Ivory Inc. reports common shares of $60,000, contributed surplus of $500,000, and retained earnings of $360,000. The non-controlling interest in the net assets of its subsidiary is $70,000. Calculate the total consolidated shareholders’ equity. $130,000 $850,000 $990,000 $920,000

A parent company holds 90% of the common shares of a subsidiary. The NCI shareholders' share of net income is $20,000. The total consolidated net income is $250,000. Calculate the consolidated income attributable to the controlling interest. $248,000 $243,000 $225,000 $230,000

How is the NCI shareholders’ share of net income reported the consolidated income statement? It is added to total consolidated net income to arrive at the controlling interest in consolidated net income. It is added to the consolidated net income attributable to the controlling interest in the subsidiary company. It is subtracted from total consolidated net income to arrive at the controlling interest in consolidated net income.

It is subtracted from the consolidated net income attributable to the controlling interest in the subsidiary company. Topaz Inc. reports a total controlling interest in the net assets of the consolidated entity of $1,200,000. The consolidated common shares is $90,000 and the total non-controlling interest in net assets is $80,000. Calculate total shareholders’ equity. Multiple choice question. $1,190,000 $1,182,000 $1,370,000 $1,280,000

Goldenrod Corp. holds 85% of the common shares of Orchid Inc. The parent's revenues are $500,000 and the subsidiary's are $200,000. The parent's expenses are $350,000 and the subsidiary's are $150,000. Calculate the consolidated net income attributable to the controlling interest. Multiple choice question. $192,500 $7,500 $157,500 $200,000 Ivory Inc. reports common shares of $60,000, contributed surplus of $500,000, and retained earnings of $360,000. The non-controlling interest in the net assets of its subsidiary is $70,000. Calculate the total consolidated shareholders’ equity. Multiple choice question. $990,000 $920,000 $130,000 $850,000 A parent company holds 80% of the common shares of a subsidiary. The total consolidated net income is $300,000. The consolidated net income attributable to the controlling interest is $270,000. Calculate the NCI shareholders' share of consolidated net income. Multiple choice question. $270,000 $30,000 $570,000 $300,000

A parent company purchased 80% of the common shares of a subsidiary in the previous year. During the current year, the subsidiary reports net income of $30,000 and the parent reports net income of $140,000, including equity method income from the subsidiary. Calculate the consolidated net income attributable to the controlling interest. Multiple choice question. $140,000 $116,800 $134,000 $112,000 Under the fair value enterprise (FVE) method, where is the non-controlling interest’s claim on the net assets of the consolidated entity reported in the consolidated financial statements? Multiple choice question. it is not reported on the consolidated balance sheet as a separate component in equity as an asset as a liability Quartz Inc. purchased 90% of the common shares of a subsidiary in the previous year. During the current year, the subsidiary reports net income of $70,000, while Quartz reports net income of $400,000, including the equity method income from the subsidiary. Calculate total consolidated net income. Multiple choice question. $400,000 $407,000 $470,000 $7,000

Which of the following is true of the reporting of the non-controlling interest’s claim on the net assets of the consolidated entity in the consolidated financial statements under the fair value enterprise (FVE) method and identifiable net asset (INA) method? It is reported as a liability. It is not reported in a balance sheet. It is reported as an asset. It is reported as an element of equity. The Investment in Subsidiary account of a parent company is ______ and the Equity Method Income account is ______ to record the parent's share of the subsidiary's net income under the equity method. debited; credited credited; debited credited; credited debited; debited Domic Inc. purchased 80% of Lunist Products Limited common shares. Assume that Domic Inc. already recorded the acquisition on January 1, 20X1. During the year, Domic recorded operating earnings of $230,000, excluding its income from investing in Lunist Products, and declared dividends of $80,000. Lunist reported 20X1 net income of $60,000 and declared dividends of $20,000. Which of the following is Dominic's journal entry under the equity method to record the receipt of the dividend from the Lunist? Multiple choice question. Debit Cash for $20,000 and Credit Non-controlling Interest for $20,000 Debit Investment in Lunist for $16,000 and Credit Cash for $16,000 Debit Non-controlling Interest for $20,000 and Credit Cash for $20,000 Debit Cash for $16,000 and Credit Investment in Lunist for $16,000

A parent company purchased 80% of the common shares of a subsidiary in the previous year. During the current year, the subsidiary reports net income of $30,000 and the parent reports net income of $140,000, including equity method income from the subsidiary. Calculate the consolidated net income attributable to the controlling interest. Multiple choice question. $112,000 $116,800 $134,000 $140,000 A company acquires 100% of the common shares of another company on January 1, 20X1. The difference between the amount paid and the book value of the subsidiary's net assets is $105,000. The acquisition differential includes excess value related to: equipment of $75,000, inventory of $8,000, and goodwill of $22,000. The equipment has a remaining economic life of 15 years from the date of acquisition (resulting in excess depreciation of $5,000 per year). The entire inventory acquired is sold in the year of acquisition. The management also determines that a $5,000 goodwill impairment loss should be recognized in the consolidated income statement. Calculate the amount of acquisition differential to be amortized in the year of acquisition. Multiple choice question. $18,000 $15,000 $22,000 $8,000 Wilson Arts Corp. purchases 35% of the common shares of Smith Resources Inc. for $450,000 on January 1, 20X1. In the same year, Smith Inc. declared a dividend of $80,000. How much of the dividend belongs to Wilson Arts? Multiple choice question. $80,000 $28,000 $42,000

$35,000 Which of the following is the parent company's journal entry under the equity method to record its share of the subsidiary's income? Multiple choice question. Debit Equity Method Income; Credit Investment in Subsidiary. Debit Equity Method Income; Credit Investment in Subsidiary; Credit Share of Noncontrolling Interest. Debit Investment in Subsidiary; Credit Equity Method Income. Debit Investment in Subsidiary; Debit Share of Non-controlling Interest; Credit Equity Method Income. Which of the following is the journal entry to record a parent company's share in the subsidiary's income under the equity method? Debit Equity Method Income from Subsidiary; Credit Investment in Subsidiary Debit Investment in Subsidiary; Credit Equity Method Income from Subsidiary

Debit Cash; Credit Investment in Subsidiary Debit Investment in Subsidiary; Credit Cash The cash account is ______ and the Investment in Subsidiary account is ______ to record dividend income from a subsidiary under the equity method. Multiple choice question. credited; debited credited; credited debited; debited debited; credited The Investment in Subsidiary account is ______ and the Cash account is ______ to record dividend income from a subsidiary under the equity method. Multiple choice question.

debited; credited credited; credited debited; debited credited; debited Which of the following is the journal entry to record the amortization of the positive acquisition differential resulting from an excess acquisition price by the parent under the equity method? Multiple choice question. Debit Investment in Subsidiary; Credit Equity Method Income from Subsidiary Debit Equity Method Income from Subsidiary; Credit Cash Debit Cash; Credit Investment in Subsidiary Debit Equity Method Income from Subsidiary; Credit Investment in Subsidiary

Which of the following will cause an increase in a parent company's total investment in their subsidiary under the equity method? Multiple choice question. The parent company declares dividends in the current year The parent earns net income in the current year The subsidiary declares dividends in the current year The subsidiary earns net income in the current year Davis Materials Corp. purchases 40% of Garcia Developers Inc.'s common shares for $600,000 on December 31, 20X1. Garcia Developers reports $120,000 of net income during 20X2. Davis' share of the amortization of the acquisition differential related to the equipment is $12,000 for 20X2. Assuming Garcia does not declare dividends during 20X2, how much does Davis' Investment in Garcia Developers account change during 20X2? Multiple choice question. $60,000

$36,000 $12,000 $48,000 Calcore Corp. purchased 80% of Ecogen Products Limited common shares on January 1, 20X1. During 20X2, Calcore reported operating earnings of $500,000, excluding its income from investing in Ecogen Products, and declared dividends of $50,000. Ecogen Products reported net income of $30,000 and declared dividends of $20,000 during 20X2. Which of the following is Calcore's journal entry to record its share of Ecogen Products income under the equity method? Multiple choice question. Debit Equity Method Income from Ecogen Products for $24,000; Credit Cash for $24,000 Debit Cash for $24,000; Credit Equity Method Income from Ecogen Products for $24,000 Debit Investment in Ecogen Products for $24,000; Credit Equity Method Income from Ecogen Products for $24,000 Debit Equity Method Income from Ecogen Products for $24,000; Credit Investment in Ecogen Products for $24,000 Which of the following is the parent company's journal entry to record the receipt of cash as dividends from a subsidiary company under the equity method? Multiple choice question. Debit Investment in Subsidiary and Credit Share of Non-controlling Interest Debit Investment in Subsidiary and Credit Equity Method Income from Subsidiary Debit NCI in Subsidiary company and Credit Cash Debit Cash and Credit Investment in Subsidiary Assume a company holds 100% of the common shares of another company. In the second year of ownership, which of the following entries is recorded in the books of the parent company under the equity method to record the income from the subsidiary company? Multiple choice question. Debit Investment in Subsidiary; Credit Equity Method Income from Subsidiary

Debit Cash; Credit Equity Method Income from Subsidiary Debit Investment in Subsidiary; Credit Cash Debit Equity Method Income from Subsidiary; Credit Investment in Subsidiary

Multiple Choice Question Which of the following will cause an decrease in a parent company's total investment in their subsidiary under the equity method? Multiple choice question. The subsidiary declares dividends in the current year The parent company declares dividends in the current year The parent earns net income in the current year The subsidiary earns net income in the current year

A Jan2019 Investment in martin Cash Dec 2019 Investment in Martin Investment income

300,000 300,000

60,000 60,000

Investment income Investment in martin

18000

Cas...