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Education.
Page 4-21
Answer: A
Learning Objective: 04-05
Topic: Acquisition-date―Fair value allocation
Topic: Amortization of fair value allocations
Topic: Worksheet procedures
Difficulty: 2 Medium
Blooms: Apply
AACSB: Knowledge Application
AICPA BB: Critical Thinking
AICPA FN: Measurement
Feedback: Fair Value Differential $4,000 – Amortization for 2019 $1,000 = $3,000 Increase
[QUESTION]
REFER TO: 04-07
48. In consolidation at December 31, 2020, what adjustment is necessary for Hogan’s Equipment
account?
A) $2,000 increase.
B) $2,000 decrease.
C) $1,800 increase.
D) $1,800 decrease.
E) No adjustment is necessary.
49. In consolidation at January 1, 2019, what adjustment is necessary for Hogan’s Land account?
A) $7,000 increase.
B) $7,000 decrease.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.
50. In consolidation at December 31, 2019, what adjustment is necessary for Hogan’s Land account?
A) $8,000 decrease .
B) $7,000 increase.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.
51. In consolidation at December 31, 2020, what adjustment is necessary for Hogan’s Land account?
A) $7,000 decrease.
B) $7,000 increase.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.
52. In consolidation at January 1, 2019, what adjustment is necessary for Hogan’s Patent account?
A) $7,000.
B) $6,300.
C) $11,000.
D) $9,900.
E) No adjustment is necessary.
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Page 4-23
Difficulty: 1 Easy
Blooms: Apply
AACSB: Knowledge Application
AICPA BB: Critical Thinking
AICPA FN: Measurement
Feedback: BV Equity $240,000 – Fair Value Equity at Acquisition $260,000 = $20,000 – Identified Net
FV Increase $9,000 (Blgs + Equipt + Land) = $11,000 Excess Attributed to Patent
[QUESTION]
REFER TO: 04-07
53. In consolidation at December 31, 2019, what net adjustment is necessary for Hogan’s Patent account?
A) $5,600.
B) $8,800.
C) $7,000.
D) $7,700.
E) No adjustment is necessary.
54. In consolidation at December 31, 2020, what net adjustment is necessary for Hogan’s Patent account?
A) $4,200.
B) $5,500.
C) $8,000.
D) $6,600.
E) No adjustment is necessary.
by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any
excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based
on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the equity method is applied.
[QUESTION]
REFER TO: 04-08
55. Compute Pell’s Investment in Demers account balance at December 31, 2019.
A) $580,000.
B) $574,400.
C) $548,000.
D) $542,400.
E) $541,000.
56. Compute Pell’s investment account balance in Demers at December 31, 2020.
A) $577,200.
B) $604,000.
C) $592,800.
D) $632,800.
E) $572,000.
2019
2020
2021
Net income
$100,000
$120,000
$130,000
Dividends
40,000
50,000
60,000
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Education.
Page 4-25
.80)] = $592,800
[QUESTION]
REFER TO: 04-08
57. Compute Pell’s investment account balance in Demers at December 31, 2021.
A) $639,000.
B) $643,200.
C) $763,200.
D) $676,000.
E) $620,000.
58. Compute Pell’s income from Demers for the year ended December 31, 2019.
A) $74,400.
B) $73,000.
C) $42,400.
D) $41,000.
E) $80,000.
59. Compute Pell’s income from Demers for the year ended December 31, 2020.
A) $90,400.
B) $89,000.
C) $50,400.
D) $56,000.
E) $96,000.
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Page 4-26
Topic: Consolidated net income―Allocation
Difficulty: 2 Medium
Blooms: Apply
AACSB: Knowledge Application
AICPA BB: Critical Thinking
AICPA FN: Measurement
Feedback: Controlling Interest Share of [Net Income for 2020 ($120,000 × .80) – Excess FV Annual
Amortization ($7,000 × .80)] = $90,400
[QUESTION]
REFER TO: 04-08
60. Compute Pell’s income from Demers for the year ended December 31, 2021.
A) $50,400.
B) $56,000.
C) $98,400.
D) $97,000.
E) $104,000.
61. Compute the noncontrolling interest in the net income of Demers at December 31, 2019.
A) $20,000.
B) $12,000.
C) $18,600.
D) $10,600.
E) $14,400.
62. Compute the noncontrolling interest in the net income of Demers at December 31, 2020.
A) $18,400.
B) $14,400.
C) $22,600.
D) $24,000.
E) $12,600.
63. Compute the noncontrolling interest in the net income of Demers at December 31, 2021.
A) $20,400.
B) $24,600.
C) $26,000.
D) $14,000.
E) $12,600.
64. Compute the noncontrolling interest in Demers at December 31, 2019.
A) $135,600.
B) $137,000.
C) $112,000.
D) $100,000.
E) $118,600.
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Education.
Page 4-28
Income for 2019 ($100,000 × .20) – Dividends for 2019 ($40,000 × .20) – Excess FV Annual
Amortization ($7,000 × .20)] = $135,600
[QUESTION]
REFER TO: 04-08
65. Compute the noncontrolling interest in Demers at December 31, 2020.
A) $107,000.
B) $126,000.
C) $109,200.
D) $149,600.
E) $148,200.
66. Compute the noncontrolling interest in Demers at December 31, 2021.
A) $107,800.
B) $140,000.
C) $165,200.
D) $160,800.
E) $146,800.
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Education.
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Assume the initial value method is applied.
[QUESTION]
REFER TO: 04-09
67. Compute Pell’s investment in Demers at December 31, 2019.
A) $500,000.
B) $574,400.
C) $625,000.
D) $542,400.
E) $532,000.
68. Compute Pell’s investment in Demers at December 31, 2020.
A) $625,000.
B) $664,800.
C) $592,400.
D) $500,000.
E) $572,000.
69. Compute Pell’s investment in Demers at December 31, 2021.
A) $592,400.
B) $500,000.
C) $625,000.
2019
2020
2021
Net income
$100,000
$120,000
$130,000
Dividends
40,000
50,000
60,000
D) $676,000.
E) $620,000.
70. How much does Pell record as Income from Demers for the year ended December 31, 2019?
A) $32,000.
B) $74,400.
C) $73,000.
D) $42,400.
E) $41,000.
71. How much does Pell record as Income from Demers for the year ended December 31, 2020?
A) $90,400.
B) $40,000.
C) $89,000.
D) $50,400.
E) $56,000.
72. How much does Pell record as Income from Demers for the year ended December 31, 2021?
A) $48,000.
B) $56,000.
C) $98,400.
D) $97,000.
E) $50,400.
73. Compute the noncontrolling interest in the net income of Demers at December 31, 2019.
A) $12,000.
B) $10,600.
C) $18,600.
D) $20,000.
E) $14,400.
74. Compute the noncontrolling interest in the net income of Demers at December 31, 2020.
A) $18,400.
B) $14,000.
C) $22,600.
D) $24,000.
E) $12,600.
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Page 4-32
AICPA FN: Measurement
Feedback: Noncontrolling Interest Share of [Net Income for 2020 ($120,000 × .20) – Excess FV Annual
Amortization ($7,000 × .20)] = $22,600
[QUESTION]
REFER TO: 04-09
75. Compute the noncontrolling interest in the net income of Demers at December 31, 2021.
A) $24,600.
B) $14,000.
C) $26,000.
D) $20,400.
E) $12,600.
76. Compute the noncontrolling interest in Demers at December 31, 2019.
A) $135,600.
B) $ 80,000.
C) $117,000.
D) $100,000.
E) $110,600.
77. Compute the noncontrolling interest in Demers at December 31, 2020.
A) $126,000.
B) $106,000.
C) $109,200.
D) $149,600.
E) $148,200.
78. Compute the noncontrolling interest in Demers at December 31, 2021.
A) $107,800.
B) $140,000.
C) $ 80,000.
D) $ 50,000.
E) $160,800.
2019
2020
2021
Net income
$100,000
$120,000
$130,000
Dividends
40,000
50,000
60,000
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Page 4-34
Assume the partial equity method is applied.
[QUESTION]
REFER TO: 04-10
79. Compute Pell’s investment in Demers at December 31, 2019.
A) $625,000.
B) $574,400.
C) $548,000.
D) $542,400.
E) $532,000.
80. Compute Pell’s investment in Demers at December 31, 2020.
A) $676,000.
B) $629,000.
C) $580,000.
D) $604,000.
E) $572,000.
81. Compute Pell’s investment in Demers at December 31, 2021.
A) $780,000.
B) $660,000.
C) $785,000.
D) $676,000.
E) $620,000.
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
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Difficulty: 2 Medium
Blooms: Apply
AACSB: Knowledge Application
AICPA BB: Critical Thinking
AICPA FN: Measurement
Feedback: December 2020 Investment Balance $604,000 + Controlling Interest Share of [Net Income for
2021 ($130,000 × .80) – Dividends for 2020 ($60,000 × .80)] = $660,000
[QUESTION]
REFER TO: 04-10
82. How much does Pell record as Income from Demers for the year ended December 31, 2019?
A) $80,000.
B) $74,400.
C) $73,000.
D) $42,400.
E) $41,000.
83. How much does Pell record as income from Demers for the year ended December 31, 2020?
A) $90,400.
B) $89,000.
C) $50,400.
D) $96,000.
E) $56,000.
84. How much does Pell record as income from Demers for the year ended December 31, 2021?
A) $ 98,400.
B) $ 56,000.
C) $104,000.
D) $ 97,000.
E) $ 50,400.
85. Compute the noncontrolling interest in the net income of Demers at December 31, 2019.
A) $20,000.
B) $12,000.
C) $18,600.
D) $10,600.
E) $14,400.
86. Compute the noncontrolling interest in the net income of Demers at December 31, 2020.
A) $18,400.
B) $14,000.
C) $22,600.
D) $24,000.
E) $12,600.
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Education.
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[QUESTION]
REFER TO: 04-10
87. Compute the noncontrolling interest in the net income of Demers at December 31, 2021.
A) $20,400.
B) $26,000.
C) $24,600.
D) $14,000.
E) $12,600.
88. Compute the noncontrolling interest in Demers at December 31, 2019.
A) $135,600.
B) $114,000.
C) $112,000.
D) $100,000.
E) $110,600.
89. Compute the noncontrolling interest in Demers at December 31, 2020.
A) $124,000.
B) $126,000.
C) $109,200.
D) $149,600.
E) $ 148,200.