1) All of the following are examples of how a parent company may lose control over a
subsidiary and discontinue future consolidation, except:
A.The parent sells some of its interest in the subsidiary
B.The subsidiary issues additional common stock
C.The subsidiary comes under the control of the government or other regulator
D.The subsidiary issues a stock dividend or a stock split
2) On January 1, 20X7, Pisa Company acquired 80 percent of Siena Company by
purchasing 40,000 shares of Siena’s common stock. There was no differential related to
this transaction. The noncontrolling interest had a fair value equal to 20 percent of book
value. The book value of Siena on December 31, 20X7 was as follows:
On January 1, 20X8, Pisa purchased an additional 12,500 shares directly from Siena for
$25 per share.
Based on the preceding information, by what amount did the Investment in Siena
account change?
A.Increase of $296,500
B.Decrease of $296,500
C.Increase of $64,000
D.Decrease of $64,000
3) ASC 805 requires contingent consideration in a business combination to be classified
as:
A.An asset
B.A liability or equity
C.An asset or equity
D.An asset or a liability
4) In a town’s general fund operating budget for the year, the amount of its estimated
revenues exceeded the amount of its appropriations. This excess should be:
A.credited to Budgetary Fund BalanceUnassigned
B.debited to Budgetary Fund BalanceUnassigned
C.credited to Fund BalanceUnassigned
D.debited to Fund BalanceUnassigned
5) A newly created subsidiary sold all of its inventory to its parent at a profit in its first
year of existence. The parent, in turn, sold all but 20 percent of the inventory to
unaffiliated companies, recognizing a profit. The parent had no other sales during the
year. The amount that should be reported as cost of goods sold in the this year’s
consolidated income statement should be:
A.80 percent of the amount reported as intercompany sales by the subsidiary
B.80 percent of the amount reported as cost of goods sold by the subsidiary
C.the amount reported as cost of goods sold by the parent minus unrealized profit in the
ending inventory of the parent
D.80 percent of the amount reported as cost of goods sold by the parent
6) Partners Dennis and Lilly have decided to liquidate their business. The following
information is available:
Dennis and Lilly share profits and losses in a 3:2 ratio. During the first month of
liquidation, half the inventory is sold for $60,000, and $60,000 of the accounts payable
is paid. During the second month, the rest of the inventory is sold for $45,000, and the
remaining accounts payable are paid. Cash is distributed at the end of each month, and
the liquidation is completed at the end of the second month.
Refer to the information provided above. Using a safe payments schedule, how much
cash will be distributed to Dennis at the end of the second month?
A.$18,000
B.$27,000
C.$36,000
D.$60,000
7) On January 1, 20X8, Ramon Corporation acquired 75 percent of Tester Company’s
voting common stock for $300,000. At the time of the combination, Tester reported
common stock outstanding of $200,000 and retained earnings of $150,000, and the fair
value of the noncontrolling interest was $100,000. The book value of Tester’s net assets
approximated market value except for patents that had a market value of $50,000 more
than their book value. The patents had a remaining economic life of ten years at the date
of the business combination. Tester reported net income of $40,000 and paid dividends
of $10,000 during 20X8.
Based on the preceding information, what balance will Ramon report as its investment
in Tester at December 31, 20X8, assuming Ramon uses the equity method in accounting
for its investment?
A.$318,750
B.$317,500
C.$330,000
D.$326,250
8) ASC 280 uses a(n) ______ approach to the definition of segments.
A.line of business
B.entity approach
C.portfolio
D.management
9) Government-wide financial statements prepared for a municipality include the
following:
A.Option A
B.Option B
C.Option C
D.Option D
10) A voluntary health and welfare organization received a $300,000 contribution on
April 15, 20X9, from a donor who stipulated the donation be invested permanently in
stocks and bonds. The donor further stipulated earnings from the investments be spent
according to the wishes of the governing board of the voluntary health and welfare
organization. Earnings from the investments for the year ended June 30, 20X9,
amounted to $6,000. How would the voluntary health and welfare organization report
this information for the year ended June 30, 20X9?
A.Increase in permanently restricted net assets of $306,000
B.Increase in permanently restricted net assets of $300,000, and in temporarily
restricted net assets of $6,000
C.Increase in permanently restricted net assets of $300,000, and in unrestricted net
assets of $6,000
D.Increase in permanently restricted net assets of $300,000, and in board-designated net
assets of $6,000
11) Trevor Company discloses supplementary operating segment information for its
three reportable segments. Data for 20X8 are available as follows:
Allocable costs for the year was $180,000. Allocable costs are assigned based on the
ratio of a segment’s income before allocable costs to total income before allocable costs.
The 20X8 operating profit for Segment B was:
A.$110,000
B.$180,000
C.$126,000
D.$120,000
12) Detroit based Auto Corporation, purchased ancillaries from a Japanese firm on
December 1, 20X8, for 1,000,000 Yen, when the spot rate for Yen was $.0095. On
December 31, 20X8, the spot rate stood at $.0096. On January 10, 20X9 Auto paid
1,000,000 Yen acquired at a rate of $.0094. Auto’s income statements should report a
foreign exchange gain or loss for the years ended December 31, 20X8 and 20X9 of:
A.Option A
B.Option B
C.Option C
D.Option D
13) On January 3, 20X9, Redding Company acquired 80 percent of Frazer
Corporation’s common stock for $344,000 in cash. At the acquisition date, the book
values and fair values of Frazer’s assets and liabilities were equal, and the fair value of
the noncontrolling interest was equal to 20 percent of the total book value of Frazer.
The stockholders’ equity accounts of the two companies at the acquisition date are:
Noncontrolling interest was assigned income of $11,000 in Redding’s consolidated
income statement for 20X9.
Based on the preceding information, what is the total stockholders’ equity in the
consolidated balance sheet as of January 3, 20X9?
A. $1,580,000
B. $1,064,000
C. $1,150,000
D. $1,236,000
14) When the local currency of the foreign subsidiary is the functional currency, a
foreign subsidiary’s inventory carried at cost would be converted to U.S. dollars by:
A.translation using historical exchange rates
B.remeasurement using historical exchange rates
C.remeasurement using the current exchange rate
D.translation using the current exchange rate
15) Bill, Page, Larry, and Scott have decided to terminate their partnership. The
partnership’s balance sheet at the time they decide to wind up is as follows:
During the winding up of the partnership, the other assets are sold for $150,000 and the
accounts payable are paid. Page and Larry are personally solvent, but Bill and Scott are
personally insolvent. The partners share profits and losses in the ratio of 4:2:1:3.
Based on the preceding information, what amount will be paid out to Scott upon
liquidation of the partnership?
A.$0
B.$2,500
C.$25,000
D.$65,000
16) On January 1, 20X8, Wilhelm Corporation acquired 90 percent of Kaiser
Company’s voting stock, at underlying book value. The fair value of the noncontrolling
interest was equal to 10 percent of the book value of Kaiser at that date. Wilhelm uses
the equity method in accounting for its ownership of Kaiser. On December 31, 20X9,
the trial balances of the two companies are as follows:
Based on the preceding information, what amount would be reported as noncontrolling
interest in the consolidated balance sheet at December 31, 20X9?
A. $27,000
B. $4,000
C. $15,000
D. $18,000
17) Which of the following observations is true of forwards contracts?
A.Substantial margin is required to initiate a contract
B.Must be completed either with the underlying’s future delivery or net cash settlement
C.Cannot be customized; for a specific amount at a specific date
D.Usually settled with a net cash amount prior to maturity date
18) Note: This is a Kaplan CPA Review Question
TheWeyman Hospital, a private, not-for-profit institution, reported the following
information:
What amount should the hospital report as net patient service revenue?
A.$840,000
B.$880,000
C.$900,000
D.$980,000
19) Dundee Company issued $1,000,000 par value 10-year bonds at 102 on January 1,
20X5, which Mega Corporation purchased. The coupon rate on the bonds is 9 percent.
Interest payments are made semiannually on July 1 and January 1. On July 1, 20X8,
Perth Company purchased $500,000 par value of the bonds from Mega for $492,200.
Perth owns 65 percent of Dundee’s voting shares.
Required:
a. What amount of gain or loss will be reported in Dundee’s 20X8 income statement on
the retirement of bonds?
b. Will a gain or loss be reported in the 20X8 consolidated financial statements for
Perth for the constructive retirement of bonds? What amount will be reported?
c. How much will Perth’s purchase of the bonds change consolidated net income for
20X8?
d. Prepare the worksheet eliminating entry or entries needed to remove the effects of the
intercorporate bond ownership in preparing consolidated financial statements at
December 31, 20X8.
e. Prepare the worksheet eliminating entry or entries needed to remove the effects of the
intercorporate bond ownership in preparing consolidated financial statements at
December 31, 20X9.
20) The costs of a building being constructed by a capital projects fund should be
debited, or charged, to which of the following accounts in the capital projects fund?
A.Expenditures
B.Building
C.Construction in Progress
D.Other Financing Uses
21) In cases of operations located in highly inflationary economies:
A.The reporting currency of the U.S. parentthe U.S. dollarshould be used as the foreign
entity’s functional currency
B.The foreign currency should be used as the functional currency with a footnote to the
financials displaying what the earnings would have been using the U.S. dollar as the
functional currency
C.The foreign currency should be used as the functional currency with a single line
itemforeign translationreporting the adjustment using the U.S. dollar as the functional
currency
D.None of these
22) Company A owns 85 percent of Company B’s stock and 80 percent of Company C’s
stock. All acquisitions were made at book value. The fair values of noncontrolling
interests at the time of acquisition were equal to the proportionate share of the book
values of the companies. The companies file a consolidated tax return each year and in
20X9 paid a total tax of $112,000. Each company is involved in a number of
intercompany inventory transfers each period. Information on the companies’ activities
for 20X9 is as follows:
Company A does not record income tax expense on income from subsidiaries because a
consolidated tax return is filed.
Based on the information provided, what amount of consolidated net income will be
reported for the year 20X9?
A.$168,000
B.$280,000
C.$165,000
D.$250,000
23) Cinema Company acquired 70 percent of Movie Corporation’s shares on December
31, 20X5, at underlying book value of $98,000. At that date, the fair value of the
noncontrolling interest was equal to 30 percent of the book value of Movie Corporation.
Movie’s balance sheet on January 1, 20X8, contained the following balances:
On January 1, 20X8, Movie acquired 5,000 of its own $2 par value common shares
from Nonaffiliated Corporation for $6 per share.
Based on the preceding information, the eliminating entry needed in preparing a
consolidated balance sheet immediately following the acquisition of shares will include:
A.a credit to NCI in NA of Movie Corp. for $19,375
B.a credit to Additional Paid-In Capital for $75,000
C.a debit to Treasury Shares for $30,000
D.a credit to Investment in Movie stock for $6,125
24) Collins Company reported consolidated revenue of $120,000,000 in 20X8. Collins
operates in two geographic areas, domestic and Asia. The following information
pertains to these two areas:
What calculation below is correct to determine if the revenue test is satisfied for the
Asian operations?
A.$58,000,000/$140,000,000
B.$50,000,000/$120,000,000
C.$58,000,000/$120,000,000
D.$50,000,000/$140,000,000
25) Orville Company recently petitioned for bankruptcy and is now in the process of
preparing a statement of affairs. The carrying values and estimated fair values of the
assets of Orville Company are as follows:
Debts of Orville are as follows:
Based on the preceding information, what is the estimated dividend percentage?
A.23 percent
B.93 percent
C.77 percent
D.68 percent
26) During the fiscal year ended June 30, 20X9, the city of Moorhead constructed a
new courthouse which was budgeted to cost $5,000,000. Moorhead used a capital
projects fund to account for the construction activities. In July of 20X8, a bid was
accepted from Diamond Construction to build the courthouse for $4,800,000. On June
15, 20X9, Diamond completed construction and submitted a bill to the city for
$4,900,000. The city accepted the bill and paid Diamond the entire amount owed,
except for a 10 percentage retainage. On the statement of revenues, expenditures, and
changes in fund balance prepared for the capital projects fund for the year ended June
30, 20X9, expenditures should be reported at
A.$4,900,000
B.$4,800,000
C.$4,410,000
D.$4,320,000
27) Micron Corporation owns 75 percent of the common shares and 60 percent of the
preferred shares of Stanley Company, all acquired at underlying book value on January
1, 20X8. At that date, the fair value of the noncontrolling interest in Stanley’s common
stock was equal to 25 percent of the book value of its common stock. The balance
sheets of Micron and Stanley immediately after the acquisition contained these
balances:
Stanley’s preferred stock pays a 12 percent dividend and is cumulative. For 20X8,
Stanley reports net income of $40,000 and pays no dividends. Micron reports income
from its separate operations of $75,000 and pays dividends of $30,000 during 20X8.
Based on the preceding information, what is the income assigned to the noncontrolling
interest in the 20X8 consolidated income statement?
A.$10,000
B.$7,000
C.$11,800
D.$4,800
28) The trial balance of WM Partnership is as follows:
Wilfred and Mike decide to incorporate their partnership. The partnership’s books will
be closed, and new books will be used for W & M Corporation. The following
additional information is available:
1> The estimated fair values of the assets follow:
2> All assets and liabilities are transferred to the corporation.
3> The common stock is $10 par. Wilfred and Mike receive a total of 10,000 shares.
4> The partners share profits and losses in the ratio 7:3.
Based on the preceding information, the journal entry on the partnership’s books to
record distribution of stock to prior partners will include a debit to Wilfred, Capital for:
A.$140,000
B.$91,700
C.$86,700
D.$126,700
29) Small-Town Retail owns 70 percent of Supplier Corporation’s common stock. For
the current financial year, Small-Town and Supplier reported sales of $450,000 and
$300,000 and expenses of $290,000 and $240,000, respectively.
Based on the preceding information, what is the amount of net income to be reported in
the consolidated income statement for the year under the entity theory approach?
A. $210,000
B. $202,000
C. $160,000
D. $220,000
30) What is the correct sequence in the expenditure process in governmental
accounting?
A.Appropriation, Encumbrance, Expenditure, and Disbursement
B.Encumbrance, Expenditure, Disbursement, and Appropriation
C.Expenditure, Encumbrance, Disbursement, and Appropriation
D.Appropriation, Expenditure, Encumbrance, and Disbursement
31) Forge Company, a calendar-year entity, had 6,000 units in its beginning inventory
for 20X8. On December 31, 20X7, the units had been adjusted down to $470 per unit
from an actual cost of $510 per unit. It was the lower of cost or market. No additional
units were purchased during 20X8. The following additional information is provided for
20X8:
Forge does not have sufficient experience with the seasonal market for its inventory
units and assumes that any reductions in market value during the year will be
permanent.
Based on the preceding information, the cost of goods sold for the second quarter is:
A.$416,000
B.$364,000
C.$304,000
D.$424,000
32) On December 1, 20X8, Winston Corporation acquired 100 shares of Linked
Corporation at a cost of $40 per share. Winston classifies them as available-for-sale
securities. On this same date, it decides to hedge against a possible decline in the value
of the securities by purchasing, at a cost of $250, an at-the-money put option to sell the
100 shares at $40 per share. The option expires on February 20, 20X9. Selected
information concerning the fair values of the investment and the options follow:
Assume that Winston exercises the put option and sells Linked shares on February 20,
20X9.
Based on the preceding information, which of the following journal entries will be
made on February 20, 20X9?
A.Option A
B.Option B
C.Option C
D.Option D
33) Arlington has a debt service fund which it uses to pay the principal and interest on
its $2,000,000 of general long-term debt. Interest at 5 percent is due on October 1 and
April 1. On October 1, 20X8, and April 1, 20X9, Arlington’s debt service fund paid
$50,000 of interest due on its bonds. On the balance sheet prepared on June 30, 20X9,
for Arlington’s debt service fund, interest payable should be reported at:
A.$0
B.$16,667
C.$25,000
D.$50,000
34) Note: This is a Kaplan CPA Review Question
Fike Hospital, a private, not-for-profit institution, receives an unrestricted gift of
common stock with a fair value of $100,000. The donor had paid $40,000 for the stock
five years earlier. The gift should be recorded as an
A.Increase in unrestricted net assets of $40,000
B.Increase in temporarily restricted net assets of $100,000
C.Increase in temporarily restricted net assets of $40,000
D.Increase in unrestricted net assets of $100,000
35) Mortar Corporation acquired 80 percent of Granite Corporation’s voting common
stock on January 1, 20X7. On December 31, 20X8, Mortar received $390,000 from
Granite for equipment Mortar had purchased on January 1, 20X5, for $400,000. The
equipment is expected to have a 10-year useful life and no salvage value. Both
companies depreciate equipments on a straight-line basis.
Based on the preceding information, in the preparation of elimination entries related to
the equipment transfer for the 20X9 consolidated financial statements, the net effect on
accumulated depreciation will be:
A.a decrease of $160,000
B.an increase of $160,000
C.an increase of $135,000
D.a decrease of $135,000
36) A donor agrees to contribute $5,000 per year at the end of each of the next five
years to a voluntary health and welfare organization. The donor did not place any use
restrictions on the amount pledged. The stream of the payments is discounted at 6
percent. The first payment of $5,000 is received at the end of the first year. The present
value factor for a five-payment annuity due on June 30, 20X9, at 6 percent is 4.2124.
Based on the preceding information, the journal entry to recognize present value at the
time the pledge is received includes:
A.a credit to Pledges ReceivableTemporarily Restricted for $25,000
B.a debit to ContributionsTemporarily Restricted for $21,062
C.a debit to Pledges ReceivableTemporarily Restricted for $21,062
D.a credit to ContributionsTemporarily Restricted for $25,000
37) Each of the following questions names an item. Select the correct description of the
item from this list. Indicate your selection by entering the letter of the description.
Descriptions
a. Provides preliminary information to investors about an upcoming issue.
b. Informs investors of an upcoming offering.
c. Required annual filing to the SEC.
d. Discloses unscheduled material events.
e. Includes amendments to the Securities Act, additional disclosure requirements, and
other current issues regarding accounting and auditing principles and standards.
f. Results in a thorough examination by the SEC of a registration statement.
g. Issued by the staff of the SEC and contains differences that must be corrected in a
registration statement before the securities may be offered or sale.
h. Quarterly report to SEC.
i. Includes new or revised administrative practices and interpretations used in reviewing
financial statements.
j. Includes the results of actions taken against accountants or other participants because
false or misleading statements were filed.
k. Includes Regulations S-X and S-K.
Accounting and Auditing Enforcement Releases
38) From an investor’s point of view, a liquidating dividend from an investee is:
A.a dividend declared by the investee in excess of its earnings in the current year
B.a dividend declared by the investee in excess of its earnings since acquisition by the
investor
C.any dividend declared by the investee since acquisition
D.a dividend declared by the investee in excess of the investee’s retained earnings
39) In order to reduce the risk associated with a new line of business, Conservative
Corporation established Spin Company as a wholly owned subsidiary. It transferred
assets and accounts payable to Spin in exchange for its common stock. Spin recorded
the following entry when the transaction occurred:
Based on the preceding information, what was Conservative’s book value of assets
transferred to Spin Company?
A.$243,000
B.$263,000
C.$221,000
D.$201,000
40) A partnership may be involved in “Dissociation” or “Dissolution.”
Required:
Describe “Dissociation” and “Dissolution.”
41) On December 31, 20X8, Defoe Corporation acquired 80 percent of Crusoe
Company’s common stock for $104,000 cash. The fair value of the noncontrolling
interest at that date was determined to be $26,000. Data from the balance sheets of the
two companies included the following amounts as of the date of acquisition:
On that date, the book values of Crusoe’s assets and liabilities approximated fair value
except for inventory, which had a fair value of $45,000, and buildings and equipment,
which had a fair value of $100,000. At December 31, 20X8, Defoe reported accounts
payable of $15,000 to Crusoe, which reported an equal amount in its accounts
receivable.
Required:
1> Provide the eliminating entries needed to prepare a consolidated balance sheet
immediately following the business combination.
2> Prepare a consolidated balance sheet worksheet.
42) Power Corporation owns 75 percent of Transmitter Company’s common stock. At
the date of acquisition the fair value of the noncontrolling interest was equal to the book
value of Transmitter Company’s common stock. The following balance sheet data are
presented for December 31, 20X8:
Transmitter reported net income of $90,000 in 20X8 and paid dividends of $30,000. Its
bonds have an annual interest rate of 10 percent and are convertible into 12,000
common shares. Its preferred shares pay a 12 percent annual dividend and convert into
5,000 shares of common stock. In addition, Transmitter has warrants outstanding for
12,000 shares of common stock at $15 per share. The 20X8 average price of
Transmitter common shares was $25.
Power reported income of $180,000 from its own operations for 20X8 and paid
dividends of $40,000. Its 9 percent bonds convert into 8,000 shares of its common
stock. The companies file separate tax returns and are subject to income taxes of 40
percent.
Required:
Compute basic and diluted earnings per share for the consolidated entity for 20X8.
43) On January 1, 2008, Pace Company acquired all of the outstanding stock of Spin
PLC, a British Company, for $350,000. Spin’s net assets on the date of acquisition were
250,000 pounds (£). On January 1, 2008, the book and fair values of the Spin’s
identifiable assets and liabilities approximated their fair values except for property,
plant, and equipment and trademarks. The fair value of Spin’s property, plant, and
equipment exceeded its book value by $25,000. The remaining useful life of Spin’s
equipment at January 1, 2008, was 10 years. The remainder of the differential was
attributable to a trademark having an estimated useful life of 5 years. Spin’s trial
balance on December 31, 2008, in pounds, follows:
Additional Information
1> Spin uses the FIFO method for its inventory. The beginning inventory was acquired
on December 31, 2007, and ending inventory was acquired on December 26, 2008.
Purchases of £300,000 were made evenly throughout 2008.
2> Spin acquired all of its property, plant, and equipment on March 1, 2006, and uses
straight-line depreciation.
3> Spin’s sales were made evenly throughout 2008, and its operating expenses were
incurred evenly throughout 2008.
4> The dividends were declared and paid on November 1, 2008.
5> Pace’s income from its own operations was $150,000 for 2008, and its total
stockholders’ equity on January 1, 2008, was $1,000,000. Pace declared $50,000 of
dividends during 2008.
6> Exchange rates were as follows:
Assume the U.S. dollar is the functional currency, not the pound.
Required:
1> Prepare a schedule remeasuring the trial balance from British pound into U.S.
dollars.
2> Assume that Pace uses the fully adjusted equity method. Record all journal entries
that relate to its investment in the British subsidiary during 2008. Provide the necessary
documentation and support for the amounts in the journal entries.
3> Prepare a schedule that determines Pace’s consolidated net income for 2008.
44) The following information is contained in the funds which are used to account for
the transactions of the Hope Hospital, which is operated by a nonprofit, religious
organization. The balances in the accounts are as of June 30, 20X9, the end of the
hospital’s fiscal year. Credit amounts are in parentheses.
Additional information:
The $64,000 in the specific purpose fund is restricted for research activities to be
conducted by the hospital.
Required:
Prepare a balance sheet for Hope Hospital as of June 30, 20X9.
45) Dish Corporation acquired 100 percent of the common stock of Toll Company by
issuing 10,000 shares of $10 par common stock with a market value of $60 per share.
Summarized balance sheet data for the two companies immediately preceding the
acquisition are as follows:
Required: Determine the dollar amounts to be presented in the consolidated balance
sheet for (1) total assets, (2) total liabilities, and (3) total stockholders’ equity.
46) Locus Corporation acquired 80 percent ownership of Stereo Company on January 1,
20X6, at underlying book value. At that date, the fair value of the noncontrolling
interest was equal to 20 percent of the book value of Stereo Company. Consolidated
balance sheets at January 1, 20X8, and December 31, 20X8, are as follows:
The consolidated income statement for 20X8 contained the following amounts:
Locus and Stereo paid dividends of $25,000 and $15,000, respectively, in 20X8.
Required:
1> Prepare a worksheet to develop a consolidated statement of cash flows for 20X8
using the direct method of computing cash flows from operations.
2> Prepare a consolidated statement of cash flows for 20X8.
47) Peter Architectural Services owns 100 percent of Smith Manufacturing. During the
course of 20X8 Peter provides $100,000 of architectural services associated with
Smith’s new manufacturing facility, which will open January 4, 20X9, and has a 5 year
useful life. Explain the impact providing this service has on Peter Architectural
Services’ 20X8 and 20X9 consolidated financial statements.
48) Parent Company acquired 90% of Son Inc. on January 31, 20X2 in exchange for
cash. The book value of Sons individual assets and liabilities approximated their
acquisition-date fair values. On the date of acquisition, Son reported the following:
During the year Son Inc. reported $310,000 in net income and declared $15,000 in
dividends. Parent Company reported $520,000 in net income and declared $25,000 in
dividends. Parent accounts for their investment using the equity method.
Required:
1>What journal entry will Parent make on the date of acquisition to record the
investment in Son Inc.?
2>If Parent were to prepare a consolidated balance sheet on the acquisition date
(January 31, 20X2), what is the basic elimination entry Parent would use in the
consolidation worksheet?
3>What is Parents balance in Investment in Son Inc. prior to consolidation on
December 31, 20X2?
4>What is the basic elimination entry Parent would use in the consolidation worksheet
on December 31, 20X2?
