22. 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
selected figures were reported by the two companies. Additionally, no dividends
have been paid.
What is the non-controlling interest’s share of the subsidiary’s net income for the
year ended December 31, 2011
and
what is the ending balance of the non-
controlling interest in the subsidiary at December 31, 2011?
23. 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
selected figures were reported by the two companies. Additionally, no dividends
have been paid.
What is the consolidated balance of the Equipment account at December 31,
2011?
24. 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 common shares of Spraz. The loan was to be paid in ten equal
annual principal payments, plus interest, beginning December 31, 2010. The
excess consideration transferred over the underlying book value of the acquired
net assets was allocated 60% to inventory and 40% to goodwill.
What is
consolidated current assets
at January 2, 2010?
25. 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 common shares of Spraz. The loan was to be paid in ten equal
annual principal payments, plus interest, beginning December 31, 2010. The
excess consideration transferred over the underlying book value of the acquired
net assets was allocated 60% to inventory and 40% to goodwill.
What is
consolidated noncurrent assets
at January 2, 2010?
26. 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 common shares of Spraz. The loan was to be paid in ten equal
annual principal payments, plus interest, beginning December 31, 2010. The
excess consideration transferred over the underlying book value of the acquired
net assets was allocated 60% to inventory and 40% to goodwill.
What are the total
consolidated current liabilities
at January 2, 2010?
27. 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 common shares of Spraz. The loan was to be paid in ten equal
annual principal payments, plus interest, beginning December 31, 2010. The
excess consideration transferred over the underlying book value of the acquired
net assets was allocated 60% to inventory and 40% to goodwill.
What is
consolidated stockholders’ equity
at January 2, 2010?
28. In measuring non-controlling interest at the date of acquisition, which of
the following would
not
be indicative of the value attributed to the non-controlling
interest?
29. When a parent uses the equity method throughout the year to account for
its investment in an acquired subsidiary, which of the following statements is
false
before making adjustments on the consolidated worksheet?
30. When a parent uses the initial value method throughout the year to
account for its investment in an acquired subsidiary, which of the following
statements is
true
before making adjustments on the consolidated worksheet?
31. When a parent uses the partial equity method throughout the year to
account for its investment in an acquired subsidiary, which of the following
statements is
false
before making adjustments on the consolidated worksheet?
32. In a step acquisition, which of the following statements is
false
?
33. Which of the following statements is
false
regarding multiple acquisitions
of a subsidiary’s existing common stock?
34. When a subsidiary is acquired sometime after the first day of the fiscal
year, which of the following statements is true?
35. When consolidating a subsidiary that was acquired on a date other than
the first day of the fiscal year, which of the following statements is
true
in the
presentation of consolidated financial statements?
36. When a parent uses the acquisition method for business combinations and
sells shares of its subsidiary, which of the following statements is
false
?
37. All of the following statements regarding the sale of subsidiary shares are
true except which of the following?
38. Which of the following statements is true regarding the sale of subsidiary
shares when using the acquisition method for accounting for business
combinations?
39. Jax Company uses the acquisition method for accounting for its investment
in Saxton Company. Jax sells some of its shares of Saxton such that neither
control nor significant influence exists. Which of the following statements is
true
?
40. Keefe, Inc., a calendar-year corporation, acquires 70% of George Company
on September 1, 2010, and an additional 10% on January 1, 2011.
Total
annual
amortization of $6,000 relates to the first acquisition. George reports the following
figures for 2011:
Without regard for this investment, Keefe independently earns $300,000 in net
income during 2011.
All net income is earned evenly throughout the year.
What is the controlling interest in consolidated net income for 2011?
41. McGuire Company acquired 90 percent of Hogan Company on January 1,
2010, for $234,000 cash. This amount is reflective of Hogan’s total fair value.
Hogan’s stockholders’ equity consisted of common stock of $160,000 and
retained earnings of $80,000. An analysis of Hogan’s net assets revealed the
following:
Any excess consideration transferred over fair value is attributable to an
unamortized patent with a useful life of 5 years.
The acquisition value attributable to the non-controlling interest at January 1,
2010 is: