46. The following information has been taken from the consolidation
worksheet of Graham Company and its 80% owned subsidiary, Stage Company.
(1.) Graham reports a loss on sale of land of $5,000. The land cost Graham
$20,000.
(2.) Non-controlling interest in Stage’s net income was $30,000.
(3.) Graham paid dividends of $15,000.
(4.) Stage paid dividends of $10,000.
(5.) Excess acquisition-date fair value over book value was expensed by $6,000.
(6.) Consolidated accounts receivable decreased by $8,000.
(7.) Consolidated accounts payable decreased by $7,000.
Using the indirect method, where does the decrease in accounts payable appear
in a consolidated statement of cash flows?
47. Webb Company owns 90% of Jones Company. The original balances
presented for Jones and Webb as of January 1, 2011, are as follows:
Jones sells 20,000 shares of previously unissued shares of its common stock to
outside parties for $10 per share.
What is the adjusted book value of Jones after the sale of the shares?
48. Webb Company owns 90% of Jones Company. The original balances
presented for Jones and Webb as of January 1, 2011, are as follows:
Jones sells 20,000 shares of previously unissued shares of its common stock to
outside parties for $10 per share.
What is the new percent ownership of Webb in Jones after the stock issuance?
49. Webb Company owns 90% of Jones Company. The original balances
presented for Jones and Webb as of January 1, 2011, are as follows:
Jones sells 20,000 shares of previously unissued shares of its common stock to
outside parties for $10 per share.
What adjustment is needed for Webb’s investment in Jones account?
50. Webb Company owns 90% of Jones Company. The original balances
presented for Jones and Webb as of January 1, 2011 are as follows:
Assume Jones issues 20,000 new shares of its common stock for $15 per share.
Of this total, Webb acquires 18,000 shares to maintain its 90% interest in Jones.
What is the adjusted book value of Jones after the stock issuance?
51. Webb Company owns 90% of Jones Company. The original balances
presented for Jones and Webb as of January 1, 2011 are as follows:
Assume Jones issues 20,000 new shares of its common stock for $15 per share.
Of this total, Webb acquires 18,000 shares to maintain its 90% interest in Jones.
After acquiring the additional shares, what adjustment is needed for Webb’s
investment in Jones account?
52. Ryan Company owns 80% of Chase Company. The original balances
presented for Ryan and Chase as of January 1, 2011, are as follows:
Assume Chase issues 30,000 additional shares common stock solely to Ryan for
$12 per share.
What is the new percent ownership Ryan owns in Chase?
53. Ryan Company owns 80% of Chase Company. The original balances
presented for Ryan and Chase as of January 1, 2011, are as follows:
Assume Chase issues 30,000 additional shares common stock solely to Ryan for
$12 per share.
What is the adjusted book value of Chase Company after the issuance of the
shares?
54. Ryan Company owns 80% of Chase Company. The original balances
presented for Ryan and Chase as of January 1, 2011, are as follows:
Assume Chase issues 30,000 additional shares common stock solely to Ryan for
$12 per share.
After acquiring the additional shares, what adjustment is needed for Ryan’s
investment in Chase account?
55. Ryan Company owns 80% of Chase Company. The original balances
presented for Ryan and Chase as of January 1, 2011 are as follows:
Assume Chase reacquired 8,000 shares of its common stock from outsiders at
$10 per share.
What should the adjusted book value of Chase be after the treasury shares were
purchased?
56. Ryan Company owns 80% of Chase Company. The original balances
presented for Ryan and Chase as of January 1, 2011 are as follows:
Assume Chase reacquired 8,000 shares of its common stock from outsiders at
$10 per share.
What is Ryan’s percent ownership in Chase after the acquisition of the treasury
shares (rounded)?
57. Ryan Company owns 80% of Chase Company. The original balances
presented for Ryan and Chase as of January 1, 2011 are as follows:
Assume Chase reacquired 8,000 shares of its common stock from outsiders at
$10 per share.
When Ryan’s new percent ownership is rounded to a whole number, what
adjustment is needed for Ryan’s investment in Chase account?
58. A variable interest entity can take all of the following forms except a(n)
59. All of the following are examples of variable interests except
60. Which of the following is not a potential loss or return of a variable interest
entity?
61. Which of the following characteristics is
not
indicative of an enterprise
qualifying as a primary beneficiary with a controlling financial interest in a
variable interest entity?
62. Which of the following statements is
false
concerning variable interest
entities (VIEs)?
63. Which of the following statements is true concerning variable interest
entities (VIEs)?
1) The role of the VIE equity investors can be fairly minor.
2) A VIE may be created specifically to benefit its sponsoring firm with low-cost
financing.
3) VIE governing agreements often limit activities and decision making.
4) VIEs usually have a well-defined and limited business activity.
64. Which of the following is
not
an indicator that requires a sponsoring firm
to consolidate a variable interest entity (VIE) with its own financial statements?
65. A parent acquires all of a subsidiary’s common stock and 60 percent of its
preferred stock. The preferred stock has a cumulative dividend. No dividends are
in arrears. How is the non-controlling interest in the subsidiary’s net income
assigned?
66. A parent acquires 70% of a subsidiary’s common stock and 60 percent of
its preferred stock. The preferred stock is noncumulative. The current year’s
dividend was paid. How is the non-controlling interest in the subsidiary’s net
income assigned?
67. Wolff Corporation owns 70 percent of the outstanding stock of Donald, Inc.
During the current year, Donald made $75,000 in sales to Wolff. How does this
transfer affect the consolidated statement of cash flows?
68. MacDonald, Inc. owns 80 percent of the outstanding stock of Stahl
Corporation. During the current year, Stahl made $125,000 in sales to
MacDonald. How does this transfer affect the consolidated statement of cash
flows?