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Multiple Choice Questions 1) On May 1, 2011, Deerfield Corporation purchased merchandise from a German firm for 78,000 euros when the spot rate for the euro was 1.48 euro per dollar. The account payable was denominated in the euro. Deerfield settled the account on August 1 when the spot rate for.
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10) Patch Corporation has a 50% undivided interest in Saric Corporation, a joint venture. Patch accounts for its interest in Saric by the equity method and also prepares consolidated financial statements for external reporting purposes. Patch follows specialized industry practices and uses proportionate consolidation for its interest in Saric. Separate.
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7) Party Corporation acquired an 80% interest in Sang Corporation on January 1, 2011 for $20,000. Balance sheet and fair value information on this date is summarized as follows: Party Book ValueSang Book ValueSang Fair Value Current assets$15,000$9,000$9,000 Land and Building-net35,0007,0007,000 Equipment8,0004,0006,000 Total assets$58,000$20,000$22,000 Liabilities$27,000$10,00010,000 Capital stock18,0004,000 Retained earnings13,0006,000 Total liab. & equity$58,000$20,000 Required: 1. Prepare an entry on the books.
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6) Partridge Corporation purchased an 80% interest in Sandy Corporation for $840,000 on January 1, 2011. Sandy's balance sheet book values and accompanying fair values on this date are shown below. Parent Entity Company TheoryTheory Push-Push- Down Down BookFairBalanceBalance   Value     Value     Sheet       Sheet   Cash$30,000$30,000________________ Receivables200,000200,000________________ Inventory300,000360,000________________ Land50,00090,000________________ Plant assets-net250,000300,000________________ Total Assets$830,000$980,000________________ Current liabilities$180,000$180,000________________ Other liabilities120,000100,000________________ Common Stock400,000________________ Retained Earnings130,000________________________ Total Liab..
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14) On January 1, 2011, Jennifer Company acquired a 90% interest in Jayda Company for $270,000 cash. On January 1, 2011, Jayda Company had the following assets and liabilities: Book ValueFair Value Cash$10,000$10,000 Accounts Receivable50,00070,000 Inventory50,00080,000 Plant Assets100,000200,000 Total Assets$210,000$360,000 Liabilities$100,000$120,000 Capital Stock100,000 Retained Earnings10,000 Total Liabilities & Stockholders' Equity$210,000 Push-down accounting is used for the acquisition. Both companies use the entity.
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12) On January 1, 2011, Jeff Company acquired a 90% interest in Margaret Company for $198,000 cash. On January 1, 2011, Margaret Company had the following assets and liabilities: Book ValueFair Value Cash$5,000$5,000 Accounts Receivable30,00035,000 Inventory40,00050,000 Plant Assets60,00080,000 Total Assets$135,000$170,000 Liabilities$25,000$25,000 Capital Stock100,000 Retained Earnings10,000 Total Liabilities & Stockholders' Equity$135,000 Push-down accounting is used for the acquisition. Required: 1. Assume both companies use the.
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8) Pascal Corporation paid $225,000 for a 70% interest in Sank Corporation on January 1, 2011. On that date, Sank's balance sheet accounts, at book value and fair value, were as follows: Book ValueFair Value Assets Cash$25,000$25,000 Accounts receivable-net45,00055,000 Inventories40,00060,000 Plant, property and equipment-net140,000125,000 Total assets$250,000$265,000 Equities Accounts payable$40,000$40,000 Common stock120,000 Retained earnings90,000 Total liab. & equity$250,000   Both companies use the parent company.
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2) On November 1, 2011, Ross Corporation, a calendar-year U.S. corporation, invested in a purely speculative contract to purchase 1 million euros on January 30, 2012, from Trattoria Company, an Italian brokerage firm. Ross agreed to purchase 1,000,000 euros from Trattoria at a fixed price of $1.420 per euro. Trattoria.
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Exercises 1) On September 1, 2011, Bylin Company purchased merchandise from Himeji Company of Japan for 20,000,000 yen payable on October 1, 2011. The spot rate for yen was $0.0079 on September 1 and the spot rate was $0.0077 on October 1. The purchase was paid on October 1, 2011. Required: 1. Did.
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15) Pretax operating incomes of Pang Corporation and its 70%-owned subsidiary, Sala Corporation, for the year 2011, are shown below. Sala pays total dividends of $60,000 for the year. There are no unamortized book value/fair value differentials relating to Pang's investment in Sala. During the year, Pang sold land to.
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11) On January 1, 2011, Penny Company acquired a 90% interest in Lampire Company for $180,000 cash. On January 1, 2011, Lampire Company had the following assets and liabilities: Book ValueFair Value Cash$10,000$10,000 Accounts Receivable30,00035,000 Inventory40,00050,000 Plant Assets60,00080,000 Total Assets$140,000$175,000 Liabilities$25,000$25,000 Capital Stock100,000 Retained Earnings15,000 Total Liabilities & Stockholders' Equity$140,000 Push-down accounting is used for the acquisition. Required: 1. Assume both companies use the.
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10) Johnson Corporation (a U.S. company) began operations on December 1, 2010, when the owner contributed $100,000 of his own money to establish the business. Johnson then had the following import and export transactions with unaffiliated Mexican companies: December 12, 2011Bought inventory for 150,000 pesos on account. Invoice denominated in pesos. December 15,.
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11) Piel Corporation (a U.S. company) began operations on January 1, 2011, when common stock was issued for $250,000. In the first two months of operations, Piel had the following transactions: January 15, 2011Bought inventory for 100,000 Mexican pesos on account January 26, 2011Sold 70% of inventory acquired on 1/15/11 for 44,000.
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9) Johnsen Corporation paid $225,000 for a 70% interest in Jonas Corporation on January 1, 2011. On that date, Jonas's balance sheet accounts, at book value and fair value, were as follows: Book ValueFair Value Assets Cash$25,000$25,000 Accounts receivable-net45,00055,000 Inventories40,00060,000 Plant, property and equipment-net140,000125,000 Total assets$250,000$265,000 Equities Accounts payable$40,000$40,000 Common stock120,000 Retained earnings90,000 Total liab. & equity$250,000 Required: 1. Prepare the journal entry necessary.
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16) Pretax operating incomes of Panitz Corporation and its 80%-owned subsidiary, Salazar Corporation, for the year 2011, are shown below. Panitz and Salazar belong to an affiliated group. Salazar pays total dividends of $35,000 for the year. There are no unamortized book value/fair value differentials relating to Panitz's investment in Salazar..
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8) A review of Ace Industries, a U.S. corporation, shows the following balances in accounts receivable and accounts payable detail at September 30, 2011, their fiscal year end. ACCOUNTS RECEIVABLE Receivables denominated in U.S. dollar$426,000 Receivable denominated in 40,000 Australian dollar43,000 Receivable denominated in 70,000 Canadian dollar71,750 $ 540,750 ACCOUNTS PAYABLE Payables denominated in U.S. dollar$ 107,000 Payable.
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3) Pashley Corporation purchased 75% of Sargent Corporation on January 1, 2011, for $115,000. Balance sheets for the two companies on this date, prepared just prior to the purchase, are provided below. PashleySargentSargent Book ValuesBook ValuesFair Values Cash$165,000$5,000$5,000 Inventory135,00035,00045,000 Buildings & equipment-net250,00060,00095,000 Total assets$550,000$100,000$145,000 Common stock$150,000$47,500 Retained earnings400,00052,500 Total equities$550,000$100,000 Required: Prepare a consolidated balance sheet using the entity theory of.
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16) On January 1, 2011, Gregory Company acquired a 90% interest in Subway Company for $200,000 cash. On January 1, 2011, Subway Company had the following assets and liabilities: Book ValueFair Value Cash$5,000$5,000 Accounts Receivable30,00035,000 Inventory40,00050,000 Other Current Assets10,00010,000 Plant Assets60,00080,000 Total Assets$145,000$180,000 Liabilities$25,000$25,000 Common Stock100,000 Retained Earnings20,000 Total Liabilities & Stockholders' Equity$145,000 The plant assets have 20 years of useful life remaining..
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13) Slade Corporation, a U.S. company, purchased materials on account from a manufacturer in Mexico on June 15. The invoice was denominated in the shipper's currency for 480,000 pesos. The goods were paid for on July 18. Slade closes their fiscal year on June 30, and used the following indirect.
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19) Charin Corporation, a U.S. corporation, imports and exports small electronics. On December 1, 2011, Charin purchased components from an Egyptian manufacturer amounting to 500,000 Egyptian pounds. The purchase is payable in Egyptian pounds. At December 30, Charin wanted to take advantage of favorable exchange rates, but did not have.
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2) Partel Corporation purchased 75% of Sandford Corporation on January 1, 2011, for $230,000. Balance sheets for the two companies on this date, prepared just prior to the purchase, are provided below. PartelSandfordSandford Book ValuesBook ValuesFair Values Cash$330,000$10,000$10,000 Inventory270,00070,00090,000 Buildings & equipment-net500,000120,000190,000 Total assets$1,100,000$200,000$290,000 Common stock$300,00095,000 Retained earnings800,000105,000 Total equities$1,100,000$200,000 Required: 1. Prepare a consolidated balance sheet using the entity.
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1) Under the entity theory, a consolidated balance sheet prepared immediately after the business combination will show goodwill of A) $15,000. B) $22,500. C) $25,000. D) $32,500. 2) Under the entity theory, a consolidated balance sheet prepared immediately after the business combination will show noncontrolling interest of A) $5,000. B) $7,500. C) $9,000. D) $10,000. 3) Paroz Corporation acquired a.
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14) The table below provides either a direct or indirect quote for a given foreign currency unit, and the related units of that foreign currency. Quote Foreign Currency Units U.S. Dollars 1 fcu : $0.0065 40,000 fcu $1 : .0098 fcu 980 fcu 1 fcu : $0.0796 80,000 fcu $1 : .0688 fcu 55,040 fcu 1 fcu : $0.3597 110,000 fcu $1 : .8443.
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5) On November 1, 2010, Mayberry Corporation, a U.S. corporation, purchased from Cantata Corporation, a Mexican company, some machinery that cost 1,000,000 pesos. The invoice was payable in pesos on January 30, 2011. To hedge against rapid changes in the peso, Mayberry entered into a forward contract on November 1,.
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11) The SEC requires push-down accounting for SEC filings of subsidiaries when the subsidiary has no substantial publicly-held debt or preferred stock outstanding and A) the parent has substantial ownership (5% or greater). B) the parent has substantial ownership (20% or greater). C) the parent has substantial ownership (50% or greater). D) the parent.
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20) Meric Corporation (a U.S. company) began operations on January 1, 2011, when the owner borrowed $150,000 to start the company. In the first month of operations, Meric had the following transactions: January 3, 2011Bought inventory for 100,000 Brazilian real on account. Must be paid with Brazilian real. January 8, 2011Sold 60%.
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Multiple Choice Questions 1) Which of the following hedging strategies would a business most likely use? A) An importer will want to hedge his foreign denominated accounts receivable and will purchase forward contracts to hedge an exposed net asset position. B) An importer will want to hedge his foreign denominated accounts payable and.
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14) Stello Corporation's stockholders' equity on December 31, 2010 was as follows: 10% cumulative preferred stock, $100 par value, callable at $110, with no dividends in arrears$100,000 Common stock, $1 par value300,000 Additional paid-in capital40,000 Retained earnings160,000 Total stockholders' equity$600,000 On January 1, 2011, Kaprelian Corporation paid $300,000 for a 90% interest in Stello's common stock. On.
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4) Patane Corporation acquired 80% of the outstanding voting common stock of Sanlon Corporation on January 1, 2011, for $500,000. Sanlon Corporation's stockholders' equity at this date consisted of $250,000 in Capital Stock and $100,000 in Retained Earnings. The fair value of Sanlon's assets was equal to the book value.
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15) On January 1, 2011, Brody Company acquired an 80% interest in Kristin Company for $240,000 cash. On January 1, 2011, Kristin Company had the following assets and liabilities: Book ValueFair Value Cash$10,000$10,000 Accounts Receivable50,00050,000 Inventory50,00070,000 Plant Assets100,000100,000 Total Assets$210,000$230,000 Liabilities$100,000$120,000 Capital Stock100,000 Retained Earnings10,000 Total Liabilities & Stockholders' Equity$210,000 Push-down accounting is used for the acquisition. Both companies use the entity.
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13) On January 1, 2011, Jeff Company acquired a 90% interest in Marian Company for $198,000 cash. On January 1, 2011, Marian Company had the following assets and liabilities: Book ValueFair Value Cash$5,000$5,000 Accounts Receivable30,00035,000 Inventory40,00050,000 Plant Assets60,00080,000 Total Assets$135,000$170,000 Liabilities$25,000$25,000 Capital Stock100,000 Retained Earnings10,000 Total Liabilities & Stockholders' Equity $135,000 Push-down accounting is used for the acquisition. Required: 1. Assume both companies use.
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18) Plymouth Corporation (a U.S. company) began operations on September 1, 2011, when the owner borrowed $250,000 to establish the business. Plymouth then had the following import and export transactions with unaffiliated Chinese companies: September 6, 2011Bought material inventory for 100,000 yuan on account. Invoice denominated in               yuan. September 18, 2011Sold.
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Exercises 1) On November 1, 2011, Portsmith Corporation, a calendar-year U.S. corporation, invested in a purely speculative contract to purchase 1 million yen on January 30, 2012, from the Karoke Trading Company, a Japanese brokerage firm. Portsmith agreed to purchase 1,000,000 yen from Karoke at a fixed price of $0.0100 per.
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12) Lincoln Corporation, a U.S. manufacturer, both imports needed materials and exports finished products. Their receivables and payables are listed below, prior to year-end adjustments or preparation of the closing entries. Foreign Currency Units Rate at Date of Transaction Per Books in U.S. Dollars Current Rate at 12/31/11 ACCOUNTS RECEIVABLE Japanese yen 14,678,000 $0.0109007 160,000 $0.0120 Euros 50,000 1.2372 61,860 1.4235 Hungarian forint 50,000,000 0.0044 220,000 0.0053   TOTAL 441,860 ACCOUNTS PAYABLE Euros 50,000 1.2378 61,890 $1.4235 Mexican pesos 1,250,000 0.0799 99,875 0.0845 Indian.
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