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Study Resources (Accounting)

16) Pull Incorporated and Shove Company reported summarized balance sheets as shown below, on December 31, 2011.     Pull     Shove Current assets$420,000 $210,000 Noncurrent assets670,000 430,000 Total assets $1,090,000$640,000 Current liabilities$230,000$50,000 Long-term debt   350,000  150 000 Stockholders' equity   510,000  440,000 Total liabilities and equities$1,090,000$640,000 On January 1, 2012, Pull purchased 70% of the outstanding capital stock of.
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Multiple Choice Questions 1) The material sale of inventory items by a parent company to an affiliated company A) enters the consolidated revenue computation only if the transfer was the result of arm's length bargaining. B) affects consolidated net income under a periodic inventory system but not under a perpetual inventory system. C) does.
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13) Pamula Corporation paid $279,000 for 90% of Shad Corporation's $10 par common stock on December 31, 2011, when Shad Corporation's stockholders' equity was made up of $200,000 of Common Stock, $60,000 Additional Paid-in Capital and $40,000 of Retained Earnings. Shad's identifiable assets and liabilities reflected their fair values on.
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8) Pexo Industries purchases the majority of their raw materials from a wholly-owned subsidiary, Springmade Chemicals. Pexo purchased Springmade to assure supply availability at a time when the materials were being rationed in the industry due to supply issues overseas. Pexo was able to purchase Springmade at the book value.
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6) Polaris Incorporated purchased 80% of The Solar Company on January 2, 2011, when Solar's book value was $800,000. Polaris paid $700,000 for their acquisition, and the fair value of noncontrolling interest was $175,000. At the date of acquisition, the fair value and book value of Solar's identifiable assets and.
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13) On January 1, 2011, Paisley Incorporated paid $300,000 for 60% of Smarnia Company's outstanding capital stock. Smarnia reported common stock on that date of $250,000 and retained earnings of $100,000.  Plant assets, which had a five-year remaining life, were undervalued in Smarnia's financial records by $10,000. Smarnia also had.
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7) Pawl Corporation acquired 90% of Snab Corporation on January 1, 2011 for $72,000 cash when Snab's stockholders' equity consisted of $30,000 of Capital Stock and $30,000 of Retained Earnings. The difference between the fair value of Pawl's assets and liabilities and the book value was allocated to a plant.
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6) Perry Instruments International purchased 75% of the outstanding common stock of Standard Systems in 1997 when the book values and fair values of Standard's assets and liabilities were equal.  The cost of Perry's investment was equal to 75% of the book value of  Standard's net assets. Separate company income.
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Exercises 1) Penguin Corporation acquired a 60% interest in Squid Corporation on January 1, 2012, at a cost equal to 60% of the book value of Squid's net assets.  At the time of the acquisition, the book values of Squid's assets and liabilities were equal to the fair values. Squid reports.
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4) Powell Corporation acquired 90% of the voting stock of Santer Corporation on January 1, 2010 for $11,700 when Santer had Capital Stock of $5,000 and Retained Earnings of $4,000. The amounts reported on the financial statements approximated fair value, with the exception of inventories, which were understated on the.
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8) Patterson Company acquired 90% of Starr Corporation on January 1, 2011 for $2,250,000. Starr had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between Starr's net.
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8) Parakeet Company has the following information collected in order to prepare a cash flow statement and uses the direct method for Cash Flow from Operations. The annual report year end is December 31, 2011. Noncontrolling Interest Dividends Paid$20,000 Dividends Received from Equity Investees17,000 Cash Paid to Employees37,000 Cash Paid for Other Operating Activities34,000 Cash.
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16) Petra Corporation paid $500,000 for 80% of the outstanding voting common stock of Sizable Corporation on January 2, 2011 when the book value of Sizable's net assets was $460,000. The fair values of Sizable's identifiable net assets were equal to their book values except as indicated below. BookFair ValueValue Inventories     (sold in.
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18) On January 1, 2011, Pinnead Incorporated paid $300,000 for an 80% interest in Shalle Company.  At that time, Shalle's total book value was $300,000.  Patents were undervalued in the amount of $10,000. Patents had a 5-year remaining useful life, and any remaining excess value was attributed to goodwill.  The.
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Exercises 1) Passerby International purchased 80% of Standaround Company's outstanding common stock for $200,000 on January 2, 2011. At that time, the fair value of Standaround's net assets were equal to the book values. The balance sheets of Passerby and Standaround at January 2, 2011 are summarized as follows: PasserbyStandaround Assets$1,600,000$470,000 Liabilities$840,000$230,000 Capital stock360,00050,000 Retained earnings400,000190,000 Required: .
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12) Passcode Incorporated acquired 90% of Safe Systems International for $540,000, the market value at that time.  On the date of acquisition, Safe Systems showed the following balances on their ledger: Book ValueFair Value Current Assets$200,000$200,000 Buildings290,000320,000 Equipment410,000430,000 Liabilities(350,000)(360,000) Safe Systems has determined that their buildings have a remaining life of 10 years, and their equipment.
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12) Paulee Corporation paid $24,800 for an 80% interest in Sergio Corporation on January 1, 2010, at which time Sergio's stockholders' equity consisted of $15,000 of Common Stock and $6,000 of Retained Earnings. The fair values of Sergio Corporation's assets and liabilities were identical to recorded book values when Paulee.
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Exercises 1) Parrot Corporation acquired 90% of Swallow Co. on January 1, 2011 for $27,000 cash when Swallow's stockholders' equity consisted of $10,000 of Capital Stock and $5,000 of Retained Earnings. The difference between the fair value and book value of Swallow's net assets was allocated solely to a patent amortized.
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10) Pool Industries paid $540,000 to purchase 75% of the outstanding stock of Swimmin Corporation, on December 31, 2011. Any excess fair value over the identified assets and liabilities is attributed to goodwill.  The following year-end information was available just before the purchase: PoolSwimmin Swimmin BookBook Fair ValueValueValue Cash$756,000$80,000$80,000 Accounts Receivable260,000152,000152,000 Inventory480,000100,000120,000 Land440,000160,000140,000 Plant and equipment-net1,320,000400,000430,000 $3,256,000$892,000$922,000 Accounts Payable$880,000$22,000$22,000 Bonds.
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2) Parrot Inc. acquired an 85% interest in Sparrow Corporation on January 2, 2011 for $42,500 cash when Sparrow had Capital Stock of $15,000 and Retained Earnings of $25,000. Sparrow's assets and liabilities had book values equal to their fair values except for inventory that was undervalued by $2,000. Balance.
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9) Pool Industries paid $540,000 to purchase 75% of the outstanding stock of Swimmin Corporation, on December 31, 2011. Any excess fair value over the identified assets and liabilities is attributed to goodwill.  The following year-end information was available just before the purchase: PoolSwimmin Swimmin BookBook Fair ValueValueValue Cash$756,000$80,000$80,000 Accounts Receivable260,000152,000152,000 Inventory480,000100,000120,000 Land440,000160,000140,000 Plant and equipment-net1,320,000400,000430,000 $3,256,000$892,000$922,000 Accounts Payable$880,000$22,000$22,000 Bonds.
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11) When performing a consolidation, if the balance sheet does not balance, A) that indicates that the Investment in Subsidiary account on the parent's books should not be adjusted to -0-, because there is excess value represented in the investment. B) it is usually because of the noncontrolling interest, as these amounts.
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11) What is Pouch's income from Shenley for 2012? A) $27,200 B) $29,600 C) $39,200 D) $49,000 12) Swamp Co., a 55%-owned subsidiary of Pond Inc., made the following entry to record a sale of merchandise to Pond: All Swamp sales are at 125% of cost. One-fourth of this merchandise remained in the Pond's inventory at.
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14) On January 2, 2011, Power Incorporated paid $630,000 for a 90% interest in Smallsen Company.  Smallsen's equity at that time amounted to $600,000, and their book values for assets and liabilities recorded approximated their fair values. Smallsen did not issue any additional stock in 2011.  At December 31, 2011,.
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2) On December 31, 2011, Paladium International purchased 70% of the outstanding common stock of Sennex Chemical. Paladium paid $140,000 for the shares and determined that the fair value of all recorded Sennex assets and liabilities approximated their book values, with the exception of a customer list that was not.
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9) PreBuild Manufacturing acquired 100% of Shoding Industries common stock on January 1, 2010, for $670,000 when the book values of Shoding's assets and liabilities were equal to their fair values and Shoding's stockholders' equity consisted of $380,000 of Capital Stock and $290,000 of Retained Earnings. PreBuild's separate income (excluding investment.
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Multiple Choice Questions 1) Which of the following will be debited to the Investment account when the equity method is used? A) Investee net losses B) Investee net profits C) Investee declaration of dividends D) Depreciation of excess purchase cost attributable to investee equipment 2) A parent company uses the equity method to account for its.
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