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148.What potential advantages and disadvantages exist with respect to engaging a consultant for an ERP implementation? Discuss. 149.What are the primary benefits of an ERP system? What are the primary risks? 150.What are Shang and Seddon’s five dimensions of ERP benefits? 1 .
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11.A business combination is accounted for properly as a purchase. Which of the following expenses related to effecting the business combination should enter into the determination of net income of the combined corporation for the period in which the expenses are incurred? Accounting and Overhead allocated consulting feesto the merger a.YesYes b.YesNo c.NoYes d.NoNo 12. In a.
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Multiple Choice 1.Assets and liabilities acquired are recorded at their fair values under a.The pooling of interests method. b.The purchase method. c.Both the purchase and the pooling of interests methods. d.Neither the purchase nor the pooling of interests methods. 2.Equity shares issued as consideration are recorded at the book value of the acquired shares under a.The pooling.
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21.When following the parent company concept in the preparation of consolidated financial statements, noncontrolling interest in combined income is considered a(n) a.prorated share of the combined income. b.addition to combined income to arrive at consolidated net income. c.expense deducted from combined income to arrive at consolidated net income. d.deduction from current assets in the.
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2-3Pate Company acquired the assets (except cash) and assumed the liabilities of Sand Company on January 1, 2004, paying $1,200,000 cash. Immediately prior to the acquisition, Sand Company's balance sheet was as follows: BOOK VALUEFAIR VALUE Accounts receivable (net)$   120,000$   110,000 Inventory145,000160,000 Land480,000754,000 Buildings (net)     510,000     696,000 Total$1,255,000$1,720,000 Accounts payable$   135,000$  135,000 Note payable300,000300,000 Common stock, $5 par210,000 Other contributed.
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11.P Company sold merchandise costing $90,000 to S Company (90% owned) for $112,500. At the end of the current year, one-third of the merchandise remains in S Company's inventory. Applying the lower-of- cost-or-market rule, S Company wrote this inventory down to $34,500.  What amount of intercompany profit should be eliminated.
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Multiple Choice 1.A business combination in which the boards of directors of the potential combining companies negotiate mutually agreeable terms is a(n) a.agreeable combination. b.friendly combination. c.hostile combination. d.unfriendly combination. 2.A merger between a supplier and a customer is a(n) a.friendly combination. b.horizontal combination. c.unfriendly combination. d.vertical combination. 3.When a business acquisition is financed using debt, the interest payments are tax.
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– CHAPTER 15 – PROBLEMS 153.Explain the hardware or standards that were developed during the ARPANET that were an important foundation for the Internet of today. 154.Describe the ERP’s modular interface that is necessary in a typical manufacturing environment. 155.Identify and describe the first generation of ERP systems used in the 1970s, and.
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5-4Packer Corporation purchased 80% of the voting common stock of Snipe Corporation for $3,990,000 cash on January 1, 2004. On this date the book values and fair values of Snipe Corporation's assets and liabilities were as follows: Book ValueFair Value Cash$     90,000 $     90,000 Receivables300,000300,000 Inventories750,000900,000 Other Current Assets375,000450,000 Land750,000900,000 Buildings – net1,200,0002,400,000 Equipment – net  1,200,000     900,000 $4,665,000$5,940,000 Accounts.
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5-5Pope Corporation acquired a 75% interest in Steele Company on January 1, 2004 for $1,300,000.  The book value and fair value of the assets and liabilities of Steele Company on that date were as follows: Book ValueFair Value Current Assets$   400,000$   400,000 Property & Equipment (net)900,0001,200,000 Land500,000600,000 Deferred Charge     200,000     200,000 Total Assets$2,000,000$2,400,000 Less Liabilities     400,000     400,000 Net.
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4-8 Python Corporation buys 80 percent of Shark Company on January 1, 2005, for $150,000.  At the time, Shark’s common stock was $100,000 and retained earnings totaled $80,000.  It was determined that Shark’s assets and liabilities were all at their fair value except for land.  The trial balances of Python.
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11.On November 30, 2004, Page, Incorporated purchased for cash of $50 per share all 300,000 shares of the outstanding common stock of Stark Company. Stark's balance sheet at November 30, 2004 showed a book value of $12,000,000. Additionally, the fair value of Stark's property, plant, and equipment on November 30,.
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Multiple Choice 1.Sales from one subsidiary to another are called a.downstream sales. b.upstream sales. c.intersubsidiary sales. d.horizontal sales. 2.Noncontrolling interest in combined income is never affected by a.upstream sales. b.downstream sales. c.horizontal sales. d.Noncontrolling interest is affected by all sales. 3.Failure to eliminate intercompany sales would result in an overstatement of consolidated a.net income. b.gross profit. c.cost of sales. d.all of these. 4.Price Company owns 80%.
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Problems 2-1Balance sheet information for Steve Corporation at January 1, 2004, is summarized as follows: Current assets$ 230,000Liabilities$ 300,000 Plant assets   450,000Capital stock $10 par   200,000        Retained earnings   180,000 $ 680,000$ 680,000 Steve’s assets and liabilities are fairly valued except for plant assets that are undervalued by $50,000.  On January 2, 2004, Paul Corporation.
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5-9 On January 2, 2004, Potomac Corporation bought 90% of Seine Company for $1,789,000.  At the time of the acquisition, Seine’s common stock was $1,000,000, and retained earnings was $900,000.  The only differences between the fair value and book value of S’s assets were as follows: Book ValueFair Value Inventory$   750,000$  765,000 Equipment (net)1,200,0001,230,000 Seine’s.
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2-5               The stockholders’ equities of P Corporation and S Corporation were as follows on January 1, 2004:     P Corp.    S Corp.  Common Stock, $1 par$2,000,000$   600,000 Other Contributed Capital  5,500,000  1,100,000 Retained Earnings  1,300,000     340,000   Total Stockholders’ equity$8,800,000$2,040,000 On January 2, 2004 P Corp. issued 200,000 of its shares with a market value.
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21.In a business combination in which the total fair value of the identifiable assets acquired over liabilities assumed is greater than the cost, the excess fair value is: classified as an extraordinary gain. allocated first to reduce proportionately non-current assets, except long-term marketable securities, and any remaining excess over cost is classified.
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5-6On January 1, 2003, Power Company purchased an 80% interest in Snider Company for $3,000,000.  On that date Snider Company had retained earnings of $700,000 and common stock of $2,300,000. The book values of assets and liabilities were equal to fair values except for the following: Book ValueFair Value Inventory$ 40,000 $.
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Multiple Choice 1.A majority-owned subsidiary that is in legal reorganization should normally be accounted for using a.consolidated financial statements. b.the equity method. c.the market value method. d.the cost method. 2.Under the purchase method, indirect costs relating to acquisitions should be a.included in the investment cost. b.expensed as incurred. c.deducted from other contributed capital. d.none of these. 3.Eliminating entries are made to.
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1-4The following balances were taken from the records of S Company: Common stock (1/1/04 and 12/31/04)$360,000 Retained earnings 1/1/04$81,000 Net income for 200490,000 Dividends declared in 2004              (21,000) Retained earnings, 12/31/04  150,000 Total stockholders' equity on 12/31/04$510,000 P Company purchased 75% of S Company's common stock on January 1, 2004 for $450,000.  The difference between cost and.
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4-3On January 1, 2004, Peeler Company purchased 80% of the common stock of Sanders Company for $300,000.  At that time, Sanders’ stockholders' equity consisted of the following: Common stock$110,000 Other contributed capital 45,000 Retained earnings160,000 During 2004, Sanders distributed a dividend in the amount of $60,000 and at year-end reported a $160,000 net income. .
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1-2Palmer Company is trying to decide whether to acquire Ellis Inc.  The following balance sheet for Ellis Inc. provides information about book values.  Estimated market values are also listed, based upon Palmer Company's appraisals. Ellis Inc.Ellis Inc. Book ValuesMarket Values Current Assets$  450,000$  450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets$1,590,000$1,750,000 Total Liabilities$700,000$700,000 Common Stock,.
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2-7 Proust Corporation is considering a merger with Seville Company.  After considerable negotiations, the two companies determined that two shares of each Seville Company stock would be replaced with one share of Proust stock.  The balance sheets of the two companies are below, along with the fair value of Seville’s identifiable.
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3 – 6 Pattern Company purchased 100% of Stock Company on January 2, 2004, for $450,000.  At the time, Stock’s capital stock was $300,000, and its retained earnings was $150,000.  At the time, Pattern and Stock had no intercompany transactions.  Any excess of cost over book value is attributable to land.             .
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1.An investor adjusts the investment account for the amortization of any difference between cost and book value under the a.cost method. b.complete equity method. c.partial equity method. d.complete and partial equity methods. 2.Under the partial equity method, the entry to eliminate subsidiary income and dividends includes a debit to a.Dividend Income. b.Dividends Declared - S Company. c.Equity in.
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Problems 1-1Plantier Company is considering the acquisition of Barkley, Inc.  To assess the amount it might be willing to pay, Plantier makes the following computations and assumptions. A.Barkley, Inc. has identifiable assets with a total fair value of $9,000,000 and liabilities of $5,300,000.  The assets include office equipment with a fair value.
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11.A potential offering price for a company is computed by adding the estimated goodwill to the book value of the company’s net assets. book value of the company’s identifiable assets. fair value of the company’s net assets. fair value of the company’s identifiable assets. 12.Estimated goodwill is determined by computing the present value of the .
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Multiple Choice 1.When the acquisition cost exceeds the aggregate fair values of identifiable net assets, the residual difference is accounted for as a.excess of cost over fair value. b.a deferred credit. c.difference between cost and fair value. d.goodwill. 2.Long-term debt and other obligations of an acquired company should be valued for consolidation purposes at their a.book value. b.carrying.
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Problems 4-1On January 1, 2004, Price Company purchased an 80% interest in the common stock of Sealy Company for $520,000, which was $60,000 greater than the book value of equity acquired.  The difference between cost and book value relates to the subsidiary's land. The following information is from the consolidated retained earnings.
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3-5  P Corporation paid $279,000 for 70% of S Corporation’s $10 par common stock on December 31, 2004, when S Corporation’s stockholders’ equity was made up of $200,000 of Common Stock, $60,000 of Other Contributed Capital and $40,000 of Retained Earnings.  S’s identifiable assets and liabilities reflected their fair values.
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Problems 5-1Philco Company purchased a 90% interest in Smith Corporation for $780,000 on January 1, 2004.  Smith Corporation had $550,000 of common stock and $350,000 of retained earnings on that date. The following values were determined for Smith Corporation on the date of purchase: BOOK VALUEFAIR VALUE Inventory$ 80,000$100,000 Land800,000900,000 Equipment540,000 600,000 Required: A.Prepare a computation and allocation.
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5-3On January 1, 2004, Palmer Corporation acquired an 80% interest in  Sealy Company for $1,200,000.  At that time Sealy Company had common stock of $900,000 and retained earnings of $400,000.  The book values of Sealy Company's assets and liabilities were equal to their fair values except for land and bonds.
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1-3Penn Company acquired an 80% interest in the common stock of Sweet Company for $772,000 on July 1, 2004.  Sweet Company's stockholders' equity on that date consisted of: Common stock$400,000 Other contributed capital200,000 Retained earnings165,000 The book values of Sweet's assets and liabilities are equal to their fair values except for the following:     Book.
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Problems 3-1On December 31, 2004, Page Company purchased 80% of the outstanding common stock of Short Company for cash.  At the time of acquisition, Short Company's balance sheet was as follows: Current assets$  840,000 Plant and equipment790,000 Land     140,000 Total assets$1,770,000 Liabilities$   660,000 Common stock, $10 par value720,000 Other contributed capital350,000 Retained earnings     120,000 Total$1,850,000 Treasury stock at cost, 4,000 shares      .
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Problems 6-1On January 1, 2004, Persen Company purchased a 90% interest in Singer Company for $1,400,000.  At that time, Singer had $920,000 of common stock and $180,000 of retained earnings.  The difference between cost and book value was allocated to the following assets of Singer Company: Inventory$ 40,000 Plant and equipment (net)120,000 Goodwill250,000 The plant.
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156.Compare and contrast the functionality of the Logistics module and Supply Chain Management activities. 157.Suppose a company is experiencing problems with omitted transactions in the conversion processes: i.e., inventory transactions are not always being recorded as they occur. How can an ERP system help to alleviate such a problem? 158.Using an internet.
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4-7On January 1, 2004, P Company acquired 80% of the outstanding capital stock of S Company for $380,000.  On that date, the capital stock of S Company was $100,000 and its retained earnings were $300,000. On the date of acquisition, the assets of S Company had the following values:     Fair Market                      .
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3-3P Company purchased 27,000 shares of the common stock of S Company on January 1, 2004, for $475,000 cash. The stockholders' equity section of S Company's balance sheet on that date was as follows: Common stock, $10 par value$300,000 Other contributed capital40,000 Retained earnings  160,000 Total$500,000 On the date of purchase, S Company owed P.
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11.Consolidated net income for a parent company and its partially owned subsidiary is best defined as the parent company’s a.recorded net income. b.recorded net income plus the subsidiary's recorded net income. c.recorded net income plus the its share of the subsidiary's recorded net income. d.income from independent operations plus its share of the subsidiary's.
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6-4Parker Company owns an 80% interest in Storey Company and a 90% interest in Todd Company. During 2003 and 2004, intercompany sales of merchandise were made by all three companies.  Total sales amounted to $800,000 in 2003, and $900,000 in 2004.  The companies sold their merchandise at the following percentages.
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11.Which of the following is a limitation of consolidated financial statements? a.Consolidated statements provide no benefit for the stockholders and creditors of the parent company. b.Consolidated statements of highly diversified companies cannot be compared with industry standards. c.Consolidated statements are beneficial only when the consolidated companies operate within the same industry. d.Consolidated statements are.
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5-2Pulli Corporation acquired a 90% interest in Starr Company for $4,300,000 on January 1 2004.  At that time Starr Company had common stock of $3,000,000 and retained earnings of $1,200,000.  The balance sheet information available for Starr Company on January 1, 2004 showed the following: BOOK VALUEFAIR VALUE Inventory (FIFO)$  900,000$1,000,000 Equipment (net)1,000,0001,300,000 Land2,000,0002,000,000 The.
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159.Using an internet search engine, search for the terms “big bang” + ERP. Identify at least one company that represents a success story with regard to this ERP implementation method (other than Marathon, as described in the Real World Example). Also identify at least one company that experienced problems with.
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4-5P Company purchased 90% of the common stock of S Company on January 2, 2004 for $450,000. On that date, S Company's stockholders' equity was as follows: Common stock, $20 par value$200,000 Other contributed capital50,000 Retained earnings225,000 During 2004, S Company earned $100,000 and declared a $50,000 dividend. P Company uses the partial equity.
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