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21.              Which of the following statements is true? a. When one affiliate purchases another affiliate's bonds prior to the business combination, the bonds become an intercompany debt as of the business combination date and thus are viewed, for consolidate purposes, as being retired on the purchase date. b. When one affiliate purchases another affiliate's.
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Partridge & Sparrow scenario: Partridge purchased a 60% interest in Sparrow on January 1, 20X1, for $240,000. At the time of the purchase, Sparrow had the following stockholders' equity: Common stock ($10 par) $  80,000 Retained earnings   120,000      Total stockholders' equity $200,000 Any excess is attributable to equipment with a 10-year life. On January 1, 20X6,.
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4.Refer to Patrick and Solomon. In both 20X1 and 20X2, Patrick has accounted for its investment in Solomon using the cost method. Required: a. Using the information above or on the separate worksheet, prepare necessary determination and distribution of excess schedules for the two purchases. b. Complete the Figure 7-2 worksheet for consolidated financial statements.
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7.On January 1, 20X1, Pepper Company purchased 90% of the common stock of Salt Company for $360,000 when Salt had total shareholders' equity as follows: 8% Preferred Stock, $100 par $100,000 Common Stock, $10 par 50,000 Other Paid-in Capital 120,000 Retained Earnings   180,000      Total $450,000 Any excess of cost over book value on this date is attributed to a.
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ESSAY 1.For each of the following intercompany transactions, state the principle to be used in accounting for intercompany gains on current and future consolidated income statements: a. Gains on merchandise sales b. Gains on the sale of land c. Gains on the sale of depreciable fixed assets d. Interest on intercompany notes 4-1 .
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9.Refer to Scenario 4-2.  Assume that during 20X1 and 20X2, Powers has appropriately accounted for its investment in Sculley using the simple equity method. Required: a. Using the information above or on the Figure 4-6 worksheet, prepare a determination and distribution of excess schedule. b. Complete the Figure 4-6 worksheet for consolidated financial statements for.
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2.The following comparative consolidated trial balances apply to Perella Company and its subsidiary Sherwood Company (80% control): 12/31/X4 12/31/X5 Cash $   275,000 $       300,800 Trading Securities Portfolio (at market)      160,000          120,000 Accts Rec      350,000          379,600 Inventories      316,000          268,000 Land        95,000          180,000 PPE      500,000          520,000 Accum Dep     (135,000)         (152,000) Goodwill       .
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11.Plymouth Company holds a 90% interest in Savannah, Inc., which was acquired in a previous year. As of the end of the current fiscal period, the following information is available: Plymouth Savannah Company     Inc.   Internally generated net income $20,000 $7,000 Weighted average common shares outstanding 10,000 4,000 Subsidiary common stock warrants to     acquire 200 shares parent common stock 200 Dilutive convertible.
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MULTIPLE CHOICE 1.The usual impetus for transactions that create a long-term debtor-creditor relationship between members of a consolidated group is due to the: a. subsidiary's ability to borrow larger amounts of capital at more favorable terms than would be available to the parent. b. parent's ability to borrow larger amounts of capital at more favorable.
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5.Refer to Patrick and Solomon. In both 20X1 and 20X2, Patrick has accounted for its investment in Solomon using the simple equity method. Required: a. Using the information from the scenario or on the separate worksheet, prepare necessary determination and distribution of excess schedules for the two purchases. b. Complete the Figure 7-3 worksheet for.
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9.The following comparative consolidated trial balances apply to Pembina Company and its subsidiary Scranton Company (80% interest) for the fiscal year ended 12/31/X5: 12/31/X4 12/31/X5 Cash $   145,000 $   419,000 Trading Securities Portfolio (at market)      160,000       175,000 Accounts Receivable     440,000     384,000 Inventories      525,000     542,000 Land      130,000      105,000 Plant, Property, and.
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PROBLEM 1.Smart Corporation is a 90%-owned subsidiary of Phan Inc. On January 2, 20X6, Smart agreed to lease $400,000 of construction equipment from Phan for $3,000 a month on an operating lease. The equipment has a 10-year life and is being depreciated using the straight-line method. Required: Prepare the eliminations and adjustments required.
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11.              Company S is a 100%-owned subsidiary of Company P. Company P purchased, at a premium, Company S bonds that are outstanding and have a remaining discount. Consolidation theory takes the position that: a. interest expense should be adjusted to reflect the market value of the bonds on the date of Company.
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MULTIPLE CHOICE 1.The cash purchase of 80% interest in a firm with no liabilities would be shown on the consolidated statement of cash flows as a. an operating activity. b. a financing activity. c. an investing activity. d. as all of the preceding. 2.The cash purchase of a controlling interest in a firm requires disclosure on the consolidated statement of.
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15.              On January 1, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $402,000. On this date Subsidiary had total owners' equity of $440,000. Any excess of cost over book value is due to goodwill. Parent accounts for its investment in Subsidiary using the simple equity.
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8.              Refer to Scenario 4-2.  Assume that during 20X1 and 20X2, Powers has appropriately accounted for its investment in Sculley using the cost method. Required: a. Using the information above or on the Figure 4-5 worksheet, prepare a determination and distribution of excess schedule. b. Complete the Figure 4-5 worksheet for consolidated financial statements for.
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31.              When there is an unguaranteed residual value for the lessor in a Direct-Financing Lease, this means: a. the total payments to be received by the lessor will come from the lessee. b. the total payments to be received by the lessee will come from the lessor. c. a portion of the total payments to be.
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10.Plymouth Company holds a 90% interest in Savannah, Inc., which was acquired in a previous year. As of the end of the current fiscal period, the following information is available: Plymouth Savannah Company     Inc.   Internally generated net income $80,000 $60,000 Weighted average common shares outstanding 25,000 12,000 Warrants to acquire sub’s common stock:     Held by unaffiliated investors 2,000 Warrants to acquire.
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11.Company P acquired 80% of the outstanding common stock of the Company S by issuing common stock with a market value of $550,000. The balance sheet of Company S was as follows on the acquisition date: Assets Liabilities and Equity Cash $  50,000 Liabilities $120,000 Inventory 120,000 Common stock, $10 par 100,000 Land 100,000 Other paid-in capital 150,000 Building (net)   350,000 Retained earnings   250,000      Total $620,000      Total $620,000 The.
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MULTIPLE CHOICE 1.A new subsidiary is being formed. The parent company purchased 70% of the shares for $20 per share. The remaining shares were sold to a variety of outside interests for an average of $22 per share. The consolidated statements will show a. a gain. b. a loss. c. only cash and related equity. d. goodwill. 2.A new subsidiary.
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21.Consolidated firms that meet the tax law requirements to be an affiliated group a. must file a consolidated return. b. must receive permission of the Internal Revenue Service to file separately. c. may elect to file as a single entity or as a consolidated group. d. cannot change the method of filing in the future. 22.When an affiliated group.
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2.Tempo Industries is an 80%-owned subsidiary of Dalie Inc. On January 1, 20X8, Dalie leased an asset to Tempo and the following journal entries were made: Tempo Assets Under Capital Lease 21,561      Cash    5,000      Obligations Under Capital Lease 16,561 Dalie Minimum Lease Payments Receivable 20,000 Cash 5,000      Unearned Interest Income    3,439      Asset (cost of asset leased) 18,000      Sales.
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PROBLEM 1.Pilatte Company acquired a 90% interest in the common stock of Sweet Company for $630,000 on January 1, 20X3, when Sweet Company had the following stockholders' equity: Preferred stock (5% cumulative, $100 par) $  80,000 Common stock ($10 par) 350,000 Paid-in capital in excess of par, common stock 75,000 Retained earnings   150,000      Total $655,000 The preferred stock dividends are.
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6.              On January 1, 20X1, Parent Company acquired 100% of the common stock of Subsidiary Company for $750,000. On this date Subsidiary had total owners' equity of $540,000. Any excess of cost over book value is attributable to land, undervalued $10,000, and to goodwill. During 20X1 and 20X2, Parent has appropriately accounted.
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8.On January 1, 20X1, Pepper Company purchased 90% of the common stock of Salt Company for $360,000 when Salt had total shareholders' equity as follows: 8% Preferred Stock, $100 par $100,000 Common Stock, $10 par 50,000 Other Paid-in Capital 120,000 Retained Earnings   180,000      Total $450,000 Any excess of cost over book value on this date is attributed to a.
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8.Plateau Company acquires an 80% interest in Seagull Company for $200,000 cash on January 1, 20X1. On that date, Seagull’s equipment is undervalued by $25,000; any excess of cost over book value is attributed to goodwill. Seagull’s balance sheet on the date of the purchase is as follows: Assets Liabilities and Equity Cash $  .
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3.Company P Industries purchased a 70% interest in Company S on January 1, 20X1, and prepared the following determination and distribution of excess schedule: D&D Schedule Entity Parent NCI Entity FV $   300,000 210,000 90,000 Book value: Pd-In Capt C Stk       200,000 RE      80,000 Book value:    280,000 196,000 84,000 Excess $     20,000    14,000.
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PROBLEM 1.Company S has been an 80%-owned subsidiary of Company P since January 1, 20X7. The determination and distribution of excess schedule prepared at the time of purchase was as follows: Entity 80% Parent 20% NCI Entity FV $ 712,500 $ 570,000 $ 142,500 Book value: Pd-In Capt 300,000 RE 1/1/X1 300,000 Book value 600,000 480,000.
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12.On January 1, 20X1, Parent Company purchased 100% of the common stock of Subsidiary Company for $390,000. On this date, Subsidiary had common stock, other paid in capital, and retained earnings of $50,000, $100,000, and $200,000 respectively. Any excess of cost over book value is due to goodwill.  Parent accounts.
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