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107.Thomas Inc. had the following stockholders' equity accounts as of January 1, 2011:Kuried Co. acquired all of the voting common stock of Thomas on January 1, 2011, for $20,656,000. The preferred stock remained in the hands of outside parties and had a fair value of $3,060,000. A database valued at.
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71.Delta Corporation owns 90 percent of Sigma Company, and Sigma owns 90 percent of Pi, Inc., all of which are domestic corporations. Information for the three companies for the year ending December 31, 2011 follows:What is Sigma's accrual-based income for 2011? A.$400,000. B.$592,000. C.$540,000. D.$572,800. E.$600,000. 72.Delta Corporation owns 90 percent of Sigma Company, and Sigma.
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41.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.
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31.A subsidiary issues new shares of common stock. If the parent acquires all of these shares at an amount greater than book value, which of the following statements is true? A.The investment in subsidiary will decrease. B.Additional paid-in capital will decrease. C.Retained earnings will increase. D.The investment in subsidiary will increase. E.No adjustment will be.
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Essay Questions 88.What configuration of corporate ownership is described as a father-son-grandson relationship? 89.What ownership structure is referred to as a connecting affiliation? Describe briefly or illustrate with a diagram. 90.What ownership pattern is referred to as mutual ownership? Describe briefly or illustrate with a diagram. 91.What are the essential criteria for including.
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11.Rojas Co. owned 7,000 shares (70%) of the outstanding 10%, $100 par preferred stock and 60% of the outstanding common stock of Brett Co. When Brett reported net income of $780,000, what was the non-controlling interest in the subsidiary's income? A.$234,000. B.$273,000. C.$302,000. D.$312,000. E.$284,000. 12.Knight Co. owned 80% of the common stock of Stoop Co..
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Multiple Choice Questions 1.On January 1, 2011, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620, and Riley paid $401,937 for them. How should you account for the difference between the carrying value and the purchase price in.
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21.These questions are based on the following information and should be viewed as independent situations.Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 2009, when Cocker had the following stockholders' equity accounts.To acquire this interest in Cocker, Popper paid a total of $682,000 with any.
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Multiple Choice Questions 1.Buckette Co. owned 60% of Shuvelle Corp. and 40% of Tayle Corp., and Shuvelle owned 35% of Tayle.When Buckette prepared consolidated financial statements, it should include A.Shuvelle but not Tayle. B.Tayle but not Shuvelle. C.either Shuvelle or Tayle. D.Shuvelle and Tayle. E.neither Shuvelle nor Tayle. 2.Buckette Co. owned 60% of Shuvelle Corp. and.
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111.Panton, Inc. acquired 18,000 shares of Glotfelty Corp. several years ago. At the present time, Glotfelty is reporting the following stockholders' equity:Glotfelty issues 5,000 shares of previously unissued stock to the public for $40 per share. None of this stock is purchased by Panton.Describe how this transaction would affect Panton's.
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103.How do upstream and downstream inventory transfers differ in their effect in a year-end consolidation? 104.How is the gain on an intra-entity transfer of a depreciable asset realized? 105.Dithers Inc. acquired all of the common stock of Bumstead Corp. on January 1, 2011. During 2011, Bumstead sold land to Dithers at a.
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Essay Questions 97.For each of the following situations (1 - 10), select the correct entry (A - E) that would be required on a consolidation worksheet.(A.) Debit retained earnings.(B.) Credit retained earnings.(C.) Debit investment in subsidiary.(D.) Credit investment in subsidiary.(E.) None of the above.___ 1. Upstream beginning inventory profit, using the.
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103.Skipen Corp. had the following stockholders' equity accounts:The preferred stock was participating and is therefore considered to be equity. Vestin Corp. acquired 90% of this common stock for $2,250,000 and 70% of the preferred stock for $1,120,000. All of the subsidiary's assets and liabilities were determined to have fair values.
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108.What is meant by unrealized inventory gains, and how are they treated on a consolidation worksheet? 109.What is the impact on the non-controlling interest of a subsidiary when there are downstream transfers of inventory between the parent and subsidiary companies? 110.When is the gain on an intra-entity transfer of land realized? 111.What is.
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61.How is goodwill amortized? A.It is not amortized for reporting purposes or for tax purposes. B.It is not amortized for reporting purposes, but is amortized over a 5-year life for tax purposes. C.It is not amortized for tax purposes, but is amortized over a 5-year life for reporting purposes. D.It is not amortized for.
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51.Under current U.S. tax law for consolidated tax returns: A.One entity in the group can use another entity's net operating loss carry-forward to its advantage. B.The parent can use the net operating loss carry-forward of another entity in the group. C.A net operating loss carry-forward if an entity will be unusable when consolidated.
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113.On January 1, 2009, Vacker Co. acquired 70% of Carper Inc. by paying $650,000. This included a $20,000 control premium. Carper reported common stock on that date of $420,000 with retained earnings of $252,000. A building was undervalued in the company's financial records by $28,000. This building had a ten-year.
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Essay Questions 85.Parent Corporation loaned money to its subsidiary with a five-year note at the market interest rate. How would the note be accounted for in the consolidation process? 86.What documents or other sources of information would be used to prepare a consolidated statement of cash flows? 87.Parent Corporation acquired some of.
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90.Danbers Co. owned seventy-five percent of the common stock of Renz Corp. How does the issuance of a five percent stock dividend by Renz affect Danbers and the consolidation process? 91.During 2011, Parent Corporation purchased at book value some of the outstanding bonds of its subsidiary. How would this acquisition have.
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41.On January 1, 2010, Jones Company bought 15% of Whitton Company. Jones paid $150,000 for these shares, an amount that exactly equaled the proportionate book value of Whitton. On January 1, 2011, Whitton acquired 80% ownership of Jones. The following data are available concerning Whitton's acquisition of Jones:Excess fair value.
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108.On January 1, 2010, Glenville Co. acquired an 80% interest in Acron Corp. for $500,000. There is no active trading market for Acron's stock. The fair value of Acron's net assets was $600,000 and Glenville accounts for its interest using the acquisition method.Determine the amount of goodwill to be recognized.
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61.Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2010.Assume the equity method is used. The following data are available pertaining to Gargiulo's income.
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51.Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2010.Assume the equity method is used. The following data are available pertaining to Gargiulo's income.
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41.When comparing the difference between an upstream and downstream transfer of inventory, and using the initial value method, which of the following statements is true when there is a non-controlling interest? A.Income from subsidiary will be lower by the amount of the ending inventory profit multiplied by the non-controlling interest percentage.
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21.Beagle Co. owned 80% of Maroon Corp. Maroon owned 90% of Eckston Inc. Operating income totals for 2011 are shown below; these figures contained no investment income. Amortization expense was not required by any of these acquisitions. Included in Eckston's operating income was a $56,000 unrealized gain on intra-entity transfers.
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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? A.The power to direct the most significant economic performance activities. B.The power through voting or similar rights to direct activities which significantly impact economic performance. C.The obligation.
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116.Strayten Corp. is a wholly owned subsidiary of Quint Inc. Quint decided to use the initial value method to account for this investment. During 2011, Strayten sold Quint goods which had cost $48,000. The selling price was $64,000. Quint still had one-eighth of the goods purchased from Strayten on hand.
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31.Which of the following statements is true regarding the filing of income taxes for an affiliated group? A.Domestic subsidiaries greater than 50% ownership must file a consolidated tax return. B.Domestic subsidiaries greater than 60% ownership must file a consolidated tax return. C.Domestic subsidiaries greater than 80% ownership must file a consolidated tax return. D.Domestic.
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95.Parent Corporation had just purchased some of its subsidiary's outstanding bonds on the open market. What items related to these bonds will have to be accounted for in the consolidation process? 96.Parent Corporation recently acquired some of its subsidiary's outstanding bonds, at an amount which required the recognition of a loss..
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71.Anderson, Inc. has owned 70% of its subsidiary, Arthur Corp., for several years. The consolidated balance sheets of Anderson, Inc. and Arthur Corp. are presented below:Additional information for 2011:Net cash flow from operating activities was: A.$43,000. B.$44,800. C.$46,200. D.$50,000. E.$25,000. 72.Anderson, Inc. has owned 70% of its subsidiary, Arthur Corp., for several years. The consolidated balance.
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91.Pepe, Incorporated acquired 60% of Devin Company on January 1, 2010. On that date Devin sold equipment to Pepe for $45,000. The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 and $325,000 for 2010.
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31.Strickland Company sells inventory to its parent, Carter Company, at a profit during 2010. One-third of the inventory is sold by Carter in 2010.In the consolidation worksheet for 2010, which of the following choices would be a debit entry to eliminate unrealized intra-entity gross profit with regard to the 2010.
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Multiple Choice Questions 1.On November 8, 2011, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized? A.Proportionately over a designated period of.
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81.Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2010, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2010 and 2011, respectively. Leo uses the equity method to account for its investment.Compute income from.
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93.What term is used to describe a parent and subsidiaries that are eligible to file a consolidated income tax return? 94.What method is used in consolidation to account for a subsidiary's ownership of shares of its parent corporation? 95.What are the benefits or advantages of filing a consolidated income tax return? 96.How is.
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