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Study Resources (Accounting)

21.Prior to being united in a business combination, Botkins Inc. and Volkerson Corp. had the following stockholders' equity figures: Botkins issued 56,000 new shares of its common stock valued at $3.25 per share for all of the outstanding stock of Volkerson. Assume that Botkins acquired Volkerson on January 1, 2010. At what.
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Multiple Choice Questions 1.For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except: A.identifiable assets acquired, at fair value. B.liabilities assumed, at book value. C.non-controlling interest, at fair value. D.goodwill or a gain from bargain purchase. E.none of these choices is correct. 2.When Jolt.
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81.Prince Company acquires Duchess, Inc. on January 1, 2009. The consideration transferred exceeds the fair value of Duchess' net assets. On that date, Prince has a building with a book value of $1,200,000 and a fair value of $1,500,000. Duchess has a building with a book value of $400,000 and.
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61.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2010. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair.
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31.When a parent uses the partial equity method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet? A.Parent company net income will equal controlling interest in consolidated net income when initial value, book value,.
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11.On January 1, 2010, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale used the equity method to account for the investment. The following information is available for Kaltop's assets, liabilities, and stockholders' equity accounts:Kaltop earned net income for 2010 of $126,000 and paid dividends of.
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114.The financial statements for Jode Inc. and Lakely Corp., just prior to their combination, for the year ending December 31, 2010, follow. Lakely's buildings were undervalued on its financial records by $60,000.On December 31, 2010, Jode issued 54,000 new shares of its $10 par value stock in exchange for all.
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71.Presented below are the financial balances for the Atwood Company and the Franz Company as of December 31, 2010, immediately before Atwood acquired Franz. Also included are the fair values for Franz Company's net assets at that date. Note: Parenthesis indicate a credit balance Assume a business combination took place at December.
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61.Following are selected accounts for Green Corporation and Vega Company as of December 31, 2013. Several of Green's accounts have been omitted.Green acquired 100% of Vega on January 1, 2009, by issuing 10,500 shares of its $10 par value common stock with a fair value of $95 per share. On.
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117.Pursley, Inc. acquires 10% of Ritz Corporation on January 3, 2010, for $80,000 when the book value of Ritz was $800,000. During 2010 Ritz reported net income of $125,000 and paid dividends of $30,000. On January 1, 2011, Pursley purchased an additional 20% of Ritz for $325,000, giving Pursley the.
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104.How are bargain purchases accounted for in an acquisition business transaction? 105.Describe the accounting for direct costs, indirect costs, and issuance costs under the acquisition method of accounting for a business combination. 106.What is the difference in consolidated results between a business combination whereby the acquired company is dissolved, and a business.
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96.What is the partial equity method? How does it differ from the equity method? What are its advantages and disadvantages compared to the equity method? 97.What advantages might push-down accounting offer for internal reporting? 98.What is the basic objective of all consolidations? 99.Yules Co. acquired Noel Co. in an acquisition transaction. Yules decided.
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31.When a company applies the partial equity method in accounting for its investment in a subsidiary and initial value, book values, and fair values of net assets acquired are all equal, what consolidation worksheet entry would be made? A.A above B.B above C.C above D.D above E.E above 32.When consolidating a subsidiary under the equity method,.
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101.Avery Company acquires Billings Company in a combination accounted for as an acquisition and adopts the equity method to account for Investment in Billings. At the end of four years, the Investment in Billings account on Avery's books is $198,984. What items constitute this balance?102.Dutch Co. has loaned $90,000 to.
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123.For each of the following situations, select the best answer that applies to consolidating financial information subsequent to the acquisition date:(A) Initial value method.(B) Partial equity method.(C) Equity method.(D) Initial value method and partial equity method but not equity method.(E) Partial equity method and equity method but not initial value.
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111.Salem Co. had the following account balances as of December 1, 2010:Bellington Inc. transferred $1.7 million in cash and 12,000 shares of its newly issued $30 par value common stock (valued at $90 per share) to acquire all of Salem's outstanding common stock.Assume that Bellington paid cash of $2.8 million..
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Multiple Choice Questions 1.Which one of the following accounts would not appear in the consolidated financial statements at the end of the first fiscal period of the combination? A.Goodwill. B.Equipment. C.Investment in Subsidiary. D.Common Stock. E.Additional Paid-In Capital. 2.Which of the following internal record-keeping methods can a parent choose to account for a subsidiary acquired in a.
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Short Answer Questions 107.Bale Co. acquired Silo Inc. on December 31, 20X1, in an acquisition business combination transaction. Bale's net income for the year was $1,400,000, while Silo had net income of $400,000 earned evenly during the year. Bale paid $100,000 in direct combination costs, $50,000 in indirect costs, and $30,000.
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Essay Questions 93.What term is used to refer to a business combination in which only one of the original companies continues to exist? 94.How are stock issuance costs accounted for in an acquisition business combination? 95.What is the primary difference between recording an acquisition when the subsidiary is dissolved and when separate incorporation.
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11.Which one of the following is a characteristic of a business combination accounted for as an acquisition? A. The combination must involve the exchange of equity securities only. B. The transaction establishes an acquisition fair value basis for the company being acquired. C. The two companies may be about the same size,.
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101.Goodwill is often acquired as part of a business combination. Why, when separate incorporation is maintained, does Goodwill not appear on the Parent company's trial balance as a separate account? 102.How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition transaction? 103.How is contingent consideration accounted.
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Essay Questions 91.For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping is the easiest for the parent to use? 92.For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping gives the most accurate portrayal of the accounting results for the entire business combination? 93.For.
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97.Peterman Co. owns 55% of Samson Co. Under what circumstances would Petermannot be required to prepare consolidated financial statements? 98.How would you account for in-process research and development acquired in a business combination accounted for as an acquisition? 100.For acquisition accounting, why are assets and liabilities of the subsidiary consolidated at fair.
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81.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2010. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair.
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61.The financial balances for the Atwood Company and the Franz Company as of December 31, 20X1, are presented below. Also included are the fair values for Franz Company's net assets. Note: Parenthesis indicate a credit balance Assume an acquisition business combination took place at December 31, 20X1. Atwood issued 50 shares of.
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117.The following are preliminary financial statements for Black Co. and Blue Co. for the year ending December 31, 20X1 prior to Black's acquisition of Blue.On December 31, 20X1 (subsequent to the preceding statements), Black exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares.
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41.Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance;Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life. FIFO inventory valuation method is.
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Short Answer Questions105.On January 1, 2010, Jumper Co. acquired all of the common stock of Cable Corp. for $540,000. Annual amortization associated with the purchase amounted to $1,800. During 2010, Cable earned net income of $54,000 and paid dividends of $24,000. Cable's net income and dividends for 2011 were $86,000.
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41.McGuire Company acquired 90 percent of Hogan Company on January 1, 2010, for $234,000 cash. This amount is reflective of Hogan's total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:Any excess consideration transferred.
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Short Answer Questions102.Alonzo Co. acquired 60% of Beazley Corp. by paying $240,000 cash. There is no active trading market for Beazley Corp. At the time of the acquisition, the book value of Beazley's net assets was $300,000.Required:What amount should have been assigned to the non-controlling interest immediately after the combination? 103.Tosco.
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Multiple Choice Questions 1.At the date of an acquisition which is not a bargain purchase, the acquisition method A. consolidates the subsidiary's assets at fair value and the liabilities at book value. B. consolidates all subsidiary assets and liabilities at book value. C. consolidates all subsidiary assets and liabilities at fair value. D. consolidates.
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120.Steven Company owns 40% of the outstanding voting common stock of Nicole Corp. and has the ability to significantly influence the investee's operations. On January 3, 2011, the balance in the Investment in NicoleCorp. account was $503,000. Amortization associated with this acquisition is $12,000 per year. During 2011, Nicole earned.
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31.The financial statements for Goodwin, Inc., and Corr Company for the year ended December 31, 20X1, prior to Goodwin's acquisition business combination transaction regarding Corr, follow (in thousands): On December 31, 20X1, Goodwin issued $600 in debt and 30 shares of its $10 par value common stock to the owners of.
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118.For each of the following situations, select the best letter answer to reflect the effect of the numbered item on the acquirer's accounting entry at the date of combination when separate incorporation will be maintained. Items (4) and (6) require two selections.(A) Increase Investment account.(B) Decrease Investment account.(C) Increase Liabilities.(D).
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41.The financial statements for Goodwin, Inc., and Corr Company for the year ended December 31, 20X1, prior to Goodwin's acquisition business combination transaction regarding Corr, follow (in thousands): On December 31, 20X1, Goodwin issued $600 in debt and 30 shares of its $10 par value common stock to the owners of.
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98.How is a non-controlling interest in the net income of an entity reported in the income statement? 99.One company buys a controlling interest in another company on April 1. How should the preacquisition subsidiary revenues and expenses be handled in the consolidated balances for the year of acquisition? 100.Prevatt, Inc. owns 80%.
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51.McGuire Company acquired 90 percent of Hogan Company on January 1, 2010, for $234,000 cash. This amount is reflective of Hogan's total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:Any excess consideration transferred.
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109.Fesler Inc. acquired all of the outstanding common stock of Pickett Company on January 1, 2010. Annual amortization of $22,000 resulted from this transaction. On the date of the acquisition, Fesler reported retained earnings of $520,000 while Pickett reported a $240,000 balance for retained earnings. Fesler reported net income of.
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71.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2010. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair.
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Essay Questions93.Where should a non-controlling interest appear on a consolidated balance sheet?94.What is preacquisition income? 95.Beta Corp. owns less than one hundred percent of the voting common stock of Shedds Co. Under what conditions will Beta be required to prepare consolidated financial statements? 96.Where may a non-controlling interest be presented in a.
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