Question 1

For an acquisition when the subsidiary maintains its incorporation,under the partial equity method,what adjustments are made to the balance of the investment account?

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Question 2

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?

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Question 3

From which methods can a parent choose for its internal recordkeeping related to the operations of a subsidiary?

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Question 4

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2010. At that date, Glen owns only three assets and has no liabilities:$\begin{array} { | l | r | r | } 
\hline & \text { Book } & \text { Fair } \
\hline & \text { Value } & \text { Value } \
\hline \text { Inventory (FIFO method) } & \$ 40,000 & \$ 50,000 \
\hline \text { Equipment (10-year life) } & 80,000 & 75,000 \
\hline \text { Building (20-year life) } & 200,000 & 300,000 \
\hline
\end{array}$
-If Watkins pays $300,000 in cash for Glen,at what amount would the subsidiary's Building be represented in a January 2,2010 consolidation?

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Question 5

What advantages might push-down accounting offer for internal reporting?

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Question 6

An acquisition transaction results in $90,000 of goodwill.Several years later a worksheet is being produced to consolidate the two companies.Describe in words at what amount goodwill will be reported at this date.

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Question 7

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2010. At that date, Glen owns only three assets and has no liabilities:$\begin{array} { | l | r | r | } 
\hline & \text { Book } & \text { Fair } \
\hline & \text { Value } & \text { Value } \
\hline \text { Inventory (FIFO method) } & \$ 40,000 & \$ 50,000 \
\hline \text { Equipment (10-year life) } & 80,000 & 75,000 \
\hline \text { Building (20-year life) } & 200,000 & 300,000 \
\hline
\end{array}$
-If Watkins pays $400,000 in cash for Glen,what amount would be represented as the subsidiary's Building in a consolidation at December 31,2012,assuming the book value of the building at that date is still $200,000?

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Question 8

For an acquisition when the subsidiary retains its incorporation,which method of internal recordkeeping is the easiest for the parent to use?

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Question 9

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?

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Question 10

What is the basic objective of all consolidations?

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Question 11

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?

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Question 12

Dutch Co.has loaned $90,000 to its subsidiary,Hans Corp. ,which retains separate incorporation.How would this loan be treated on a consolidated balance sheet?

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Question 13

What accounting method requires a subsidiary to record acquisition fair value allocations and the amortization of allocations in its internal accounting records?

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Question 14

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2010. At that date, Glen owns only three assets and has no liabilities:$\begin{array} { | l | r | r | } 
\hline & \text { Book } & \text { Fair } \
\hline & \text { Value } & \text { Value } \
\hline \text { Inventory (FIFO method) } & \$ 40,000 & \$ 50,000 \
\hline \text { Equipment (10-year life) } & 80,000 & 75,000 \
\hline \text { Building (20-year life) } & 200,000 & 300,000 \
\hline
\end{array}$
-If Watkins pays $450,000 in cash for Glen,what amount would be represented as the subsidiary's Equipment in a consolidation at December 31,2012,assuming the book value of the equipment at that date is still $80,000?

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Question 15

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2010. At that date, Glen owns only three assets and has no liabilities:$\begin{array} { | l | r | r | } 
\hline & \text { Book } & \text { Fair } \
\hline & \text { Value } & \text { Value } \
\hline \text { Inventory (FIFO method) } & \$ 40,000 & \$ 50,000 \
\hline \text { Equipment (10-year life) } & 80,000 & 75,000 \
\hline \text { Building (20-year life) } & 200,000 & 300,000 \
\hline
\end{array}$
-If Watkins pays $450,000 in cash for Glen,at what amount would Glen's Inventory acquired be represented in a December 31,2010 consolidated balance sheet?

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Question 16

Yules Co.acquired Noel Co.in an acquisition transaction.Yules decided to use the partial equity method to account for the investment.The current balance in the investment account is $416,000.Describe in words how this balance was derived.

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Question 17

Paperless Co.acquired Sheetless Co.and in effecting this business combination,there was a cash-flow performance contingency to be paid in cash,and a market-price performance contingency to be paid in additional shares of stock.In what accounts and in what section(s)of a consolidated balance sheet are these contingent consideration items shown?

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Question 18

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2010. At that date, Glen owns only three assets and has no liabilities:$\begin{array} { | l | r | r | } 
\hline & \text { Book } & \text { Fair } \
\hline & \text { Value } & \text { Value } \
\hline \text { Inventory (FIFO method) } & \$ 40,000 & \$ 50,000 \
\hline \text { Equipment (10-year life) } & 80,000 & 75,000 \
\hline \text { Building (20-year life) } & 200,000 & 300,000 \
\hline
\end{array}$
-If Watkins pays $450,000 in cash for Glen,and Glen earns $50,000 in net income and pays $20,000 in dividends during 2010,what amount would be reflected in consolidated net income for 2010 as a result of the acquisition?

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The answer of  Watkins, Inc. acquires all of the...

Question 19

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2010. At that date, Glen owns only three assets and has no liabilities:$\begin{array} { | l | r | r | } 
\hline & \text { Book } & \text { Fair } \
\hline & \text { Value } & \text { Value } \
\hline \text { Inventory (FIFO method) } & \$ 40,000 & \$ 50,000 \
\hline \text { Equipment (10-year life) } & 80,000 & 75,000 \
\hline \text { Building (20-year life) } & 200,000 & 300,000 \
\hline
\end{array}$
-If Watkins pays $450,000 in cash for Glen,what acquisition-date fair value allocation,net of amortization,should be attributed to the subsidiary's Equipment in consolidation at December 31,2012?

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The answer of  Watkins, Inc. acquires all of the...

Question 20

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2010. At that date, Glen owns only three assets and has no liabilities:$\begin{array} { | l | r | r | } 
\hline & \text { Book } & \text { Fair } \
\hline & \text { Value } & \text { Value } \
\hline \text { Inventory (FIFO method) } & \$ 40,000 & \$ 50,000 \
\hline \text { Equipment (10-year life) } & 80,000 & 75,000 \
\hline \text { Building (20-year life) } & 200,000 & 300,000 \
\hline
\end{array}$
-If Watkins pays $450,000 in cash for Glen,what amount would be represented as the subsidiary's Building in a consolidation at December 31,2012,assuming the book value of the building at that date is still $200,000?

Accepted Answer

The answer of  Watkins, Inc. acquires all of the...

Quiz 3: Consolidations-Subsequent to the Date of Acquisition

For an acquisition when the subsidiary maintains its incorporation,under the partial equity method,what adjustments are made to the balance of the investment account?

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?

From which methods can a parent choose for its internal recordkeeping related to the operations of a subsidiary?

What advantages might push-down accounting offer for internal reporting?

An acquisition transaction results in $90,000 of goodwill.Several years later a worksheet is being produced to consolidate the two companies.Describe in words at what amount goodwill will be reported at this date.

For an acquisition when the subsidiary retains its incorporation,which method of internal recordkeeping is the easiest for the parent to use?

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?

What is the basic objective of all consolidations?

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?

Dutch Co.has loaned $90,000 to its subsidiary,Hans Corp. ,which retains separate incorporation.How would this loan be treated on a consolidated balance sheet?

What accounting method requires a subsidiary to record acquisition fair value allocations and the amortization of allocations in its internal accounting records?

Yules Co.acquired Noel Co.in an acquisition transaction.Yules decided to use the partial equity method to account for the investment.The current balance in the investment account is $416,000.Describe in words how this balance was derived.