Deck 5: Consolidation of Less-Than-Wholly Owned Subsidiaries

Question 1

On January 1,2009,Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.

Based on the preceding information,what amount of total assets will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$720,000
B)$840,000
C)$825,000
D)$865,000

Answer 1

A

Question 2

On January 1,2009,Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.

Based on the preceding information,what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$130,000
B)$135,000
C)$90,000
D)$45,000

Answer 2

B

Question 3

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders.
Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$120,000
C)$65,000
D)$20,000

Answer 3

C

Question 4

On January 1,2008,Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date.Wilhelm uses the equity method in accounting for its ownership of Kaiser.On December 31,2009,the trial balances of the two companies are as follows:

Based on the preceding information,what amount would be reported as total liabilities in the consolidated balance sheet at December 31,2009?

A)$330,000
B)$712,000
C)$318,000
D)$130,000

Question 5

On January 1,2008,Climber Corporation acquired 90 percent of Wisden Corporation for $180,000 cash.Wisden reported net income of $30,000 and dividends of $10,000 for 2008,2009,and 2010.On January 1,2008,Wisden reported common stock outstanding of $100,000 and retained earnings of $60,000,and the fair value of the noncontrolling interest was $20,000.It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of five years.All depreciable assets held by Wisden at the date of acquisition had a remaining economic life of five years.Climber uses the equity method in accounting for its investment in Wisden.
Based on the preceding information,what balance would Climber report as its investment in Wisden at January 1,2011?

A)$251,100
B)$224,100
C)$215,100
D)$234,000

Question 6

On January 1,2008,Climber Corporation acquired 90 percent of Wisden Corporation for $180,000 cash.Wisden reported net income of $30,000 and dividends of $10,000 for 2008,2009,and 2010.On January 1,2008,Wisden reported common stock outstanding of $100,000 and retained earnings of $60,000,and the fair value of the noncontrolling interest was $20,000.It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of five years.All depreciable assets held by Wisden at the date of acquisition had a remaining economic life of five years.Climber uses the equity method in accounting for its investment in Wisden.
Based on the preceding information,the increase in the fair value of patents held by Wisden is:

A)$20,000
B)$25,000
C)$15,000
D)$5,000

Question 7

On January 1,2009,Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.

Based on the preceding information,what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?

A)$445,000
B)$205,000
C)$565,000
D)$550,000

Question 8

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders.
Based on the preceding information,what amount will be reported as investment in Silver Corporation stock in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$210,000
C)$300,000
D)$400,000

Question 9

On January 1,2009,Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.

Based on the preceding information,what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$395,000
B)$280,000
C)$265,000
D)$195,000

Question 10

On January 1,2008,Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date.Wilhelm uses the equity method in accounting for its ownership of Kaiser.On December 31,2009,the trial balances of the two companies are as follows:

Based on the preceding information,what amount would be reported as total assets in the consolidated balance sheet at December 31,2009?

A)$805,000
B)$712,000
C)$742,000
D)$1,102,000

Question 11

On January 1,2009,Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.

Based on the preceding information,what amount of consolidated retained earnings will be reported?

A)$205,000
B)$120,000
C)$325,000
D)$310,000

Question 12

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders.
Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$70,000
C)$83,750
D)$100,000

Question 13

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders.
Based on the preceding information,what amount of buildings and equipment (net)will be included in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$50,000
C)$250,000
D)$300,000

Question 14

On January 1,2008,Climber Corporation acquired 90 percent of Wisden Corporation for $180,000 cash.Wisden reported net income of $30,000 and dividends of $10,000 for 2008,2009,and 2010.On January 1,2008,Wisden reported common stock outstanding of $100,000 and retained earnings of $60,000,and the fair value of the noncontrolling interest was $20,000.It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination.The remainder of the differential at acquisition was attributable to an increase in the value of patents,which had a remaining useful life of five years.All depreciable assets held by Wisden at the date of acquisition had a remaining economic life of five years.Climber uses the equity method in accounting for its investment in Wisden.
Based on the preceding information,what balance would Climber report as its investment in Wisden at January 1,2010?

A)$230,400
B)$180,000
C)$234,000
D)$203,400

Question 15

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders.
Based on the preceding information,what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$65,000
C)$70,000
D)$60,000

Question 16

On January 1,2008,Ramon Corporation acquired 75 percent of Tester Company's voting common stock for $300,000.At the time of the combination,Tester reported common stock outstanding of $200,000 and retained earnings of $150,000,and the fair value of the noncontrolling interest was $100,000.The book value of Tester's net assets approximated market value except for patents that had a market value of $50,000 more than their book value.The patents had a remaining economic life of ten years at the date of the business combination.Tester reported net income of $40,000 and paid dividends of $10,000 during 2008.
Based on the preceding information,what balance will Ramon report as its investment in Tester at December 31,2008,assuming Ramon uses the equity method in accounting for its investment?

A)$318,750
B)$317,500
C)$330,000
D)$326,250

Question 17

On January 1,2009,Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.

Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?

A)$0
B)$40,000
C)$20,000
D)$15,000

Question 18

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 2008, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders.
Based on the preceding information,what amount of land will be included in the consolidated balance sheet immediately following the acquisition?

A)$0
B)$10,000
C)$90,000
D)$100,000

Question 19

On January 1,2009,Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.

Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination?

A)$0
B)$15,000
C)$40,000
D)$46,000

Question 20

On January 1,2008,Ramon Corporation acquired 75 percent of Tester Company's voting common stock for $300,000.At the time of the combination,Tester reported common stock outstanding of $200,000 and retained earnings of $150,000,and the fair value of the noncontrolling interest was $100,000.The book value of Tester's net assets approximated market value except for patents that had a market value of $50,000 more than their book value.The patents had a remaining economic life of ten years at the date of the business combination.Tester reported net income of $40,000 and paid dividends of $10,000 during 2008.
Based on the preceding information,all of the following are eliminating entries needed to prepare a full set of consolidated financial statements at December 31,2008,except:

A)Choice A
B)Choice B
C)Choice C
D)Choice D

Question 21

On January 1,2008,Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash.At that date,Animation reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Animation's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Animation reported the following data for 2008 and 2009:
Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years.

Based on the preceding information,what is the amount of comprehensive income attributable to the controlling interest for 2008?

A)$123,750
B)$118,750
C)$119,000
D)$104,000

Question 22

On January 1,2008,Colorado Corporation acquired 75 percent of Denver Company's voting common stock for $90,000 cash.At that date,the fair value of the noncontrolling interest was $30,000.Denvers's balance sheet at the date of acquisition contained the following balances:
At the date of acquisition,the reported book values of Denver's assets and liabilities approximated fair value.Eliminating entries are being made to prepare a consolidated balance sheet immediately following the business combination.

Based on the preceding information,the amount of goodwill reported is:

A)$0.
B)$10,000.
C)$15,000.
D)$20,000.

Question 23

On January 1,2008,Colorado Corporation acquired 75 percent of Denver Company's voting common stock for $90,000 cash.At that date,the fair value of the noncontrolling interest was $30,000.Denvers's balance sheet at the date of acquisition contained the following balances:
At the date of acquisition,the reported book values of Denver's assets and liabilities approximated fair value.Eliminating entries are being made to prepare a consolidated balance sheet immediately following the business combination.

Based on the preceding information,in the entry to eliminate the investment balance,

A)retained earnings will be credited for $20,000.
B)additional paid-in-capital will be credited for $20,000.
C)differential will be credited for $10,000.
D)noncontrolling interest will be debited for 30,000.

Question 24

On December 31,2008,X Company acquired controlling ownership of Y Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 2008,X Company provided consulting services to Y Company and has not yet been paid for them.There were no other receivables or payables between the companies at December 31,2008.

Based on the information given,what balance in accounts receivable did Y Company report at December 31,2008?

A)$28,000
B)$48,000
C)$40,000
D)$38,000

Question 25

On January 1,2004,Plimsol Company acquired 100 percent of Shipping Corporation's voting shares,at underlying book value.Plimsol uses the cost method in accounting for its investment in Shipping.Shipping's retained earnings was $75,000 on the date of acquisition.On December 31,2004,the trial balance data for the two companies are as follows:

Based on the information provided,what amount of total liabilities will be reported in the consolidated balance sheet prepared on December 31,2004?

A)$525,000
B)$115,000
C)$125,000
D)$190,000

Question 26

On December 31,2008,Melkor Corporation acquired 80 percent of Sydney Company's common stock for $160,000.At that date,the fair value of the noncontrolling interest was $40,000.Of the $75,000 differential,$10,000 related to the increased value of Sydney's inventory,$20,000 related to the increased value of its land,and $25,000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination.Sydney sold all inventory it held at the end of 2008 during 2009.The land to which the differential related was also sold during 2009 for a large gain.At the date of combination,Sydney reported retained earnings of $75,000 and common stock outstanding of $50,000.In 2009,Sydney reported net income of $60,000,but paid no dividends.Melkor accounts for its investment in Sydney using the equity method.
Based on the preceding information,what is the amount of write-off of differential associated with this acquisition recorded by Melkor during 2009?

A)$0
B)$32,500
C)$26,000
D)$20,000

Question 27

On January 1,2004,Plimsol Company acquired 100 percent of Shipping Corporation's voting shares,at underlying book value.Plimsol uses the cost method in accounting for its investment in Shipping.Shipping's retained earnings was $75,000 on the date of acquisition.On December 31,2004,the trial balance data for the two companies are as follows:

Based on the information provided,what amount of retained earnings will be reported in the consolidated balance sheet prepared on December 31,2004?

A)$235,000
B)$210,000
C)$310,000
D)$225,000

Question 28

On December 31,2008,X Company acquired controlling ownership of Y Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 2008,X Company provided consulting services to Y Company and has not yet been paid for them.There were no other receivables or payables between the companies at December 31,2008.

Based on the information given,what is the amount of unpaid consulting services at December 31,2008,on work done by X Company for Y Company?

A)$0
B)$10,000
C)$5,000
D)$15,000

Question 29

On January 1,2008,Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash.At that date,Animation reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Animation's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Animation reported the following data for 2008 and 2009:
Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years.

Based on the preceding information,what is the amount of consolidated comprehensive income reported for 2008?

A)$125,000
B)$123,750
C)$118,750
D)$130,000

Question 30

On January 1,2008,Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash.At that date,Animation reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Animation's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Animation reported the following data for 2008 and 2009:
Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years.

Based on the preceding information,what is the amount of comprehensive income attributable to the controlling interest for 2009?

A)$138,750
B)$131,000
C)$128,750
D)$135,000

Question 31

On January 1,2008,Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash.At that date,Animation reported common stock outstanding of $200,000 and retained earnings of $100,000,and the fair value of the noncontrolling interest was $70,000.The book values and fair values of Animation's assets and liabilities were equal,except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life.Animation reported the following data for 2008 and 2009:
Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years.

Based on the preceding information,what is the amount of consolidated comprehensive income reported for 2009?

A)$145,000
B)$135,000
C)$138,750
D)$128,750

Question 32

On January 1,2008,Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date.Wilhelm uses the equity method in accounting for its ownership of Kaiser.On December 31,2009,the trial balances of the two companies are as follows:

Based on the preceding information,what amount would be reported as total stockholder's equity in the consolidated balance sheet at December 31,2009?

A)$412,000
B)$394,000
C)$542,000
D)$348,000

Question 33

On January 1,2008,Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date.Wilhelm uses the equity method in accounting for its ownership of Kaiser.On December 31,2009,the trial balances of the two companies are as follows:

Based on the preceding information,what amount would be reported as income to controlling interest in the consolidated financial statements for 2009?

A)$168,000
B)$138,000
C)$164,000
D)$150,000

Question 34

On January 1,2004,Plimsol Company acquired 100 percent of Shipping Corporation's voting shares,at underlying book value.Plimsol uses the cost method in accounting for its investment in Shipping.Shipping's retained earnings was $75,000 on the date of acquisition.On December 31,2004,the trial balance data for the two companies are as follows:

Based on the information provided,what amount of net income will be reported in the consolidated financial statements prepared on December 31,2004?

A)$100,000
B)$85,000
C)$110,000
D)$125,000

Question 35

On January 1,2008,Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date.Wilhelm uses the equity method in accounting for its ownership of Kaiser.On December 31,2009,the trial balances of the two companies are as follows:

Based on the preceding information,what amount would be reported as noncontrolling interest in the consolidated balance sheet at December 31,2009?

A)$27,000
B)$4,000
C)$15,000
D)$18,000

Question 36

On January 1,2008,Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date.Wilhelm uses the equity method in accounting for its ownership of Kaiser.On December 31,2009,the trial balances of the two companies are as follows:

Based on the preceding information,what amount would be reported as retained earnings in the consolidated balance sheet prepared at December 31,2009?

A)314,000
B)294,000
C)150,000
D)424,000

Question 37

On December 31,2008,Melkor Corporation acquired 80 percent of Sydney Company's common stock for $160,000.At that date,the fair value of the noncontrolling interest was $40,000.Of the $75,000 differential,$10,000 related to the increased value of Sydney's inventory,$20,000 related to the increased value of its land,and $25,000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination.Sydney sold all inventory it held at the end of 2008 during 2009.The land to which the differential related was also sold during 2009 for a large gain.At the date of combination,Sydney reported retained earnings of $75,000 and common stock outstanding of $50,000.In 2009,Sydney reported net income of $60,000,but paid no dividends.Melkor accounts for its investment in Sydney using the equity method.
Based on the preceding information,the amount of goodwill reported in the consolidated financial statements prepared immediately after the combination is:

A)$0
B)$32,500
C)$26,000
D)$20,000

Question 38

On December 31,2008,Melkor Corporation acquired 80 percent of Sydney Company's common stock for $160,000.At that date,the fair value of the noncontrolling interest was $40,000.Of the $75,000 differential,$10,000 related to the increased value of Sydney's inventory,$20,000 related to the increased value of its land,and $25,000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination.Sydney sold all inventory it held at the end of 2008 during 2009.The land to which the differential related was also sold during 2009 for a large gain.At the date of combination,Sydney reported retained earnings of $75,000 and common stock outstanding of $50,000.In 2009,Sydney reported net income of $60,000,but paid no dividends.Melkor accounts for its investment in Sydney using the equity method.
Based on the preceding information,what is the elimination entry made to assign income to noncontrolling interest in the workpaper to prepare a full set of consolidated financial statements for the year 2009?

A)Option A
B)Option B
C)Option C
D)Option D

Question 39

On January 1,2004,Plimsol Company acquired 100 percent of Shipping Corporation's voting shares,at underlying book value.Plimsol uses the cost method in accounting for its investment in Shipping.Shipping's retained earnings was $75,000 on the date of acquisition.On December 31,2004,the trial balance data for the two companies are as follows:

Based on the information provided,what amount of total stockholder's equity will be reported in the consolidated balance sheet prepared on December 31,2004?

A)$190,000
B)$335,000
C)$460,000
D)$310,000

Question 40

On January 1,2004,Plimsol Company acquired 100 percent of Shipping Corporation's voting shares,at underlying book value.Plimsol uses the cost method in accounting for its investment in Shipping.Shipping's retained earnings was $75,000 on the date of acquisition.On December 31,2004,the trial balance data for the two companies are as follows:

Based on the information provided,what amount of total assets will be reported in the consolidated balance sheet prepared on December 31,2004?

A)$425,000
B)$525,000
C)$650,000
D)$630,000

Question 41

On January 1,2008,Gregory Corporation acquired 90 percent of Nova Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Nova at that date.Gregory uses the equity method in accounting for its ownership of Nova.On December 31,2008,the trial balances of the two companies are as follows:
Required:
1)Provide all eliminating entries required as of December 31,2008,to prepare consolidated financial statements.
2)Prepare a three-part consolidation workpaper.
3)Prepare a consolidated balance sheet,income statement,and retained earnings statement for 2008.

Question 42

On December 31,2008,Defoe Corporation acquired 80 percent of Crusoe Company's common stock for $104,000 cash.The fair value of the noncontrolling interest at that date was determined to be $26,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
On that date,the book values of Crusoe's assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and buildings and equipment,which had a fair value of $100,000.At December 31,2008,Defoe reported accounts payable of $15,000 to Crusoe,which reported an equal amount in its accounts receivable.
Required:
1)Provide the eliminating entries needed to prepare a consolidated balance sheet immediately following the business combination.
2)Prepare a consolidated balance sheet workpaper.
3)Prepare a consolidated balance sheet in good form.

Question 43

Magellan Corporation acquired 80 percent ownership of Dipper Corporation on January 1,2008,for $200,000.At that date,Dipper reported common stock outstanding of $75,000 and retained earnings of $150,000.The fair value of the noncontrolling interest was $50,000.The differential is assigned to equipment,which had a fair value $25,000 greater than book value and a remaining economic life of five years at the date of the business combination.Canton reported net income of $40,000 and paid dividends of $20,000 in 2008.
Required:
1)Provide the journal entries recorded by Magellan during 2008 on its books if it accounts for its investment in Dipper using the equity method.
2)Give the eliminating entries needed at December 31,2008,to prepare consolidated financial statements.

Question 44

On January 1,2008,Vector Company acquired 80 percent of Scalar Company's ownership on for $120,000 cash.At that date,the fair value of the noncontrolling interest was $30,000.The book value of Scalar's net assets at acquisition was $125,000.The book values and fair values of Scalar's assets and liabilities were equal,except for buildings and equipment,which were worth $15,000 more than book value.Buildings and equipment are depreciated on a 10-year basis.Although goodwill is not amortized,the management of Vector concluded at December 31,2008,that goodwill from its acquisition of Scalar shares had been impaired and the correct carrying amount was $5,000.Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders.(Note that Vector Company does not adjust its Income from Subsidiary for goodwill impairment under the basic equity method. )No additional impairment occurred in 2009.
Trial balance data for Vector and Scalar on December 31,2009,are as follows:
Required:
1)Provide all eliminating entries needed to prepare a three-part consolidation workpaper as of December 31,2009.
2)Prepare a three-part consolidation workpaper for 2009 in good form.

Question 45

On January 1,2008,Gregory Corporation acquired 90 percent of Nova Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Nova at that date.Gregory uses the equity method in accounting for its ownership of Nova.On December 31,2009,the trial balances of the two companies are as follows:
Required:
1)Give all eliminating entries required on December 31,2008,to prepare consolidated financial statements.
2)Prepare a three-part consolidation workpaper as of December 31,2008.

Question 46

On December 31,2008,X Company acquired controlling ownership of Y Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 2008,X Company provided consulting services to Y Company and has not yet been paid for them.There were no other receivables or payables between the companies at December 31,2008.

Based on the information given,what was the fair value of Y Company as a whole at the date of acquisition?

A)$155,000
B)$110,000
C)$115,000
D)$135,000

Question 47

On January 1,2008,Zeta Company acquired 85 percent of Theta Company's common stock for $100,000 cash.The fair value of the noncontrolling interest was determined to be 15 percent of the book value of Theta at that date.What portion of the retained earnings reported in the consolidated balance sheet prepared immediately after the business combination is assigned to the noncontrolling interest?

A)Nil
B)15 percent
C)100 percent
D)Cannot be determined

Question 48

On December 31,2008,X Company acquired controlling ownership of Y Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 2008,X Company provided consulting services to Y Company and has not yet been paid for them.There were no other receivables or payables between the companies at December 31,2008.

Based on the information given,what amount will be reported as total controlling interest in the consolidated balance sheet?

A)$254,000
B)$285,000
C)$364,000
D)$395,000

Question 49

On January 1,2007,Plimsol Company acquired 100 percent of Shipping Corporation's voting shares,at underlying book value.Plimsol uses the cost method in accounting for its investment in Shipping.Shipping's reported retained earnings of $75,000 on the date of acquisition.The trial balances for Plimsol Company and Shipping Corporation as of December 31,2008,follow:
Required:
1)Provide all eliminating entries required to prepare a full set of consolidated statements for 2008.
2)Prepare a three-part consolidation workpaper in good form as of December 31,2008.

Question 50

On December 31,2008,X Company acquired controlling ownership of Y Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 2008,X Company provided consulting services to Y Company and has not yet been paid for them.There were no other receivables or payables between the companies at December 31,2008.

Based on the information given,X Company and Y Company reported wages payable of

A)$50,000 and $28,000 respectively.
B)$60,000 and $32,000 respectively.
C)$40,000 and $35,000 respectively.
D)$28,000 and $60,000 respectively.

Question 51

On December 31,2008,X Company acquired controlling ownership of Y Company.A consolidated balance sheet was prepared immediately.Partial balance sheet data for the two companies and the consolidated entity at that date follow:
During 2008,X Company provided consulting services to Y Company and has not yet been paid for them.There were no other receivables or payables between the companies at December 31,2008.

Based on the information given,what percentage of Y Company's shares were acquired by X Company?

A)100 percent
B)60 percent
C)80 percent
D)75 percent