Question 1

What is the consolidated balance of the Equipment account?

Accepted Answer

The consolidated balance of the Equipment account is calculated by adding the balances of equipment from all entities within the consolidation. The correct total is $756,000.

Question 2

What amount should have been reported for the land on a consolidated balance sheet,according to SFAS 141(R),using the acquisition method?

Accepted Answer

E

Question 3

What is the dollar amount of non-controlling interest which should appear on a balance sheet prepared immediately after consolidation according to the acquisition method per SFAS 141(R)?

Accepted Answer

Under SFAS 141(R), the non-controlling interest is measured at fair value at the acquisition date. The correct amount is $400,000, as it represents the fair value of the non-controlling interest in the subsidiary immediately after consolidation.

Question 4

What amount of excess land allocation would be included for the calculation of non-controlling interest,according to SFAS 141(R)?

Accepted Answer

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Question 5

What is the total amount of goodwill recognized per SFAS 141 (R)using the acquisition method?

Accepted Answer

Goodwill is recognized as the excess of the purchase price over the fair value of identifiable net assets acquired. In this case, the purchase price is $420,000 and the fair value of identifiable net assets acquired is $270,000. Therefore, the goodwill recognized is $420,000 - $270,000 = $150,000.

Question 6

Kordel Inc.holds 75% of the outstanding common stock of Raxston Corp.Raxston currently owes Kordel $500,000 for inventory acquired over the past few months.In preparing consolidated financial statements,what amount of this debt should be eliminated?

Accepted Answer

In consolidated financial statements, intercompany transactions and balances are eliminated in full. Since Kordel Inc. holds 75% of Raxston Corp., the entire $500,000 debt owed by Raxston to Kordel should be eliminated.

Question 7

What amount should have been reported for the land on a consolidated balance sheet,assuming the investment was obtained prior to SFAS 141(R)and the purchase method,parent company concept,was used?

Accepted Answer

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Question 8

MacHeath Inc.bought 60% of the outstanding common stock of Nomes Inc.in a business combination that resulted in the recognition of goodwill.Nomes owned a piece of land that cost $250,000 but was worth $600,000 at the date of purchase.What value would be attributed to this land in a consolidated balance sheet at the date of takeover,according to the acquisition method per SFAS 141(R)and the purchase method per SFAS 141?

Accepted Answer

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Question 9

In consolidation,the total amount of expenses related to Kailey and to Denber's acquisition of Kailey for 2009 is determined to be

Accepted Answer

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Question 10

What amount of goodwill should be attributed to the non-controlling interest according to the acquisition method per SFAS 141(R)?

Accepted Answer

Under the acquisition method per SFAS 141(R), the goodwill is determined as the excess of the consideration transferred plus any noncontrolling interest over the fair value of the identifiable net assets acquired.

Consideration transferred plus noncontrolling interest = $1,000,000 + $100,000 = $1,100,000

Fair value of identifiable net assets = $800,000

Goodwill = $1,100,000 - $800,000 = $300,000

Goodwill attributable to noncontrolling interest = Noncontrolling interest / Total goodwill x Goodwill

= $100,000 / $300,000 x $300,000 
= $100,000

Therefore, the goodwill attributed to the noncontrolling interest is $30,000.

Question 11

The non-controlling interest's share of the earnings of Harbor Corp.is calculated to be

Accepted Answer

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Question 12

What amount of goodwill should be attributed to Perch according to the acquisition method per SFAS 141(R)?

Accepted Answer

According to the acquisition method per SFAS 141(R), goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. 
Here, the purchase price was $650,000 and the fair value of the net assets acquired was $400,000 ($200,000 in identifiable assets and $200,000 in liabilities). Therefore, goodwill is $250,000 ($650,000 purchase price - $400,000 fair value of net assets acquired).

Question 13

The non-controlling interest's share shown on Denber's income statement for 2009 is calculated to be

Accepted Answer

The non-controlling interest's share is calculated as the net income multiplied by the non-controlling interest percentage. In this case, the net income is $110,000 and the non-controlling interest percentage is 20%. Therefore, the non-controlling interest's share is $110,000 x 20% = $22,000.

Question 14

According to SFAS 160,Non-controlling Interests and Consolidated Financial Statements,a non-controlling interest is most likely to be shown as part of equity under the

Accepted Answer

Under the acquisition method, non-controlling interests are shown as part of equity. This is because under this method, the parent company acquires control over the subsidiary and hence the non-controlling interest in the subsidiary represents the ownership interest of the outside shareholders, which is a component of equity. The proportionate consolidation method, economic unit method, parent company method, and proprietary method do not involve the concept of non-controlling interests, and hence they are not relevant for this question.

Question 15

The impact of the consolidation on consolidated net income for 2009 is determined to be

Accepted Answer

The consolidated net income is calculated by combining the net incomes of the parent and subsidiary companies, adjusting for any intercompany transactions and non-controlling interests. The correct impact on consolidated net income for 2009 is $55,000.

Question 16

What is the non-controlling interest's share of the subsidiary's net income and what is the ending balance of the non-controlling interest in the subsidiary?

Accepted Answer

The non-controlling interest's share of the subsidiary's net income is 10%, which is $50,400 (10% x $504,000). The ending balance of the non-controlling interest in the subsidiary is $397,600 ($347,200 + $50,400).

Question 17

What is consolidated net income that is attributable to Royce's controlling interest?

Accepted Answer

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Question 18

What is the net effect of the inclusion of Harbor on consolidated net income for 2009?

Accepted Answer

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Question 19

What is the dollar amount of non-controlling interest which should appear on a balance sheet prepared immediately after consolidation according to the purchase method according to SFAS 141?

Accepted Answer

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Question 20

What is the dollar amount of Float Corp.'s net assets that would be represented on a balance sheet prepared immediately after consolidation according to the acquisition method per SFAS 141(R)?

Accepted Answer

The answer of What is the dollar amount of Float...

Quiz 4: Consolidated Financial Statements and Outside Ownership

What is the consolidated balance of the Equipment account?

What amount should have been reported for the land on a consolidated balance sheet,according to SFAS 141(R) ,using the acquisition method?

What is the dollar amount of non-controlling interest which should appear on a balance sheet prepared immediately after consolidation according to the acquisition method per SFAS 141(R) ?

What amount of excess land allocation would be included for the calculation of non-controlling interest,according to SFAS 141(R) ?

What is the total amount of goodwill recognized per SFAS 141 (R) using the acquisition method?