Question 1

Where may a noncontrolling interest be presented in a consolidated balance sheet?

Accepted Answer

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Question 2

How would you determine the amount of goodwill to be recognized at date of acquisition when there is a noncontrolling interest present?

Accepted Answer

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Question 3

Parsons Company acquired 90% of Roxy Company several years ago and recorded goodwill of $200,000 at that date. During 2013 an analysis of the fair value of Roxy's assets determined an impairment of goodwill in the amount of $50,000.
-At what amount would consolidated goodwill be reported for 2013?

Accepted Answer

Goodwill impairment loss of $50,000 should be deducted from the original goodwill of $200,000. Therefore, the consolidated goodwill for 2013 would be $150,000.

Question 4

Prevatt,Inc.owns 80% of Franklin Company.During the current year,a portion of the investment in Franklin is sold.Prior to recording the sale,Prevatt adjusts the carrying value of its investment.What is the purpose of the adjustment?

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Question 5

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-How much does Pell record as income from Demers for the year ended December 31,2011?

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 6

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-How much does Pell record as Income from Demers for the year ended December 31,2010?

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 7

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-Compute the noncontrolling interest in Demers at December 31,2011.

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 8

In comparing U.S.GAAP and international financial reporting standards (IFRS)with regard to a basis for measurement of a noncontrolling interest,which of the following is true?

Accepted Answer

The answer of In comparing U.S.GAAP and international financial reporting...

Question 9

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?

Accepted Answer

The answer of One company buys a controlling interest in...

Question 10

How does a parent company account for the sale of a portion of an investment in a subsidiary?

Accepted Answer

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Question 11

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-How much does Pell record as income from Demers for the year ended December 31,2012?

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 12

How is a noncontrolling interest in the net income of an entity reported in the income statement?

Accepted Answer

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Question 13

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-Compute the noncontrolling interest in the net income of Demers at December 31,2011.

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 14

What is preacquisition income?

Accepted Answer

The answer of What is preacquisition income?...

Question 15

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-Compute the noncontrolling interest in the net income of Demers at December 31,2010.

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 16

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-Compute the noncontrolling interest in the net income of Demers at December 31,2012.

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 17

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 value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.

Demers earns income and pays dividends as follows:

$\begin{array} { l r r r } 
& 2010 & 2011 & 2012 \
\text { Net income } & \$ 100,000 & \$ 120,000 & \$ 130,000 \
\text { Dividends } & 40,000 & 50,000 & 60,000
\end{array}$
Assume the partial equity method is applied.

-Compute the noncontrolling interest in Demers at December 31,2010.

Accepted Answer

The answer of Pell Company acquires 80% of Demers Company...

Question 18

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 noncontrolling interest immediately after the combination?

Accepted Answer

The answer of Alonzo Co.acquired 60% of Beazley Corp.by paying...

Question 19

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?

Accepted Answer

The answer of Beta Corp.owns less than one hundred percent...

Question 20

Where should a noncontrolling interest appear on a consolidated balance sheet?

Accepted Answer

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Quiz 4: Consolidated Financial Statements and Outside Ownership

Where may a noncontrolling interest be presented in a consolidated balance sheet?

How would you determine the amount of goodwill to be recognized at date of acquisition when there is a noncontrolling interest present?

Parsons Company acquired 90% of Roxy Company several years ago and recorded goodwill of $200,000 at that date. During 2013 an analysis of the fair value of Roxy's assets determined an impairment of goodwill in the amount of $50,000. -At what amount would consolidated goodwill be reported for 2013?

Prevatt,Inc.owns 80% of Franklin Company.During the current year,a portion of the investment in Franklin is sold.Prior to recording the sale,Prevatt adjusts the carrying value of its investment.What is the purpose of the adjustment?

In comparing U.S.GAAP and international financial reporting standards (IFRS) with regard to a basis for measurement of a noncontrolling interest,which of the following is true?

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?

How does a parent company account for the sale of a portion of an investment in a subsidiary?

How is a noncontrolling interest in the net income of an entity reported in the income statement?

What is preacquisition income?

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?

Where should a noncontrolling interest appear on a consolidated balance sheet?