江西财经大学高级财务会计国际学院题库chapter_07

1Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHallAdvancedAccounting,11e(Beams/Anthony/Bettinghaus/Smith)Chapter7IntercompanyProfitTransactions-BondsMultipleChoiceQuestions1)Ifthepricepaidbyaparentcompanytoacquirethedebtofasubsidiaryisgreaterthanthebookvalueoftheliability,a________occurs.A)realizedlossontheretirementofdebtfromtheviewpointofthesubsidiaryB)realizedgainontheretirementofdebtfromtheviewpointofthesubsidiaryC)constructivelossontheretirementofdebtfromtheviewpointoftheconsolidatedentityD)constructivegainontheretirementofdebtfromtheviewpointoftheconsolidatedentityAnswer:CObjective:LO1Difficulty:Easy2)Ifanaffiliatepurchasesbondsintheopenmarket,thebookvalueoftheintercompanybondliabilityatthetimeofpurchaseisA)alwaysassignedtotheparentcompanybecauseithascontrol.B)theparvalueofthebondslesstheunamortizeddiscountorplustheunamortizedpremium.C)parvalue.D)theparvalueofthebondsplustheunamortizeddiscountorlesstheunamortizedpremium.Answer:BObjective:LO1Difficulty:Easy3)Bondsissuedbyacompanyremainontheirbooksasaliability,butareconsideredconstructivelyretiredwhenA)thecompanyborrowsmoneyfromunaffiliatedentitiestore-purchaseitsownbondsatagain.B)Thecompanyborrowsmoneyfromanaffiliatetore-purchaseitsownbondsatagain.C)Thecompany'sparentorsubsidiarypurchasesthebondsfromoutsideentities.D)Thecompanyborrowsmoneyfromanaffiliatetorepurchaseitsownbondsatagainorataloss.Answer:CObjective:LO1Difficulty:Easy2Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHallUsethefollowinginformationtoanswerthequestion(s)below.PascalianCompanyownsa90%interestinSappCompany.OnJanuary1,2010,Pascalianhad$300,000,6%bondsoutstandingwithanunamortizedpremiumof$9,000.ThebondsmatureonDecember31,2014.Sappacquiredone-thirdofPascalian'sbondsintheopenmarketfor$97,000onJanuary1,2010.Bothcompaniesusestraight-lineamortizationofbonddiscounts/premiums.InterestispaidonDecember31.OnDecember31,2010,thebooksofthetwoaffiliatesheldthefollowingbalances:Pascalian'sbooks6%bondspayable$300,000Premiumonbonds7,200Interestexpense16,200Sapp'sbooksInvestmentinPascalianbonds$97,600Interestincome6,6004)ThegainfromthebondpurchasethatappearedontheDecember31,2010consolidatedincomestatementwasA)$4,320.B)$4,800.C)$5,400.D)$6,000.Answer:DExplanation:D)BookvalueofPascalian'sbondsacquiredbySappequals1/3times($300,000+$9,000)$103,000Less:CostofacquiringPascalianbonds(97,000)Constructivegainonbonds$6,000Objective:LO2Difficulty:Moderate5)ConsolidatedInterestExpenseandconsolidatedInterestIncome,respectively,thatappearedontheconsolidatedincomestatementfortheyearendedDecember31,2010wasA)$10,800and$0.B)$10,800and$6,600.C)$0and$0.D)$16,200and$6,600.Answer:AExplanation:A)Consolidatedinterestexpense=$16,200×2/3$10,800Objective:LO2Difficulty:Moderate3Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHall6)PrussiaCorporationowns80%thevotingstockofStadCorporation.OnJanuary1,2010,Prussiapaid$391,000cashfor$400,000parofStad's10%$1,000,000parvalueoutstandingbonds,dueonApril1,2015.Stad'sbondshadabookvalueof$1,045,000onJanuary1,2010.Straight-lineamortizationisused.Thegainorlossontheconstructiveretirementof$400,000ofStadbondsonJanuary1,2010wasreportedinthe2010consolidatedincomestatementintheamountofA)$14,000.B)$21,600.C)$23,000.D)$27,000.Answer:DObjective:LO2Difficulty:ModerateUsethefollowinginformationtoanswerthequestion(s)below.PfadtInc.had$600,000parof8%bondspayableoutstandingonJanuary1,2011dueJanuary1,2015withanunamortizeddiscountof$12,000.Senatisa90%-ownedsubsidiaryofPfadt.OnJanuary2,2011,SenatCorporationpurchased$150,000parvalueofPfadt'soutstandingbondsfor$152,000.ThebondshaveinterestpaymentdatesofJanuary1andJuly1.Straight-lineamortizationisused.7)Withrespecttothebondpurchase,theconsolidatedincomestatementofPfadtCorporationandSubsidiaryfor2011showedagainorlossofA)$4,500.B)$5,000.C)$10,800.D)$12,000.Answer:BExplanation:B)[($588,000×0.25)-$152,000]Objective:LO2Difficulty:Moderate8)BondInterestReceivablefor2011ofPfadt'sbondsonSenat'sbookswasA)$5,400.B)$6,000.C)$10,800.D)$12,000.Answer:BExplanation:B)[$150,000×8%×1/2]Objective:LO2Difficulty:Moderate4Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHall9)BondsPayableappearedintheDecember31,2011consolidatedbalancesheetofPfadtCorporationandSubsidiaryintheamountofA)$398,925.B)$441,000.C)$443,250.D)$450,000.Answer:CExplanation:C)[$591,000×75%]Objective:LO2Difficulty:ModerateUsethefollowinginformationtoanswerthequestion(s)below.PlentyCorporationissuedsixthousand,$1,000par,6%bondsonJanuary1,2010,atpar.InterestispaidonJanuary1andJuly1ofeachyear;thebondsmatureonJanuary1,2015.OnJanuary2,2012,ScrawnCorporation,a75%-ownedsubsidiaryofPlenty,purchased3,000ofthebondsontheopenmarketat102.50.Plenty'sseparatenetincomefor2012includedtheannualinterestexpenseforall3,000bonds.Scrawn'sseparatenetincomefor2012was$400,000,whichincludedthebondinterestreceivedonJuly1aswellastheaccrualofbondinterestrevenueearnedonDecember31.Bothcompaniesusestraight-lineamortizationofbonddiscounts/premiums.10)Whatwastheamountofgainor(loss)fromtheintercompanypurchaseofPlenty