江西财经大学高级财务会计国际学院题库chapter_11

1Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHallAdvancedAccounting,11e(Beams/Anthony/Bettinghaus/Smith)Chapter11ConsolidationTheories,Push-DownAccounting,andCorporateJointVenturesMultipleChoiceQuestionsUsethefollowinginformationtoanswerthequestion(s)below.PasfieldCorporationacquireda90%interestinSantiniCorporationfor$90,000cashonJanuary1,2011.ThefollowinginformationisavailableforSantiniatthattime.BookValueFairValueDifferenceCurrentassets$40,000$50,000$10,000Plantassets60,00075,00015,000Liabilities(50,000)(50,000)0Netassets$50,000$75,0001)Undertheentitytheory,aconsolidatedbalancesheetpreparedimmediatelyafterthebusinesscombinationwillshowgoodwillofA)$15,000.B)$22,500.C)$25,000.D)$32,500.Answer:CExplanation:C)ImputedvalueofSantini($90,000/90%)$100,000Less:Fairvalueofnetassetsacquired(75,000)Goodwill$25,000Objective:LO1Difficulty:Moderate2)Undertheentitytheory,aconsolidatedbalancesheetpreparedimmediatelyafterthebusinesscombinationwillshownoncontrollinginterestofA)$5,000.B)$7,500.C)$9,000.D)$10,000.Answer:DExplanation:D)ImputedvalueofSantini($90,000/90%)$100,000Noncontrollinginterestpercentage10%Noncontrollinginterest$10,000Objective:LO1Difficulty:Moderate2Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHall3)ParozCorporationacquireda70%interestinSandbergCorporationfor$900,000whenSandberg'sstockholders'equityconsistedof$600,000ofCapitalStockand$600,000ofRetainedEarnings.ThefairvaluesofSandberg'snetassetswereequaltotheirrecordedbookvalues.Atthetimeofacquisition,onParoz'sbooks,ParozwillrecordA)goodwillfor$60,000undertheparentcompanytheory.B)goodwillfor$85,714undertheentitytheory.C)investmentinSandbergfor$1,285,714undertheentitytheory.D)investmentinSandbergfor$900,000undertheentityandparentcompanytheories.Answer:DExplanation:D)(Theinvestmentisrecordedatcost.)Objective:LO1Difficulty:ModerateUsethefollowinginformationtoanswerthequestion(s)below.PascoeCorporationpaid$450,000fora90%interestinSarabetCorporationonJanuary1,2011,whenSarabet'sstockholders'equityconsistedof$250,000CommonStockand$50,000RetainedEarnings.ThebookvaluesandfairvaluesofSarabet'sassetsandliabilitieswereequalwhenPascoeacquireditsinterest.Theseparatenetincomes(excludinginvestmentincome)ofPascoeandSarabetfor2011were$600,000and$100,000,respectively.Dividendsdeclaredandpaidduring2011were$250,000forPascoeand$50,000forSarabet.PascoeusestheentitytheoryinconsolidatingitsfinancialstatementswiththoseofSarabet.4)GoodwillwasreportedintheDecember31,2011consolidatedbalancesheetatA)$170,000.B)$180,000.C)$200,000.D)$210,000.Answer:CExplanation:C)ImputedfairvalueofSarabet($450,000/90%)$500,000Less:Totalunderlyingbookvalue(300,000)Totalamountofimpliedgoodwill$200,000Objective:LO1Difficulty:Moderate5)Noncontrollinginterestsharewasreportedinthe2011consolidatedincomestatementatA)$5,000.B)$6,000.C)$8,000.D)$10,000.Answer:DExplanation:D)Sarabet'sseparateincome$100,000Parentownershippercentage10%Noncontrollinginterestshare$10,000Objective:LO1Difficulty:Moderate3Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHall6)Pascoe'sincomefromSarabetundertheequitymethodfor2011wasA)$72,000.B)$87,500.C)$90,000.D)$100,000.Answer:CExplanation:C)Sarabet'sseparateincome$100,000Parentownershippercentage90%IncomefromSarabettoPascoe$90,000Objective:LO1Difficulty:ModerateUsethefollowinginformationtoanswerthequestion(s)below.ParisCorporationpurchased80%oftheoutstandingvotingcommonstockofSandersCorporationonJanuary1,2011,atacostof$400,000.Thestockholders'equityofSandersCorporationonthisdateconsistedof$200,000ofCapitalStockand$100,000ofRetainedEarnings.Bookvalueswereequaltofairvaluesexceptforlandandinventory.ThebookvalueofSanders'landwas$10,000,andfairvaluewas$22,000.ThebookvalueofSanders'inventorywas$30,000,andfairvaluewas$25,000.7)Undertheparentcompanytheory,whatamountofgoodwillwasreportedontheconsolidatedbalancesheetatDecember31,2011?A)$148,000B)$153,000C)$154,400D)$160,000Answer:CExplanation:C)Purchasepriceof80%interest$400,000Less:Bookvalueacquired($300,000×80%)240,000Excessofcostoverbookvalue$160,000Less:Excessallocatedtoland($12,000×80%)(9,600)Plus:Excessallocatedtoinventory($5,000×80%)4,000Remainderallocatedtogoodwill$154,400Objective:LO1Difficulty:Moderate8)Undertheentitytheory,whatamountofgoodwillwasreportedontheconsolidatedbalancesheetatDecember31,2011?A)$185,000B)$191,250C)$193,000D)$200,000Answer:CExplanation:C)($154,400/80%=$193,000)Objective:LO1Difficulty:Moderate4Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHall9)AssumeParis'slandaccounthadabookvalueof$50,000andafairvalueof$70,000onJanuary1,2011.Usingtheparentcompanyandentitytheories,whatamountswouldbereportedontheconsolidatedbalancesheetatJanuary1,2011forthelandaccount?ParentCompanyTheoryEntityTheoryA)ParentCompanyTheoryEntityTheory$69,600$72,000B)ParentCompanyTheoryEntityTheory$72,000$72,000C)ParentCompanyTheoryEntityTheory$72,000$92,000D)ParentCompanyTheoryEntityTheory$92,000$72,000Answer:AExplanation:A)Undertheparentcompanytheory,theLandaccountontheconsolidatedbalancesheetwouldbethesumofthebo