江西财经大学高级财务会计国际学院题库chapter_05

1Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHallAdvancedAccounting,11e(Beams/Anthony/Bettinghaus/Smith)Chapter5IntercompanyProfitTransactions-InventoriesMultipleChoiceQuestions1)ThematerialsaleofinventoryitemsbyaparentcompanytoanaffiliatedcompanyA)enterstheconsolidatedrevenuecomputationonlyifthetransferwastheresultofarm'slengthbargaining.B)affectsconsolidatednetincomeunderaperiodicinventorysystembutnotunderaperpetualinventorysystem.C)doesnotresultinconsolidatedincomeuntilthemerchandiseissoldtooutsideparties.D)doesnotrequireaworkingpaperadjustmentifthemerchandisewastransferredatcost.Answer:CObjective:LO1Difficulty:Easy2)PhastCorporationownsa80%interestinStechnoCompany,acquiredseveralyearsagoatacostequaltobookvalueandfairvalue.StechnosellsmerchandisetoPhastforthefirsttimein2011,andsomeisunsoldatDecember31,2011.Incomputingincomefromtheinvesteefor2011undertheequitymethod,Phastuseswhichequation?A)80%ofStechno'sincomeless100%oftheunrealizedprofitinPhast'sendinginventoryB)80%ofStechno'sincomeplus100%oftheunrealizedprofitinPhast'sendinginventoryC)80%ofStechno'sincomeless80%oftheunrealizedprofitinPhast'sendinginventoryD)80%ofStechno'sincomeplus80%oftheunrealizedprofitinPhast'sendinginventoryAnswer:CObjective:LO1Difficulty:Moderate3)Assumethereareroutineinventorysalesbetweenparentcompaniesandsubsidiaries.Whenpreparingtheconsolidatedfinancialstatements,whichofthefollowinglineitemsisindifferenttothesalesbeingeitherupstreamordownstream?A)ConsolidatedretainedearningsB)ConsolidatedgrossprofitC)NoncontrollinginterestshareD)ControllinginterestshareofconsolidatednetincomeAnswer:BObjective:LO1Difficulty:Easy4)A(n)________saleisasalebyaparentcompanytoasubsidiary.A(n)________saleisasalebyasubsidiarytoaparentcompany.A)deferred;realized.B)realized;deferred.C)upstream;downstreamD)downstream;upstreamAnswer:DObjective:LO2Difficulty:Easy2Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHallUsethefollowinginformationtoanswerthequestion(s)below.PaggleCorporationowns80%ofSpillwayInc.'scommonstockthatwaspurchasedatitsunderlyingbookvalue.Atthetimeofpurchase,thebookvalueandfairvalueofSpillway'snetassetswereequal.Thetwocompaniesreportthefollowinginformationfor2011and2012.During2011,onecompanysoldinventorytotheothercompanyfor$50,000whichcostthetransferor$40,000.Asoftheendof2011,30%oftheinventorywasunsold.In2012,theremaininginventorywasresoldoutsidetheconsolidatedentity.2011SelectedData:PaggleSpillwaySalesRevenue$600,000$320,000CostofGoodsSold320,000155,000OtherExpenses100,00089,000NetIncome$180,000$76,000DividendsPaid19,00002012SelectedData:PaggleSpillwaySalesRevenue$580,000$445,000CostofGoodsSold300,000180,000OtherExpenses130,000171,000NetIncome$150,000$94,000DividendsPaid16,0005,0005)Ifthesalereferredtoabovewasadownstreamsale,thetotalsalesrevenuereportedintheconsolidatedincomestatementfor2011wouldbeA)$870,000.B)$880,000.C)$920,000.D)$970,000.Answer:AExplanation:A)2011combinedsales$920,000Less:2011intercompanysales(50,000)Consolidatedsales$870,000Objective:LO2Difficulty:Moderate3Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHall6)Ifthesalereferredtoabovewasadownstreamsale,bywhatamountmustInventoryontheconsolidatedbalancesheetbereducedtoreflectthecorrectbalanceasoftheendof2011?A)$3,000B)$10,000C)$14,000D)$20,000Answer:AExplanation:A)Sellingprice$50,000Less:Costofsales40,000Originalunrealizedprofit10,000Unsoldpercentage30%Unrealizedprofit$3,000Objective:LO2Difficulty:Moderate7)For2011,consolidatednetincomewillbewhatamountiftheintercompanysalewasdownstream?A)$180,000B)$253,000C)$256,000D)$259,000Answer:BExplanation:B)2011CombinedNetIncome$256,000Less:UnrealizedProfit(above)(3,000)2011ConsolidatedNetIncome$253,000Objective:LO2Difficulty:Moderate8)Iftheintercompanysalementionedabovewasanupstreamsale,whatwillbethereportedamountoftotalconsolidatedsalesrevenuefor2012?A)$1,025,000B)$1,900,000C)$1,950,000D)$2,000,000Answer:AExplanation:A)Therewerenointercompanysalesin2012toeliminate.Objective:LO2Difficulty:Moderate4Copyright©2012PearsonEducation,Inc.PublishingasPrenticeHall9)Iftheintercompanysalewasanupstreamsale,thetotalamountofconsolidatedcostofgoodssoldfor2012willbeA)$300,000.B)$430,000.C)$470,000.D)$477,000.Answer:DExplanation:D)Combinedcostofgoodssold$480,000Less:Unrealizedprofitinthe2012beginninginventory(3,000)Consolidatedcostofsales$477,000Objective:LO2Difficulty:ModerateUsethefollowinginformationtoanswerthequestion(s)below.PouchCorporationacquiredan80%interestinShenleyCorporationonJanuary1,2012,whenthebookvaluesofShenley'sassetsandliabilitieswereequaltotheirfairvalues.Thecostofthe80%interestwasequalto80%ofthebookvalueofShenley'snetassets.During2012,Pouchsoldmerchandisethatcost$70,000toShenleyfor$86,000.OnDecember31,2012,three-fourthsofthemerchandiseacquiredfromPouchremainedinShenley'sinventory.Separateincomes(investmentincomenotincluded)ofthetwocompaniesareasfollows:PouchShenleySalesRevenue$180,000$160,000CostofGoodsSold120,00090,000OperatingExpenses17,00021,000Separateincomes$43,000$49,00010)Theconsolidatedincomes