Scribd
Upload
0 views11 pages

Section 10 (Revision-MCQ)

The document contains multiple-choice questions related to accounting for investments and consolidations, including calculations for net income, intercompany receivables, goodwill, and retained earnings. It provides scenarios involving different companies and their financial transactions, requiring the reader to apply accounting principles to determine correct answers. Each question is followed by the correct answer and relevant calculations.

Uploaded by

nadaabozina18
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0 views11 pages

Section 10 (Revision-MCQ)

The document contains multiple-choice questions related to accounting for investments and consolidations, including calculations for net income, intercompany receivables, goodwill, and retained earnings. It provides scenarios involving different companies and their financial transactions, requiring the reader to apply accounting principles to determine correct answers. Each question is followed by the correct answer and relevant calculations.

Uploaded by

nadaabozina18
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 11

Revision

(MCQ)
By: Nada Magdy
Pigeon Corporation acquired a 60% interest in South Company on January 1, 2016, for $72,000 cash
South had Capital Stock of $60,000 and Retained Earnings of $40,000. All excess purchase cost was
attributable to equipment with a 10-year (straight-line) life. South suffered a $10,000 net loss in 2016
and paid no dividends. At year-end 2016, South owed Pigeon $12,000 on account. Pigeon's separate
income for 2016 was $150,000. Consolidated net income for 2016 was...............

a) 13700
b) 120000
c) 130000
d) 142800
e) 129000
Answer: d
F.V at acquisition date = 120,000 B.V= 60,000+40,000=100,000
Difference= 20,000 depreciation expense= 20,000/10= 2000
C.NI attributable to parent (controlling interest) = N.I (P)+ %NI (S) - %Excess amortization – equity
income or dividend income-S = 150,000 + (10,000*60%) – (2000*60%)= 142,800
Page Corporation has several subsidiaries that are included in its consolidated financial statements and
several other investments in corporations that are not consolidated. In its year-end trial balance, the
following intercompany balances appear. Ostrich Corporation is the unconsolidated company, the rest
are consolidated.

What amount should Page report as intercompany receivables on its consolidated balance sheet?
a) 30,000
b) 53,000
c) 63,000
d) 40,000
e) 10,000
Answer: e
Peter corporation bought 75% of sky company’s common stock, with a book value of $900,000, on
January 2, 2019 for $750,000. The law firm of Dewey was paid $550,000 to facilitate the purchase. At
what amount should Peter’s investment in Sky account be reported on January 2,2019?
a) 675,000
b) 695,000
c) 845,000
d) 750,000
Answer: d

Pepper Corporation owns 65 percent of Salt Company's stock. In the 20X9 consolidated income
statement, the noncontrolling interest was assigned $21,000 of income. There was no differential in the
acquisition. What amount of net income did Salt Company report for 20X9?
a) 32,307
b) 60,000
c) 21,000
d) None of the above
Answer: b
C.NI attributable to NCI = %NI (S) - %excess amortization
On January 1, 2017, Prince Company purchased an 80% interest in the common stock of Sivet
Company for $1,040,000, which was $60,000 greater than the book value of equity acquired. The
difference between implied and book value relates to the subsidiary's land. The following information is
from the consolidated retained earnings section of the consolidated statements workpaper for the year
ended December 31, 2017:
Sivet company Consolidated balances

1-1-17 retained 300,000 1,400,000


earnings
Net income 220,000 680,000

Dividends declared (80,000) (140,000)

12-31-17 retained 440,000 1,940,000


earnings

Sivet's stockholders' equity includes only common stock and retained earnings. Compute the total
noncontrolling interest to be reported on the consolidated balance sheet on December 31, 2017
a) 2880,000 b)28,000 c)260,000 d) none of the above
Answer: a
On January 1, 2018, Parachute Corporation purchased 80% of the common stock of Swan Co.
Separate balance sheet data for the companies at the acquisition date (After the acquisition) are
given below:
Parachute Sewan
Cash 34,000 206,000
A/R 144,000 26,000
Inventory 132,000 38,000
Land 68,000 32,000
Plant assets 700,000 300,000
Accum.Depreciation (240,000) (60,000)
Investment in Sewan 392,000
Total assets 1,230,000 542,000
A/P 206,000 142,000
Capital stock 800,000 300,000
Retained earnings 224,000 100,000
At the date of the acquisition, the book values of Swan's net assets were equal to the
fair value except for Swan's inventory, which had a fair value of $60,000 .
1- what amount of inventory will be reported?
a) 186,500
b) 169,000
c) 192,000
d) 170,000
Answer: c

2- what amount of goodwill will be reported?


a) 68,000
b) 90,000
c) 72,000
d) 54,400
Answer: a

3- what is the total liabilities will be reported?


a) 206,000
b) 278,400
c) 348,000
d) 319,600
Answer: c
4- what is the reported amount for the non-controlling interest?
a) 80,000
b) 84,400
c) 122,500
d) 98,000
Answer: d

5- what is the amount of consolidated retained earnings?


a) 259,200
b) 224,000
c) 304,000
d) 324,000
Answer: b

6- what is the amount of total assets?


a) 1,470,000
b) 1,402,000
c) 1,875,000
d) 1,380,000
Answer: b
Bellbird Corporation acquired an 80% interest in Honey Inc. for $130,000 on January1, 2019, when Honey
had Capital Stock of $125,000 and Retained Earnings of$25,000.All excess between the purchase price of
Honey and the book value of Honey’s net assets was assigned to equipment with a 10-year (straight-line)
life. Bellbird’s separate income statement and a consolidated income statement for Bellbird Corporation
and Subsidiary as of December 31, 2019, are shown below.

Honey’s separate income statement must have reported net income of:
a) 13,250 b)15,750 c)14,500 d)16,500
Answer: b
On January 1,2020. Platt corporation purchases 30% interest in Sandy company for $450,000. On this
date, the fair values of Sandy’s assets and liabilities are assumed to be the same as their book values.
Platt will account for sandy using equity method. Sandy’s adjusted trial balance at the date of acquisition
and year end were as follows:

Debits Dec 31 Jan 1


Current assets 160,000 120,000
Noncurrent assets 420,000 460,000
Expenses 390,000
Dividends (paid in June 30) 40,000
Total 1,010,000

Credits
Current liabilities 90,000 120,000
Capital stock 250,000 250,000
Beg retained earnings 140,000 140,000
Sales 530,000
Total 1,010,000
1- what is Platt’s investment income for the year ending December 31,2010?
a) 42000
b) 25000
c) 140000
d) None of the above
Answer: a
Net income-S = 530,000 – 390,000 = 140,000
140,000*30%= 42,000

2- what is Platt’s investment in S for the year ending December 31,2010?


a) 492,000
b) 480,000
c) 450,000
d) None of the above
Answer: b
Investment account balance = beg investment account + %NI - % Dividend declared
= 450,000 + 42,000 + (40,000 *30%) = 480,000

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy