Question 1

2 out of 2 points A newly acquired subsidiary has pre-existing goodwill on its books. The parent companys consolidated balance sheet will: Answer Selected Answer: not show any value for the subsidiarys pre-existing goodwill. Correct Answer: not show any value for the subsidiarys pre-existing goodwill.

Question 2
2 out of 2 points On January 1, 2011, Pena Company and Shelby Company had condensed balanced sheets as follows: Pena Shelby Current assets $210,000 $ 60,000 Noncurrent assets 270,000 120,000 Total assets $480,000 $180,000 Current liabilities Long-term debt Stockholders' equity Total liabilities & stockholders' equity $ 90,000 150,000 240,000 $480,000 $ 30,000 -0150,000 $180,000

On January 2, 2011 Pena borrowed $180,000 and used the proceeds to purchase 90% of the outstanding common stock of Shelby. This debt is payable in 10 equal annual principal payments, plus interest, starting December 30, 2011. Any difference between book value and the value implied by the purchase price relates to land. On Pena's January 2, 2011 consolidated balance sheet, noncurrent liabilities should be Answer Selected Answer: $312,000. Correct Answer: $312,000.

Question 3

2 out of 2 points Under the acquisition method, indirect costs relating to acquisitions should be Answer Selected Answer: expensed as incurred. Correct Answer: expensed as incurred.

Question 4
2 out of 2 points On January 1, 2011, Pena Company and Shelby Company had condensed balanced sheets as follows: Pena Shelby Current assets $210,000 $ 60,000 Noncurrent assets 270,000 120,000 Total assets $480,000 $180,000 Current liabilities Long-term debt Stockholders' equity Total liabilities & stockholders' equity $ 90,000 150,000 240,000 $480,000 $ 30,000 -0150,000 $180,000

On January 2, 2011 Pena borrowed $180,000 and used the proceeds to purchase 90% of the outstanding common stock of Shelby. This debt is payable in 10 equal annual principal payments, plus interest, starting December 30, 2011. Any difference between book value and the value implied by the purchase price relates to land. On Pena's January 2, 2011 consolidated balance sheet, noncurrent assets should be Answer Selected Answer: $440,000. Correct Answer: $440,000.

Question 5
0 out of 2 points

A majority-owned subsidiary that is in legal reorganization should normally be accounted for using Answer Selected Answer: consolidated financial statements. Correct Answer: the cost method.

Question 6
2 out of 2 points On January 1, 2011, Polk Company and Sigler Company had condensed balance sheets as follows: Polk Sigler Current assets $280,000 $ 80,000 Noncurrent assets 360,000 160,000 Total assets $640,000 $240,000 Current liabilities Long-term debt Stockholders' equity Total liabilities & stockholders' equity $120,000 200,000 320,000 $640,000 $ 40,000 -0200,000 $240,000

On January 2, 2011 Polk borrowed $240,000 and used the proceeds to purchase 90% of the outstanding common stock of Sigler. This debt is payable in 10 equal annual principal payments, plus interest, starting December 30, 2011. Any difference between book value and the value implied by the purchase price relates to land. On Polk's January 2, 2011 consolidated balance sheet, noncurrent assets should be Answer Selected Answer: $586,667. Correct Answer: $586,667.

Question 7
2 out of 2 points The main evidence of control for purposes of consolidated financial statements involves

Answer Selected Answer: having decision-making ability that is not shared with others. Correct Answer: having decision-making ability that is not shared with others.

Question 8
2 out of 2 points Reasons a parent company may pay more than book value for the subsidiary company's stock include all of the following except Answer Selected Answer: stockholders' equity may be undervalued. Correct Answer: stockholders' equity may be undervalued.

Question 9
2 out of 2 points The Difference between Implied and Book Value account is: Answer Selected Answer: Correct Answer: used in allocating the amounts paid for recorded balance sheet accounts that are different than their fair values. used in allocating the amounts paid for recorded balance sheet accounts that are different than their fair values.

Question 10
2 out of 2 points Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2011. On the date of acquisition, Princeton held land with a book value of $150,000 and a fair value of $300,000; Sheffield held land with a book value of $100,000 and fair value of $500,000. What amount would land be reported in the consolidated balance sheet prepared immediately after the combination? Answer

Selected Answer: $650,000 Correct Answer: $650,000

Question 11
2 out of 2 points On the consolidated balance sheet, consolidated stockholders' equity is Answer Selected Answer: equal to the parent's stockholders' equity. Correct Answer: equal to the parent's stockholders' equity.

Question 12
2 out of 2 points Eliminating entries are made to cancel the effects of intercompany transactions and are made on the Answer Selected Answer: workpaper only. Correct Answer: workpaper only.

Question 13
0 out of 2 points On January 1, 2011, Polk Company and Sigler Company had condensed balance sheets as follows: Polk Sigler Current assets $280,000 $ 80,000 Noncurrent assets 360,000 160,000 Total assets $640,000 $240,000 Current liabilities Long-term debt $120,000 200,000 $ 40,000 -0-

Stockholders' equity Total liabilities & stockholders' equity

320,000 $640,000

200,000 $240,000

On January 2, 2011 Polk borrowed $240,000 and used the proceeds to purchase 90% of the outstanding common stock of Sigler. This debt is payable in 10 equal annual principal payments, plus interest, starting December 30, 2011. Any difference between book value and the value implied by the purchase price relates to land. On Polk's January 2, 2011 consolidated balance sheet, noncurrent liabilities should be Answer Selected Answer: $440,000. Correct Answer: $416,000.

Question 14
2 out of 2 points Which of the following is a limitation of consolidated financial statements? Answer Selected Answer: Correct Answer: Consolidated statements of highly diversified companies cannot be compared with industry standards. Consolidated statements of highly diversified companies cannot be compared with industry standards.

Question 15
2 out of 2 points Pine Corp. owns 60% of Sage Corp.'s outstanding common stock. On May 1, 2011, Pine advanced Sage $90,000 in cash, which was still outstanding at December 31, 2011. What portion of this advance should be eliminated in the preparation of the December 31, 2011 consolidated balance sheet? Answer Selected Answer: $90,000. Correct Answer:

$90,000. Sunday, January 27, 2013 12:40:26 PM EST