Professional Documents
Culture Documents
Comprehensive Quiz*
Instructions: Read each of the following multiple choice questions carefully. Enter the correct answer in the highlighted and underlined cell corresponding to that
question. Use capital letters for your responses (A, B, C, or D). There is only one correct answer to each question. The assignment is open book and open note but is
non-collaborative: This assignment must be your own work. The assignment is not timed but it is due by the date indicated in the syllabus.
Note: DO NOT change the formatting of this spreadsheet. Do not add columns or rows. Simply place your answer in the appropriate cell.
*Critical Assignment: This is the Critical Assignment for the course and must be passed at an acceptable rate in order to pass the course.
Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment.
Trace reported net income of $110,000 for 2013 and paid dividends of $60,000 on October 1, 2013. How much income should Gaw
1. C recognize on this investment in 2013?
A. $ 16,500
B. $ 9,000
C. $ 25,500
D. $ 7,500
E. $ 50,000
2. A A company should always use the equity method to account for an investment if:
A. It has the ability to exercise significant influence over the operating policies of the investee.
B. It owns 30% of another company’s stock.
C. It has a controlling interest (more than 50%) of another company’s stock.
D. The investment was made primarily to earn a return on excess cash.
E. It does not have the ability to exercise significant influence over the operating policies of the investee.
On January 1, 2013, Bangle Company purchased 30% of the voting common stock of Sleat Corp. for $1,000,000. Any excess of cost over book
value was assigned to goodwill. During 2013, Sleat paid dividends of $24,000 and reported a net loss of $140,000. What is the balance in the
3. A investment account on December 31, 2013?
A. $ 950,800
B. $ 958,000
C. $ 836,000
D. $ 990,100
E. $ 956,400
Club Co. appropriately uses the equity method to account for its investment in Chip Corp. As of the end of 2013, Chip’s common stock had
suffered a significant decline in fair value, which is expected to be recovered over the next several months. How should Club account for the
4. C decline in value?
Tower Inc. owns 30% of Yale Co. and applies the equity method. During the current year, Tower bought inventory costing $66,000 and then sold it
to Yale for $120,000. At year-end, only $24,000 of merchandise was still being held by Yale. What amount of intra-entity inventory profit must be
deferred by Tower?
5.
A. $ 6,480
B. $ 3,240
C. $ 10,800
D. $ 16,200
E. $ 6,610
6. At the date of an acquisition which is not a bargain purchase, the acquisition method
A. Consolidates the subsidiary’s assets at fair value and the liabilities at book value.
B. Consolidates all subsidiary assets and liabilities at book value.
C. Consolidates all subsidiary assets and liabilities at fair value.
D. Consolidates current assets and liabilities at book value, long-term assets and liabilities at fair value.
E. Consolidates the subsidiary’s assets at book value and the liabilities at fair value.
7. Lisa Co. paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the conso
A. A worksheet
B. Lisa's general journal
C. Victoria's general journal
D. Victoria's secret consolidation journal
E. The general journal of both companies
What is the primary accounting difference between accounting for when the subsidiary is dissolved and when the subsidiary retains its
8. incorporation?
Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 2013. The book value and fair value of Vicker's accounts on that
9. to creating the combination) follow, along with the book value of Bullen's accounts:
Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $47 fair value to obtain all of Vicker's outstanding stock. In th
acquisition transaction, how much goodwill should be recognized?
A. $ 144,000.00
B. $ 104,000.00
C. $ 64,000.00
D. $ 60,000.00
E. $ -
Refer to the information from Question 9: Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $42 fair value for
10. all of the outstanding stock of Vicker. What is the consolidated balance for Land as a result of this acquisition transaction?
A. 460,000
B. 510,000
C. 500,000
D. 520,000
E. 490,000
Which one of the following accounts would not appear in the consolidated financial statements at the end of the first fiscal period of the
11. combination?
A. Goodwill
B. Equipment
C. Investment in Subsidiary
D. Common Stock
E. Additional Paid-In Capital
12. Which one of the following varies between the equity, initial value, and partial equity methods of accounting for an investment?
Racer Corp. acquired all of the common stock of Tangiers Co. in 2011. Tangiers maintained its incorporation. Which of Racer's account balances
13. would vary between the equity method and the initial value method?
A. Goodwill, Investment in Tangiers Co., and Retained Earnings
B. Expenses, Investment in Tangiers Co., and Equity in Subsidiary Earnings
C. Investment in Tangiers Co., Equity in Subsidiary Earnings, and Retained Earnings
D. Common Stock, Goodwill, and Investment in Tangiers Co.
E. Expenses, Goodwill, and Investment in Tangiers Co.
Velway Corp. acquired Joker Inc. on January 1, 2012. The parent paid more than the fair value of the subsidiary's net assets. On that date, Velway
equipment with a book value of $500,000 and a fair value of $640,000. Joker had equipment with a book value of $400,000 and a fair value of $47
Joker decided to use push-down accounting. Immediately after the acquisition, what Equipment amount would appear on Joker's separate balanc
14. on Velway’s consolidated balance sheet, respectively?
Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2012. Janex's reported earnings for 2012 totaled $432
it paid $120,000 in dividends during the year. The amortization of allocations related to the investment was $24,000. Cashen's net income, not inc
investment, was $3,180,000, and it paid dividends of $900,000. On the consolidated financial statements for 2012, what amount should have been
Equity in Subsidiary Earnings?
15.
A. $ 432,000.00
B. $ -
C. $ 408,000.00
D. $ 120,000.00
E. $ 288,000.00
16. What amount should have been reported for the land in a consolidated balance sheet at the acquisition date?
A. $ 52,500
B. $ 70,000
C. $ 75,000
D. $ 92,500
E. $ 100,000
17. What is the total amount of excess land allocation at the acquisition date?
A. $ -
B. $ 30,000
C. $ 22,500
D. $ 25,000
E. $ 17,500
18. What is the amount of excess land allocation attributed to the controlling interest at the acquisition date?
A. $ -
B. $ 30,000
C. $ 22,500
D. $ 25,000
E. $ 17,500
19. What is the amount of excess land allocation attributed to the non-controlling interest at the acquisition date?
A. $ -
B. $ 30,000
C. $ 22,500
D. $ 7,500
E. $ 17,500
What amount should have been reported for the land in a consolidated balance sheet, assuming the investment was obtained prior to the date
20. the purchase method of accounting for new business combinations was discontinued?
A. 70,000
B. 75,000
C. 85,000
D. 92,500
E. 100,000
On January 1, 2013, Race Corp. acquired 80% of the voting common stock of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods
which cost $330,000. Gallow still owned 15% of the goods at year-end. Gallow's reported net income was $204,000, and Race's net income was
$806,000. Race decided to use the equity method to account for this investment. What was the non-controlling interest's share of consolidated
21. net income?
A. $ 3,600
B. $ 22,800
C. $ 30,900
D. $ 32,900
E. $ 40,800
Webb Co. acquired 100% of Rand Inc. on January 5, 2013. During 2013, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000.
Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand. What was
22. consolidated cost of goods sold?
A. $ 17,200,000
B. $ 15,040,000
C. $ 14,800,000
D. $ 15,400,000
E. $ 14,560,000
Justings Co. owned 80% of Evana Corp. During 2013, Justings sold to Evana land with a book value of $48,000. The selling price was $70,000. In
23. its accounting records, Justings should
A. not recognize a gain on the sale of the land since it was made to a related party.
B. recognize a gain of $17,600.
C. defer recognition of the gain until Evana sells the land to a third party.
D. recognize a gain of $8,000.
E. recognize a gain of $22,000.
During 2012, Von Co. sold inventory to its wholly-owned subsidiary, Lord Co. The inventory cost $30,000 and was sold to Lord for $44,000. From
24. the perspective of the combination, when is the $14,000 gain realized?
A. $ 41,100
B. $ 33,600
C. $ 21,600
D. $ 45,600
E. $ 36,600
On January 1, 2013, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620,
and Riley paid $401,937 for them. How should you account for the difference between the carrying value and the purchase price in the
26. consolidated financial statements for 2013?
27. How would consolidated earnings per share be calculated if the subsidiary has no convertible securities or warrants?
A. $ 234,000
B. $ 237,000
C. $ 302,000
D. $ 312,000
E. $ 284,000
Campbell Inc. owned all of Gordon Corp. For 2013, Campbell reported net income (without consideration of its investment in Gordon) of
$280,000 while the subsidiary reported $112,000. The subsidiary had bonds payable outstanding on January 1, 2013, with a book value of
$297,000. The parent acquired the bonds on that date for $281,000. During 2013, Campbell reported interest income of $31,000 while Gordon
29. reported interest expense of $29,000. What is consolidated net income for 2013?
A. $ 406,000
B. $ 374,000
C. $ 378,000
D. $ 410,000
E. $ 394,000
Vontkins Inc. owned all of Quasimota Co. The subsidiary had bonds payable outstanding on January 1, 2012, with a book value of $265,000. The
parent acquired the bonds on that date for $288,000. Subsequently, Vontkins reported interest income of $25,000 in 2012 while Quasimota
reported interest expense of $29,000. Consolidated financial statements were prepared for 2013. What adjustment would have been required for
30. the retained earnings balance as of January 1, 2013?
A. reduction of $27,000.
B. reduction of $4,000.
C. reduction of $19,000.
D. reduction of $30,000.
E. reduction of $20,000.
A. $ 5,500
B. $ 16,949
C. $ 18,182
D. $ 17,241
E. $ 16,667
32. What amount of foreign exchange gain or loss should be recorded on December 31?
A. $300 gain.
B. $300 loss.
C. $0.00
D. $941 loss.
E. $941 gain.
33. What amount of foreign exchange gain or loss should be recorded on January 30?
A. $1,516 gain.
B. $1,516 loss.
C. $ 575 loss.
D. $ 500 loss.
E. $ 500 gain.
Meisner Co. ordered parts costing §100,000 for a foreign supplier on May 12 when the spot rate was $.24 per stickle. A one-month forward
contract was signed on that date to purchase §100,000 at a forward rate of $.25 per stickle. On June 12, when the parts were received and
34. payment was made, the spot rate was $.28 per stickle. At what amount should inventory be reported?
A. $ -
B. $ 28,000
C. $ 24,000
D. $ 25,000
E. $ 2,000
According to U.S. GAAP for a local currency perspective, which method is usually required for translating a foreign subsidiary's financial statements
37. into the parent's reporting currency?
Jan. 1 £1 = $1.60
June 30 £1 = $1.64
Dec. 31 £1 = $1.61
Weighted Avg for the Year £1 = $1.59
Westmore reported sales of £1,500,000 during 2013. What amount (rounded) would have been included for this subsidiary in calculating
38. consolidated sales?
A. $ 2,415,000
B. $ 2,400,000
C. $ 2,385,000
D. $ 943,396
E. $ 931,677
On December 31, 2013, Westmore had accounts receivable of £280,000. What amount (rounded) would have been included for this subsidiary in
39. calculating consolidated accounts receivable?
A. $ 173,913
B. $ 176,100
C. $ 445,200
D. $ 448,000
E. $ 450,800
Sinkal Co. was formed on January 1, 2013 as a wholly owned foreign subsidiary of a U.S. corporation. Sinkal's functional currency was the stickle
(§). The following transactions and events occurred during 2013:
Cherryhill and Hace had been partners for several years, and they decided to admit Quincy to the partnership. The accountant for the partnership
believed that the dissolved partnership and the newly formed partnership were two separate entities. What method would the accountant have
41. used for recording the admission of Quincy to the partnership?
42. The disadvantages of the partnership form of business organization, compared to corporations, include
A. only when the partnership sells its assets and permanently closes its books.
B. only when a partner leaves the partnership.
C. at the end of each year, when income is allocated to the partners.
D. only when a new partner is admitted to the partnership.
E. when there is any change in the individuals who make up the partnership
Cleary,
Refer toWasser, and Nolan
the following formed afor
information partnership
Questionson44-45
January 1, 2012, with investments of $100,000, $150,000, and $200,000, respectively. For
below:
division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser,
and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in
2012 and $180,000 in 2013. Each partner withdrew $1,000 for personal use every month during 2012 and 2013.
44. What was Wasser's total share of net income for 2012?
A. $ 63,000
B. $ 53,000
C. $ 58,000
D. $ 29,000
E. $ 51,000
45. What was Nolan's total share of net income for 2012?
A. $ 63,000
B. $ 53,000
C. $ 58,000
D. $ 29,000
E. $ 51,000
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