江西财经大学高级财务会计国际学院题库chapter08.docx
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江西财经大学高级财务会计国际学院题库chapter08.docx
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江西财经大学高级财务会计国际学院题库chapter08
AdvancedAccounting,11e(Beams/Anthony/Bettinghaus/Smith)
Chapter8Consolidations-ChangesinOwnershipInterests
MultipleChoiceQuestions
1)Whichofthefollowingiscorrect?
Thedirectsaleofadditionalsharesofstockatbookvaluepersharetoonlytheparentcompanyfromasubsidiary
A)decreasestheparent'sinterestanddecreasesthenoncontrollingshareholders'interest.
B)decreasestheparent'sinterestandincreasesthenoncontrollingshareholders'interest.
C)increasestheparent'sinterestandincreasesthenoncontrollingshareholders'interest.
D)increasestheparent'sinterestanddecreasesthenoncontrollingshareholders'interest.
Answer:
D
Objective:
LO3
Difficulty:
Moderate
Usethefollowinginformationtoanswerthequestion(s)below.
OnDecember31,2010,GiantCorporation'sInvestmentinPenguinCorporationaccounthadabalanceof$500,000.Thebalanceconsistedof80%ofPenguin's$625,000stockholders'equityonthatdate.Giantowns80%ofPenguin.OnJanuary2,2011,Penguinincreaseditsoutstandingcommonstockfrom15,000to18,000shares.
2)AssumethatPenguinsoldtheadditional3,000sharesdirectlytoGiantfor$150,000onJanuary2,2011.Giant'spercentageownershipinPenguinimmediatelyafterthepurchaseoftheadditionalstockis
A)66-2/3%.
B)80%.
C)83-1/3%.
D)86-2/3%
Answer:
C
Explanation:
C)(Parenthad80%of15,000shares,or12,000shares.Theynowhold15,000of18,000shares)=83.33%
Objective:
LO3
Difficulty:
Moderate
3)AssumethatPenguinsoldtheadditional3,000sharestooutsideinterestsfor$150,000onJanuary2,2011.Giant'spercentageownershipimmediatelyafterthesaleofadditionalstockwouldbe
A)66-2/3%.
B)75%.
C)80%.
D)83-1/3%.
Answer:
A
Explanation:
A)(12,000shares/18,000shares)=66.67%
Objective:
LO3
Difficulty:
Moderate
Usethefollowinginformationtoanswerthequestion(s)below.
BirdCorporationpurchasedan80%interestinBrushCorporationonJuly1,2010atitsbookvalue,andonJanuary1,2011itsInvestmentinBrushaccountwas$300,000,equaltoitsbookvalue.Brush'snetincomefor2011was$99,000(earneduniformly);nodividendsweredeclared.OnMarch1,2011,BirdreduceditsinterestinBrushbysellinga20%interest,one-fourthofitsinvestment,for$84,000.
4)IfBirdusesa"beginning-of-the-year"saleassumption,itsgainonsaleandincomefromBrushfor2011willbe
A)
GainonSale
IncomefromBrush
$5,700
$59,400
B)
GainonSale
IncomefromBrush
$5,700
$62,700
C)
GainonSale
IncomefromBrush
$9,000
$59,40
D)
GainonSale
IncomefromBrush
$9,000
$62,70
Answer:
C
Explanation:
C)
Sellingprice$84,000
Bookvalueofinterestsold
$300,000×(20%/80%)=75,000
Gainonsale$9,000
IncomefromBrush
$99,000×(80%-20%)=$59,400
Objective:
LO2
Difficulty:
Moderate
5)IfBirdusesthe"actual-sale-date"salesassumption,itsgainonthesaleandincomefromBrushfor2011willbe
A)
GainonSale
IncomefromBrush
$5,700
$59,400
B)
GainonSale
IncomefromBrush
$5,700
$62,700
C)
GainonSale
IncomefromBrush
$21,360
$59,400
D)
GainonSale
IncomefromBrush
$21,360
$62,700
Answer:
B
Explanation:
B)
Sellingprice$84,000
Bookvalueofinterestsold:
Beginningbalance$300,000
Incomefor2months
$99,000x1/6×80%=13,200
Adjustedbookvalue313,200
Percentageofinterestsold1/4
Bookvalueapplied78,30078,300
Gainonsale$5,700
IncomefromBrush:
Jan1-Mar1$99,000×2/12×80%=$13,200
Mar1-Dec31$99,000×10/12×60%=49,500
IncomefromBrush$62,700
Objective:
LO2
Difficulty:
Moderate
6)JerseyCompanyacquired90%ofYorkCompanyonApril1,2011.BothJerseyCompanyandYorkCompanyhaveDecember31fiscalyearends.UndercurrentGAAP,whichofthefollowingstatementsisfalse?
A)Theconsolidatedincomestatementin2011shouldnotincludeYork'srevenuesandexpensespriortoApril1,2011.
B)Whenpreparingconsolidatingworkpapersin2011,York'srevenuespriortoApril1,2011areeliminated.
C)York'searningspriortoApril1,2011shouldappearasadeductionontheconsolidatedincomestatementin2011.
D)Theconsolidatedincomestatementin2011shouldincludeYork'srevenuesandexpensesafterApril1,2011.
Answer:
C
Objective:
LO1
Difficulty:
Moderate
7)UtahCompanyholds80%ofthestockofasubsidiarycompany.Thesubsidiaryissues100additionalsharesofstocktoUtahCompanyatapriceabovebookvaluepershare.Thesubsidiarydoesnotissueanyadditionalsharesatthesametime.HowwillUtahCompanyrecordthepurchase?
A)UtahCompanyrecordsagainonsaleofstock.
B)UtahCompanyincreasesadditionalpaid-incapital.
C)UtahCompanydecreasesadditionalpaid-incapital.
D)UtahCompanyassignsanyexcesscostoverbookvalueacquiredtoincreaseundervaluedidentifiableassetsorgoodwillasappropriate.
Answer:
D
Objective:
LO3
Difficulty:
Moderate
Usethefollowinginformationtoanswerthequestion(s)below.
GoldbergCorporationowneda70%interestinSavannahCorporationonDecember31,2010,andGoldberg'sInvestmentinSavannahaccounthadabalanceof$3,900,000.Savannah'sstockholders'equityonthisdatewasasfollows:
Capitalstock,$10parvalue$3,000,000
RetainedEarnings2,400,000
TotalStockholders'Equity$5,400,000
OnJanuary1,2011,Savannahissues80,000newsharesofcommonstocktoGoldbergfor$16each.
8)WhatisGoldberg'spercentageownershipinSavannahafterSavannahissuesitsstocktoGoldberg?
A)76.32%
B)80.43%
C)82.57%
D)83.43%
Answer:
A
Explanation:
A)(210,000+80,000)/380,000
Objective:
LO3
Difficulty:
Moderate
9)OnJanuary1,2011,assumethefairvaluesofSavannah'sidentifiableassetsandliabilitiesequalbookvalues.Whatisthechangeintheamountofgoodwillassociatedwiththeissuanceof80,000additionalsharestoGoldberg?
(Usefourdecimalplaces.)
A)Increasegoodwill$38,176.
B)Decreasegoodwill$38,176.
C)Increasegoodwill$384,000.
D)Decreasegoodwill$384,000.
Answer:
B
Explanation:
B)
Savannah'sequityaftertheissuanceof
thenewshares($5,400,000+$1,280,000)$6,680,000
Goldberg'sownershippercentage76.32%
Goldberg'sshareofSavannah'sequitynow$5,098,176
Goldberg'spreviousshareofSavannah'sequity($5,400,000×70%)3,780,000
Savannah'sequityacquiredinthepurchase$1,318,176
Amountspenttoacquirestock1,280,000
Excessbookvalueacquiredovercost$38,176
Objective:
LO3
Difficulty:
Difficult
Usethefollowinginformationtoanswerthequestion(s)below.
GreatCorporationacquireda90%interestinSOSCorporationatits$810,000bookvalueonDecember31,2010.Asummaryofthestockholders'equityforSOSattheendof2010and2011isasfollows:
12/31/1012/31/11
Capitalstock,$10par$600,000$600,000
Additionalpaid-incapital30,00030,000
RetainedEarnings270,000420,000
Totalstockholders'equity$900,000$1,050,000
OnJanuary1,2012,SOSsold10,000newsharesofits$10parvaluecommonstockfor$45pershare.
10)IfSOSsoldtheadditionalsharestothegeneralpublic,Great'sInvestmentinSOSaccountafterthesalewouldbe________.(Usefourdecimalplaces.)
A)$945,000
B)$1,157,100
C)$1,225,000
D)$1,245,000
Answer:
B
Explanation:
B)
SOS'sstockholders'equitypriortothestockissuance$1,050,000
Plus:
Capitalreceivedfromnewstockissued450,000
Newstockholders'equity$1,500,000
Great'sownership(54,000/(60,000+10,000))77.14%
Great'sadjustedinvestmentinSOS$1,157,100
Objective:
LO3
Difficulty:
Moderate
11)IfSOSsoldtheadditionalsharesdirectlytoGreat,Great'sInvestmentinSOSaccountafterthesalewouldbe
A)$1,350,000.
B)$1,395,000.
C)$1,425,000.
D)$1,500,000.
Answer:
B
Explanation:
B)
Investmentbalanceat12/31/2011
($1,050,000×90%)$945,000
Additionalinvestment(10,000shares×$45)450,000
Investmentaccountbalance,12/31/2011$1,395,000
Objective:
LO3
Difficulty:
Moderate
12)Considerasaleofstockbyasubsidiarytopartiesoutsidetheconsolidatedentity.Thistransactionrequiresanadjustmentoftheparent'sinvestmentandadditionalpaid-incapitalaccountsexceptwhen
A)thesharesaresoldbelowbookvaluepershare.
B)thesharesaresoldabovebookvaluepershare.
C)thesharesaresoldatbookvaluepershare.
D)Alloftheabovearecorrect.
Answer:
C
Objective:
LO3
Difficulty:
Moderate
13)Ifaparentcompanyandoutsideinvestorspurchasesharesofasubsidiaryinrelationtoexistingstockownership(ratably),then
A)therewillbeanadjustmenttoadditionalpaid-incapitalifthestockissoldabovebookvalue.
B)therewillbenoadjustmenttoadditionalpaid-incapitalregardlesswhetherthestockissoldaboveorbelowbookvalue.
C)therewillbeanadjustmenttoadditionalpaid-incapitalifthestockissoldbelowbookvalue.
D)therewillbetheeliminationofagain.
Answer:
B
Objective:
LO3
Difficulty:
Easy
14)Asubsidiarysplititsstock2for1.Whichofthefollowingstatementsisfalse?
A)Astocksplitdoesnotaffecttheamountofnetassetsofthesubsidiary.
B)Astocksplitdoesnotaffectparentandnoncontrollinginterestownershippercentages.
C)Astocksplitdoesnotaffectconsolidationprocedures.
D)A2for1stocksplitdecreasesthenumberofsharesoutstanding.
Answer:
D
Objective:
LO3
Difficulty:
Moderate
Usethefollowinginformationtoanswerthequestion(s)below.
BowerCorporationpurchaseda70%interestinStageCorporationonJune1,2010atapurchasepriceof$350,000.OnJune1,2010,thebookvaluesofStage'sassetsandliabilitieswereequaltofairvalues.OnJune1,2010,Stage'sstockholders'equityconsistedof$290,000ofCommonStockand
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