BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-5 (E4-5)
General questions on statement of cash flows
1. In preparing a statement of cash flows, the cost of acquiring a subsidiary is reported:
2. In computing cash flows from operating activities under the direct method, the following item is an addition:
3. In computing cash flows from operating activities under the indirect method, the following item is an addition to consolidated net income:
4. In computing cash flows from operating activities under the direct method, the following item is an addition:
5. Dividends paid as presented in a consolidated cash flow statement are:
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Showing posts with label Clement. Show all posts
Showing posts with label Clement. Show all posts
Monday, July 19, 2010
Advanced Accounting: Chapter 4 E4-3 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-3 (E4-3)
General Problems
1. Peggy Corporation owns a 70% interest in Sandy Corporation, acquired several years ago at book value. On December 31, 2006, Sandy mailed a check for $10,000 to Peggy in part payment of a $20,000 account with Peggy. Peggy had not received the check when its books were closed on December 31. Peggy Corporation had accounts receivable of $150,000 (including the $20,000 from Sandy), and Sandy had accounts receivable at $220,000 at year-end. In the consolidated balance sheet of Peggy Corporation and Subsidiary at December 31, 2006, accounts receivable will be shown in the amount of:
Use the following information in answering questions 2 and 3.
Primrose Corporation purchased a 70% interest in Starman Corporation on January 1, 2006, for $15,000, when Starman’s stockholders’ equity consisted of $3,000 common stock, $10,000 additional paid-in capital, and $2,000 retained earnings. Income and dividend information for Starman for 2006, 2007, and 2008 is as follows:
2006 2007 2008
Net income (or loss) $1,000 $200 $(500)
Dividends 400 100 —
2. Primrose reported separate income of $12,000 for 2008. Consolidated net income for 2008 is:
3. Primrose’s Investment in Starman balance at December 31, 2008, under the equity method is:
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Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-3 (E4-3)
General Problems
1. Peggy Corporation owns a 70% interest in Sandy Corporation, acquired several years ago at book value. On December 31, 2006, Sandy mailed a check for $10,000 to Peggy in part payment of a $20,000 account with Peggy. Peggy had not received the check when its books were closed on December 31. Peggy Corporation had accounts receivable of $150,000 (including the $20,000 from Sandy), and Sandy had accounts receivable at $220,000 at year-end. In the consolidated balance sheet of Peggy Corporation and Subsidiary at December 31, 2006, accounts receivable will be shown in the amount of:
Use the following information in answering questions 2 and 3.
Primrose Corporation purchased a 70% interest in Starman Corporation on January 1, 2006, for $15,000, when Starman’s stockholders’ equity consisted of $3,000 common stock, $10,000 additional paid-in capital, and $2,000 retained earnings. Income and dividend information for Starman for 2006, 2007, and 2008 is as follows:
2006 2007 2008
Net income (or loss) $1,000 $200 $(500)
Dividends 400 100 —
2. Primrose reported separate income of $12,000 for 2008. Consolidated net income for 2008 is:
3. Primrose’s Investment in Starman balance at December 31, 2008, under the equity method is:
Click here for the SOLUTION
Advanced Accounting: Chapter 4 E4-1 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-1 (E4-1)
General questions
1. Working paper entries normally:
2. Working paper techniques assume nominal accounts are:
3. Most errors made in consolidating financial statements will appear when:
4. Net income on consolidation working papers is:
5. On consolidation working papers, individual stockholders’ equity accounts of a subsidiary are:
6. On consolidation working papers, investment income from a subsidiary is:
7. On consolidation working papers, the investment in consolidated subsidiary account balances are:
8. On consolidation working papers, consolidated net income is determined by:
9. On consolidation working papers, consolidated end-of-the-period retained earnings is determined by:
10. Under the trial balance approach to consolidation working papers, which of the following is used?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 4
Exercise 4-1 (E4-1)
General questions
1. Working paper entries normally:
2. Working paper techniques assume nominal accounts are:
3. Most errors made in consolidating financial statements will appear when:
4. Net income on consolidation working papers is:
5. On consolidation working papers, individual stockholders’ equity accounts of a subsidiary are:
6. On consolidation working papers, investment income from a subsidiary is:
7. On consolidation working papers, the investment in consolidated subsidiary account balances are:
8. On consolidation working papers, consolidated net income is determined by:
9. On consolidation working papers, consolidated end-of-the-period retained earnings is determined by:
10. Under the trial balance approach to consolidation working papers, which of the following is used?
Click here for the SOLUTION
Friday, July 9, 2010
Advanced Accounting: Chapter 2 E2-2 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-2 (E2-2)
[AICPA adapted] General problems
1. Investor Company owns 40% of Alimand Corporation. During the calendar year, Alimand had net earnings of $100,000 and paid dividends of $10,000. Investor mistakenly recorded these transactions using the cost method rather than the equity method of accounting. What effect would this have on the investment account, net earnings, and retained earnings, respectively?
2. The corporation exercises control over an affiliate in which it holds a 40% common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how would this affect the investor corporation?
3. An investor uses the cost method to account for an investment in common stock. A portion of the dividends received this year were in excess of the investor’s share of investee’s earnings after the date of the investment. The amount of dividends revenue that should be reported in the investor’s income statement for this year would be:
4. On January 1 Grade Company paid $300,000 for 20,000 shares of Medium Company’s common stock, which represents a 15% investment in Medium. Grade does not have the ability to exercise significant influence over Medium. Medium declared and paid a dividend of $1 per share to its stockholders during the year. Medium reported net income of $260,000 for the year ended December 31. The balance in Grade’s balance sheet account “Investment in Medium Company” at December 31 should be
5. On January 2, 2006, Troquel Corporation bought 15% of Zafacon Corporation’s capital stock for $30,000. Troquel accounts for this investment by the cost method. Zafacon’s net income for the years ended December 31, 2006, and December 31, 2007, were $10,000 and $50,000, respectively. During 2007 Zafacon declared a dividend of $70,000. No dividends were declared in 2006. How much should Troquel show on its 2007 income statement as income from this investment?
6. Pare purchased 10% of Tot Company’s 100,000 outstanding shares of common stock on January 2 for $50,000. On December 31, Pare purchased an additional 20,000 shares of Tot for $150,000. There was no goodwill as a result of either acquisition, and Tot had not issued any additional stock during the year. Tot reported earnings of $300,000 for the year. What amount should Pare report in its December 31 balance sheet as investment in Tot?
7. On January 1, Point purchased 10% of Iona Company’s common stock. Point purchased additional shares, bringing its ownership up to 40% of Iona’s common stock outstanding, on August 1. During October, Iona declared and paid a cash dividend on all of its outstanding common stock. How much income from the Iona investment should Point’s income statement report?
8. On January 2, Kean Company purchased a 30% interest in Pod Company for $250,000. On this date, Pod’s stockholders’ equity was $500,000. The carrying amounts of Pod’s identifiable net assets approximated their fair values, except for land, whose fair value exceeded its carrying amount by $200,000. Pod reported net income of $100,000 and paid no dividends. Kean accounts for this investment using the equity method. In its December 31 balance sheet, what amount should Kean report as investment in subsidiary?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-2 (E2-2)
[AICPA adapted] General problems
1. Investor Company owns 40% of Alimand Corporation. During the calendar year, Alimand had net earnings of $100,000 and paid dividends of $10,000. Investor mistakenly recorded these transactions using the cost method rather than the equity method of accounting. What effect would this have on the investment account, net earnings, and retained earnings, respectively?
2. The corporation exercises control over an affiliate in which it holds a 40% common stock interest. If its affiliate completed a fiscal year profitably but paid no dividends, how would this affect the investor corporation?
3. An investor uses the cost method to account for an investment in common stock. A portion of the dividends received this year were in excess of the investor’s share of investee’s earnings after the date of the investment. The amount of dividends revenue that should be reported in the investor’s income statement for this year would be:
4. On January 1 Grade Company paid $300,000 for 20,000 shares of Medium Company’s common stock, which represents a 15% investment in Medium. Grade does not have the ability to exercise significant influence over Medium. Medium declared and paid a dividend of $1 per share to its stockholders during the year. Medium reported net income of $260,000 for the year ended December 31. The balance in Grade’s balance sheet account “Investment in Medium Company” at December 31 should be
5. On January 2, 2006, Troquel Corporation bought 15% of Zafacon Corporation’s capital stock for $30,000. Troquel accounts for this investment by the cost method. Zafacon’s net income for the years ended December 31, 2006, and December 31, 2007, were $10,000 and $50,000, respectively. During 2007 Zafacon declared a dividend of $70,000. No dividends were declared in 2006. How much should Troquel show on its 2007 income statement as income from this investment?
6. Pare purchased 10% of Tot Company’s 100,000 outstanding shares of common stock on January 2 for $50,000. On December 31, Pare purchased an additional 20,000 shares of Tot for $150,000. There was no goodwill as a result of either acquisition, and Tot had not issued any additional stock during the year. Tot reported earnings of $300,000 for the year. What amount should Pare report in its December 31 balance sheet as investment in Tot?
7. On January 1, Point purchased 10% of Iona Company’s common stock. Point purchased additional shares, bringing its ownership up to 40% of Iona’s common stock outstanding, on August 1. During October, Iona declared and paid a cash dividend on all of its outstanding common stock. How much income from the Iona investment should Point’s income statement report?
8. On January 2, Kean Company purchased a 30% interest in Pod Company for $250,000. On this date, Pod’s stockholders’ equity was $500,000. The carrying amounts of Pod’s identifiable net assets approximated their fair values, except for land, whose fair value exceeded its carrying amount by $200,000. Pod reported net income of $100,000 and paid no dividends. Kean accounts for this investment using the equity method. In its December 31 balance sheet, what amount should Kean report as investment in subsidiary?
Click here for the SOLUTION
Advanced Accounting: Chapter 2 E2-1 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-1 (E2-1)
General questions
1. Indicators of an investor company’s inability to exercise significant influence over an investee are provided in FASB Interpretation No. 35. Which of the following is not included among those indicators?
2. A 20% common stock interest in an investee company:
3. The cost of a 25% interest in the voting stock of an investee that is recorded in the investment account includes:
4. The underlying equity of an investment at acquisition:
5. Jarret Corporation is a 25%-owned equity investee of Marco Corporation. During the current year, Marco receives $12,000 in dividends from Jarret. How does the $12,000 dividend affect Marco’s financial position and results of operations?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 2
Exercise 2-1 (E2-1)
General questions
1. Indicators of an investor company’s inability to exercise significant influence over an investee are provided in FASB Interpretation No. 35. Which of the following is not included among those indicators?
2. A 20% common stock interest in an investee company:
3. The cost of a 25% interest in the voting stock of an investee that is recorded in the investment account includes:
4. The underlying equity of an investment at acquisition:
5. Jarret Corporation is a 25%-owned equity investee of Marco Corporation. During the current year, Marco receives $12,000 in dividends from Jarret. How does the $12,000 dividend affect Marco’s financial position and results of operations?
Click here for the SOLUTION
Advanced Accounting: Chapter 1 E1-2 General Questions
BA 459
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 1
Exercise 1-2 (E1-2)
[AICPA adapted] General Problems
1. Fast Corporation paid $50,000 cash for the net assets of Agge Company, which consisted of the following:
Book Value Fair Value
Current assets $10,000 $14,000
Plant and equipment 40,000 55,000
Liabilities assumed (10,000) (9,000)
$40,000 $60,000
The plant and equipment acquired in this business combination should be recorded at:
2. On April 1, Jack Company paid $800,000 for all the issued and outstanding common stock of Ann Corporation in a transaction properly accounted for as a purchase. The recorded assets and liabilities of Ann Corporation on April 1 follow:
Cash $ 80,000
Inventory 240,000
Property and equipment (net of accumulated depreciation of $320,000) 480,000
Liabilities (180,000)
On April 1, it was determined that the inventory of Ann had a fair value of $190,000 and the property and equipment (net) had a fair value of $560,000. What is the amount of goodwill resulting from the business combination?
Click here for the SOLUTION
Advanced Accounting: Beams, Clement, Anthony, Lowensohn
Floyd A. Beams
Robin P. Clement
Joseph H. Anthony
Suzanne Lowensohn
9th Edition 10th Edition
Chapter 1
Exercise 1-2 (E1-2)
[AICPA adapted] General Problems
1. Fast Corporation paid $50,000 cash for the net assets of Agge Company, which consisted of the following:
Book Value Fair Value
Current assets $10,000 $14,000
Plant and equipment 40,000 55,000
Liabilities assumed (10,000) (9,000)
$40,000 $60,000
The plant and equipment acquired in this business combination should be recorded at:
2. On April 1, Jack Company paid $800,000 for all the issued and outstanding common stock of Ann Corporation in a transaction properly accounted for as a purchase. The recorded assets and liabilities of Ann Corporation on April 1 follow:
Cash $ 80,000
Inventory 240,000
Property and equipment (net of accumulated depreciation of $320,000) 480,000
Liabilities (180,000)
On April 1, it was determined that the inventory of Ann had a fair value of $190,000 and the property and equipment (net) had a fair value of $560,000. What is the amount of goodwill resulting from the business combination?
Click here for the SOLUTION
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