Ch4 Consolidated Financial Statements and Outside Test Bank

Student name:__________

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.
1) For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except:

A) Identifiable assets acquired, at fair value.
B) Liabilities assumed, at book value.
C) Non-controlling interest, at fair value.
D) Goodwill, or a gain from bargain purchase.
E) Intangible assets acquired, at fair value.

2) When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What amount should have been reported for the land in a consolidated balance sheet at the acquisition date?

A) $40,000.
B) $50,000.
C) $75,000.
D) $100,000.
E) $125,000.

3) When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What is the total amount of excess land allocation at the acquisition date?

A) $0.
B) $40,000.
C) $50,000.
D) $60,000.
E) $75,000.

4) When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What is the amount of excess land allocation attributed to the controlling interest at the acquisition date?

A) $0.
B) $12,500.
C) $40,000.
D) $50,000.
E) $60,000.

5) When Valley Co. acquired 80% of the common stock of Coleman Corp., Coleman owned land with a book value of $75,000 and a fair value of $125,000.What is the amount of excess land allocation attributed to the noncontrolling interest at the acquisition date?

A) $0.
B) $10,000.
C) $15,000.
D) $40,000.
E) $50,000.

6) Which of the following methods is not used to value a noncontrolling interest under circumstances where a control premium is applied to determine the appropriate value for such interest?

A) Valuation models based on subsidiary discounted cash flows.
B) Valuation models based on subsidiary residual income projections.
C) Comparison with comparable investments.
D) The application of a safe harbor discount rate.
E) Fair value based on market trades.

7) Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace’s net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the total amount of goodwill recognized at the date of acquisition?

A) $0.
B) $100,000.
C) $200,000.
D) $300,000.
E) $700,000.

8) Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace’s net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What amount of goodwill should be attributed to Dodd at the date of acquisition?

A) $0.
B) $75,000.
C) $150,000.
D) $225,000.
E) $300,000.

9) Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace’s net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What amount of goodwill should be attributed to the noncontrolling interest at the date of acquisition?

A) $0.
B) $25,000.
C) $50,000.
D) $75,000.
E) $175,000.

10) Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace’s net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the dollar amount of noncontrolling interest that should appear in a consolidated balance sheet prepared at the date of acquisition?

A) $75,000.
B) $450,000.
C) $475,000.
D) $525,000.
E) $600,000.

11) Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace’s net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the dollar amount of Wallace Corp.'s net assets that would be represented in a consolidated balance sheet prepared at the date of acquisition?

A) $1,575,000.
B) $1,800,000.
C) $1,900,000.
D) $2,100,000.
E) $2,400,000.

12) Dodd Co. acquired 75% of the common stock of Wallace Corp. for $1,800,000. The fair value of Wallace’s net assets was $2,100,000, and the book value was $1,900,000. The noncontrolling interest shares of Wallace Corp. are not actively traded.What is the dollar amount of fair value over book value differences for identifiable net assets attributed to Dodd at the date of acquisition?

A) $0.
B) $150,000.
C) $200,000.
D) $375,000.
E) $500,000.

13) Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2022. During 2022, Sogers had revenues of $2,700,000 and expenses of $2,100,000. The amortization of fair value allocations totaled $65,000 in 2022. Not including its investment in Sogers, Renz Co. had its own revenues of $4,800,000 and expenses of $3,600,000 for the year 2022.The noncontrolling interest's share of the earnings of Sogers Corp. for 2022 is calculated to be

A) $0.
B) $107,000.
C) $120,000.
D) $133,000.
E) $240,000.

14) Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2022. During 2022, Sogers had revenues of $2,700,000 and expenses of $2,100,000. The amortization of fair value allocations totaled $65,000 in 2022. Not including its investment in Sogers, Renz Co. had its own revenues of $4,800,000 and expenses of $3,600,000 for the year 2022.What amount would Renz Co. report as consolidated net income for 2022?

A) $600,000.
B) $1,200,000.
C) $1,735,000.
D) $1,800,000.
E) $1,865,000.

15) Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2022. During 2022, Sogers had revenues of $2,700,000 and expenses of $2,100,000. The amortization of fair value allocations totaled $65,000 in 2022. Not including its investment in Sogers, Renz Co. had its own revenues of $4,800,000 and expenses of $3,600,000 for the year 2022.What amount of consolidated net income for 2022 should be allocated to Renz’s controlling interest in Sogers?

A) $1,200,000
B) $1,388,000
C) $1,440,000
D) $1,492,000
E) $1,628,000

16) LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.In consolidation, the total amount of expenses related to Dean, and to LaFevor’s acquisition of Dean, for 2022 is determined to be

A) $180,000.
B) $234,000.
C) $325,000.
D) $333,750.
E) $546,000.

17) LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.What is the effect of including Dean in consolidated net income for 2022?

A) $8,750.
B) $66,250.
C) $75,000.
D) $126,000.
E) $159,000.

18) LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.What is the amount of Dean’s net income attributable to the controlling interest for 2022?

A) $19,875.
B) $46,375.
C) $66,250.
D) $111,300.
E) $126,000.

19) LaFevor Co. acquired 70% of the common stock of Dean Corp. on August 1, 2022. For 2022, Dean reported revenues of $960,000 and expenses of $780,000, all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $21,000.What is the amount of the noncontrolling interest's share of Dean’s income for 2022?

A) $15,900.
B) $19,875.
C) $46,375.
D) $47,700.
E) $54,000.

20) Dunne Inc. bought 65% of the outstanding common stock of Hardy Inc. in an acquisition that resulted in the recognition of goodwill. Hardy owned a piece of land that cost $375,000 but was worth $700,000 at the date of acquisition. What value would be attributed to this land in a consolidated balance sheet at the date of acquisition?

A) $245,000.
B) $325,000.
C) $375,000.
D) $455,000.
E) $700,000.

21) Daniels Inc. acquired 85% of the outstanding common stock of Noyce Corp.in 2021. Noyce currently owes Daniels $400,000 for inventory acquired during 2022. In preparing consolidated financial statements for 2022, what amount of Noyce’s liability should be eliminated?

A) $0.
B) $60,000.
C) $300,000.
D) $340,000.
E) $400,000.

22) Scott Co. acquired 70% of Gregg Co. for $525,000 on December 31, 2019 when Gregg’s book value was $580,000. The Gregg stock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life) that was undervalued in the financial records by $170,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid.

What amount of consolidated net income for 2020 is attributable to Scott’s controlling interest?

A) $580,000.
B) $668,200.
C) $680,100.
D) $692,000.
E) $723,000.

23) Scott Co. acquired 70% of Gregg Co. for $525,000 on December 31, 2019 when Gregg’s book value was $580,000. The Gregg stock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life) that was undervalued in the financial records by $170,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid.

What is the noncontrolling interest's share of the subsidiary's net income for the year ended December 31, 2020 and what is the ending balance of the noncontrolling interest in the subsidiary at December 31, 2020?

A) $48,000 and $262,800.
B) $48,000 and $273,000.
C) $42,900 and $267,900.
D) $42,900 and $262,800.
E) $48,000 and $267,900.

24) Scott Co. acquired 70% of Gregg Co. for $525,000 on December 31, 2019 when Gregg’s book value was $580,000. The Gregg stock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life) that was undervalued in the financial records by $170,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid.

What is the consolidated balance of the Equipment account at December 31, 2020?

A) $814,000.
B) $821,000.
C) $831,000.
D) $797,000.
E) $661,000.

25) On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows:

On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What amount represents consolidated current assets at January 2, 2019?

A) $127,000.
B) $129,800.
C) $143,800.
D) $148,000.
E) $135,400.

26) On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows:

On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What is the amount attributable to consolidated noncurrent assets at January 2, 2019?

A) $195,000.
B) $192,200.
C) $186,600.
D) $181,000.
E) $169,800.

27) On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows:

On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What are the total consolidated current liabilities at January 2, 2019?

A) $53,200.
B) $56,000.
C) $64,400.
D) $42,000.
E) $70,000.

28) On January 1, 2019, Palk Corp. and Spraz Corp. had condensed balance sheets as follows:

On January 2, 2019, Palk borrowed the entire $84,000 it needed to acquire 80% of the outstanding common shares of Spraz. Shares of Spraz are not actively traded on the market. The loan was to be paid in ten equal annual principal payments, plus interest, beginning December 31, 2019. The excess consideration transferred over the underlying book value of the acquired net assets was allocated 60% to inventory and 40% to goodwill.What is consolidated stockholders’ equity at January 2, 2019?

A) $112,000.
B) $133,000.
C) $168,000.
D) $182,000.
E) $203,000.

29) In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

A) Fair value based on stock trades of the acquired company.
B) Subsidiary cash flows discounted to present value.
C) Book value of subsidiary net assets.
D) Projections of residual income.
E) Consideration transferred by the parent company that implies a total subsidiary value.

30) When a parent uses the equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is false at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

A) Parent company net income equals controlling interest in consolidated net income.
B) Parent company retained earnings equals consolidated retained earnings.
C) Parent company total assets equals consolidated total assets.
D) Parent company dividends equals consolidated dividends.
E) Goodwill is not recorded on the parent’s books.

31) When a parent uses the initial value method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

A) Parent company net income equals consolidated net income.
B) Parent company retained earnings equals consolidated retained earnings.
C) Parent company total assets equals consolidated total assets.
D) Parent company dividends equal consolidated dividends.
E) Goodwill is recorded on the parent’s books.

32) When a parent uses the partial equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

A) Parent company net income equals consolidated net income.
B) Parent company retained earnings equals consolidated retained earnings.
C) Parent company total assets equals consolidated total assets.
D) Parent company dividends equal consolidated dividends.
E) Goodwill is recorded on the parent’s books.

33) In a step acquisition, which of the following statements is false?

A) The acquisition method views a step acquisition essentially the same as a single step acquisition.
B) Income from subsidiary is computed by applying a partial year for a new purchase acquired during the year.
C) Income from subsidiary is computed for the entire year for a new purchase acquired during the year.
D) Obtaining control through a step acquisition is a significant measurement event.
E) Pre-acquisition earnings are not included in the consolidated income statement.

34) Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?

A) The parent recognizes a larger percent of subsidiary income.
B) A step acquisition resulting in control may result in a parent recognizing a gain on revaluation.
C) The book value of the subsidiary will increase.
D) The parent's percent ownership in subsidiary will increase.
E) Noncontrolling interest in subsidiary's net income will decrease.

35) When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true?

A) Income from subsidiary is not recognized until there is an entire year of consolidated operations.
B) Income from subsidiary is recognized from date of acquisition to year-end.
C) Excess cost over acquisition value is recognized at the beginning of the fiscal year.
D) No goodwill can be recognized.
E) Income from subsidiary is recognized for the entire year.

36) When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?

A) Pre-acquisition earnings are deducted from consolidated retained earnings.
B) Pre-acquisition earnings are added to consolidated revenues and expenses.
C) Pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity.
D) Pre-acquisition earnings are added to the beginning consolidated stockholders' equity.
E) Pre-acquisition earnings are excluded from the consolidated income statement.

37) When a parent uses the acquisition method for business combinations and sells shares of its subsidiary, which of the following statements is false?

A) If majority control is still maintained, consolidated financial statements are still required.
B) If majority control is not maintained but significant influence exists, the equity method to account for the investment is still used but consolidated financial statements are not required.
C) If majority control is not maintained but significant influence exists, the equity method is still used to account for the investment and consolidated financial statements are still required.
D) If majority control is not maintained and significant influence no longer exists, a prospective change in accounting principle to the fair value method is required.
E) A gain or loss calculation must be prepared if control is lost.

38) All of the following statements regarding the sale of subsidiary shares are true except which of the following?

A) The use of specific identification based on serial number is acceptable.
B) The use of the FIFO assumption is acceptable.
C) The use of the averaging assumption is acceptable.
D) The use of specific LIFO assumption is acceptable.
E) The parent company must determine whether consolidation is still appropriate for the remaining shares owned.

39) Which of the following statements is true regarding the sale of subsidiary shares when using the acquisition method for accounting for business combinations?

A) If control continues, the difference between selling price and acquisition value is recorded as a realized gain or loss.
B) If control continues, the difference between selling price and acquisition value is an unrealized gain or loss.
C) If control continues, the difference between selling price and carrying value is recorded as an adjustment to additional paid-in capital.
D) If control continues, the difference between selling price and carrying value is recorded as a realized gain or loss.
E) If control continues, the difference between selling price and carrying value is recorded as an adjustment to retained earnings.

40) Jax Company used the acquisition method when it acquired its investment in Saxton Company. Jax now sells some of its shares of Saxton such that neither control nor significant influence exists. Which of the following statements is true?

A) The difference between selling price and acquisition value is recorded as a realized gain or loss.
B) The difference between selling price and acquisition value is recorded as an unrealized gain or loss.
C) The difference between selling price and carrying value is recorded as a realized gain or loss.
D) The difference between selling price and carrying value is recorded as an unrealized gain or loss.
E) The difference between selling price and carrying value is recorded as an adjustment to retained earnings.

41) Brady, Inc., a calendar-year corporation, acquires 85% of Austin Company on September 1, 2019, and an additional 10% on January 1, 2020. Total annual amortization of $8,000 relates to the first acquisition. Austin reports the following figures for 2020:

Without regard for this investment, Brady independently earns $375,000 in net income during 2020.All net income is earned evenly throughout the year.What is the controlling interest in consolidated net income for 2020?

A) $464,250.
B) $474,450.
C) $481,250.
D) $492,000.
E) $500,000.

42) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.The acquisition value attributable to the noncontrolling interest at January 1, 2019 is:

A) $23,400.
B) $24,000.
C) $24,900.
D) $26,000.
E) $20,000.

43) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Buildings account?

A) $2,000 increase.
B) $2,000 decrease.
C) $1,800 increase.
D) $1,800 decrease.
E) No change.

44) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Buildings account?

A) $1,620 increase.
B) $1,620 decrease.
C) $1,800 increase.
D) $1,800 decrease.
E) No adjustment is necessary.

45) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Buildings account?

A) $1,440 increase.
B) $1,440 decrease.
C) $1,600 increase.
D) $1,600 decrease.
E) No adjustment is necessary.

46) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Equipment account?

A) $4,000 increase.
B) $4,000 decrease.
C) $3,600 increase.
D) $3,600 decrease.
E) No adjustment is necessary.

47) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Equipment account?

A) $3,000 increase.
B) $3,000 decrease.
C) $2,700 increase.
D) $2,700 decrease.
E) No adjustment is necessary.

48) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Equipment account?

A) $2,000 increase.
B) $2,000 decrease.
C) $1,800 increase.
D) $1,800 decrease.
E) No adjustment is necessary.

49) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Land account?

A) $7,000 increase.
B) $7,000 decrease.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.

50) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Land account?

A) $8,000 decrease.
B) $7,000 increase.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.

51) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what adjustment is necessary for Hogan's Land account?

A) $7,000 decrease.
B) $7,000 increase.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.

52) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Patent account?

A) $7,000.
B) $6,300.
C) $11,000.
D) $9,900.
E) No adjustment is necessary.

53) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2019, what net adjustment is necessary for Hogan's Patent account?

A) $5,600.
B) $8,800.
C) $7,000.
D) $7,700.
E) No adjustment is necessary.

54) McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan’s total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2020, what net adjustment is necessary for Hogan's Patent account?

A) $4,200.
B) $5,500.
C) $8,000.
D) $6,600.
E) No adjustment is necessary.

55) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute Pell's Investment in Demers account balance at December 31, 2019.

A) $580,000.
B) $574,400.
C) $548,000.
D) $542,400.
E) $541,000.

56) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute Pell's investment account balance in Demers at December 31, 2020.

A) $577,200.
B) $604,000.
C) $592,800.
D) $632,800.
E) $572,000.

57) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute Pell's investment account balance in Demers at December 31, 2021.

A) $639,000.
B) $643,200.
C) $763,200.
D) $676,000.
E) $620,000.

58) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute Pell's equity income from Demers for the year ended December 31, 2019.

A) $74,400.
B) $73,000.
C) $42,400.
D) $41,000.
E) $80,000.

59) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute Pell's equity income from Demers for the year ended December 31, 2020.

A) $90,400.
B) $89,000.
C) $50,400.
D) $56,000.
E) $96,000.

60) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute Pell's equity income from Demers for the year ended December 31, 2021.

A) $50,400.
B) $56,000.
C) $98,400.
D) $97,000.
E) $104,000.

61) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2019.

A) $20,000.
B) $12,000.
C) $18,600.
D) $10,600.
E) $14,400.

62) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2020.

A) $18,400.
B) $14,400.
C) $22,600.
D) $24,000.
E) $12,600.

63) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2021.

A) $20,400.
B) $24,600.
C) $26,000.
D) $14,000.
E) $12,600.

64) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2019.

A) $135,600.
B) $137,000.
C) $112,000.
D) $100,000.
E) $118,600.

65) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2020.

A) $107,000.
B) $126,000.
C) $109,200.
D) $149,600.
E) $148,200.

66) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2021.

A) $107,800.
B) $140,000.
C) $165,200.
D) $160,800.
E) $146,800.

67) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.What is the consolidated balance of the Investment in Demers account at December 31, 2021.

A) $639,000.
B) $643,200.
C) $763,200.
D) $0.
E) $620,000.

68) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the equity method is applied.What is the consolidated balance of the Equity in Demers Earnings account at December 31, 2021.

A) $0.
B) $56,000.
C) $98,400.
D) $97,000.
E) $104,000.

69) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute Pell's Investment in Demers at December 31, 2019.

A) $500,000.
B) $574,400.
C) $625,000.
D) $542,400.
E) $532,000.

70) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute Pell's Investment in Demers at December 31, 2020.

A) $625,000.
B) $664,800.
C) $592,400.
D) $500,000.
E) $572,000.

71) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute Pell's Investment in Demers at December 31, 2021.

A) $592,400.
B) $500,000.
C) $625,000.
D) $676,000.
E) $620,000.

72) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2019?

A) $32,000.
B) $74,400.
C) $73,000.
D) $42,400.
E) $41,000.

73) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2020?

A) $90,400.
B) $40,000.
C) $89,000.
D) $50,400.
E) $56,000.

74) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2021?

A) $48,000.
B) $56,000.
C) $98,400.
D) $97,000.
E) $50,400.

75) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2019.

A) $12,000.
B) $10,600.
C) $18,600.
D) $20,000.
E) $14,400.

76) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2020.

A) $18,400.
B) $14,000.
C) $22,600.
D) $24,000.
E) $12,600.

77) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2021.

A) $24,600.
B) $14,000.
C) $26,000.
D) $20,400.
E) $12,600.

78) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute the noncontrolling interest in Demers at December 31, 2019.

A) $135,600.
B) $80,000.
C) $117,000.
D) $100,000.
E) $110,600.

79) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute the noncontrolling interest in Demers at December 31, 2020.

A) $126,000.
B) $106,000.
C) $109,200.
D) $149,600.
E) $148,200.

80) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the initial value method is applied.Compute the noncontrolling interest in Demers at December 31, 2021.

A) $107,800.
B) $140,000.
C) $80,000.
D) $50,000.
E) $160,800.

81) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute Pell's Investment in Demers at December 31, 2019.

A) $625,000.
B) $574,400.
C) $548,000.
D) $542,400.
E) $532,000.

82) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute Pell's Investment in Demers at December 31, 2020.

A) $676,000.
B) $629,000.
C) $580,000.
D) $604,000.
E) $572,000.

83) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute Pell's Investment in Demers at December 31, 2021.

A) $780,000.
B) $660,000.
C) $785,000.
D) $676,000.
E) $620,000.

84) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2019?

A) $80,000.
B) $74,400.
C) $73,000.
D) $42,400.
E) $41,000.

85) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2020?

A) $90,400.
B) $89,000.
C) $50,400.
D) $96,000.
E) $56,000.

86) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.How much does Pell record as Income from Demers for the year ended December 31, 2021?

A) $98,400.
B) $56,000.
C) $104,000.
D) $97,000.
E) $50,400.

87) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2019.

A) $20,000.
B) $12,000.
C) $18,600.
D) $10,600.
E) $14,400.

88) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2020.

A) $18,400.
B) $14,000.
C) $22,600.
D) $24,000.
E) $12,600.

89) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute the noncontrolling interest in the net income of Demers at December 31, 2021.

A) $20,400.
B) $26,000.
C) $24,600.
D) $14,000.
E) $12,600.

90) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2019.

A) $135,600.
B) $114,000.
C) $112,000.
D) $100,000.
E) $110,600.

91) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2020.

A) $124,000.
B) $126,000.
C) $109,200.
D) $149,600.
E) $148,200.

92) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.Compute the noncontrolling interest in Demers at December 31, 2021.

A) $107,800.
B) $140,000.
C) $80,000.
D) $160,800.
E) $146,800.

93) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.What is the consolidated balance of the Investment in Demers account at December 31, 2021.

A) $780,000.
B) $660,000.
C) $785,000.
D) $676,000.
E) $0.

94) Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Demers earns income and pays dividends as follows:

Assume the partial equity method is applied.What is the consolidated balance of the Equity in Demers Earnings account at December 31, 2021.

A) $0.
B) $56,000.
C) $104,000.
D) $97,000.
E) $50,400.

95) Parsons Company acquired 90% of Roxy Company several years ago for which the consideration transferred included an amount paid for goodwill of $200,000 at that date. During 2020 an analysis of the fair value of Roxy's assets determined an impairment of goodwill in the amount of $50,000.At what amount would consolidated goodwill be reported for 2020?

A) $150,000.
B) $200,000.
C) $50,000.
D) $0.
E) $135,000.

96) In comparing U.S. GAAP and International Financial Reporting Standards (IFRS) with regard to a basis for measurement of a noncontrolling interest, which of the following is true?

A) U.S. GAAP requires acquisition-date fair value measurement and IFRS requires the acquiree's identifiable net asset fair value measurement.
B) U.S. GAAP and IFRS both require acquisition-date fair value measurement.
C) U.S. GAAP and IFRS both require the acquiree's identifiable net asset fair value measurement.
D) U.S. GAAP requires acquisition-date fair value measurement, but IFRS allows an option for acquisition-date fair value measurement.
E) U.S. GAAP and IFRS both apportion goodwill to the parent only.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
97) Alonzo Co. acquired 60% of Beazley Corp. by paying $240,000 cash. There is no active trading market for Beazley Corp. At the time of the acquisition, the book value of Beazley's net assets was $300,000.Required:What amount should have been assigned to the noncontrolling interest immediately after the combination?

98) Tosco Co. paid $540,000 for 80% of the stock of Martz Co. when the book value of Martz's net assets was $600,000. For all of Martz's assets and liabilities, book value and fair value were approximately equal. There was no active market for the shares of Martz Co.Required: Using the acquisition method, what amount of goodwill should appear in a consolidated balance sheet prepared immediately after the combination?

99) On January 1, 2020, Elva Corp. paid $750,000 for 80% of Fenton Co. when the book value of Fenton's net assets was $800,000. Fenton owned a building with a fair value of $150,000 and a book value of $120,000.Required: At what amount would the building appear on a consolidated balance sheet prepared immediately after the combination, under the acquisition method of accounting for business combinations?

100) Pennant Corp. owns 70% of the common stock of Scarvens Co. Scarvens's revenues for 2020 totaled $200,000.Required: What amount of Scarvens' revenues would be included in the consolidated revenues under the acquisition method of accounting for business combinations?

101) Caldwell Inc. acquired 65% of Club Corp. for $2,600,000. There was no active market for the shares of Club Corp. Club owned a building and equipment with ten-year useful lives. The combined book value of these assets was $830,000, and the fair value was $950,000. For Club's other assets and liabilities, book value was equal to fair value. The total acquisition-date fair value of Club's net assets was $3,500,000.Using the acquisition method, determine the amount of goodwill associated with Caldwell's purchase of Club.

102) Caldwell Inc. acquired 65% of Club Corp. for $2,600,000. There was no active market for the shares of Club Corp. Club owned a building and equipment with ten-year useful lives. The combined book value of these assets was $830,000, and the fair value was $950,000. For Club's other assets and liabilities, book value was equal to fair value. The total acquisition-date fair value of Club's net assets was $3,500,000.Determine the amount of the noncontrolling interest as of the date of the acquisition.

103) On January 1, 2019, Glenville Co. acquired an 80% interest in Acron Corp. for $500,000. There is no active trading market for Acron’s stock. The fair value of Acron's net assets was $600,000 and Glenville accounts for its interest using the acquisition method.Determine the amount of goodwill to be recognized in this acquisition.

104) On January 1, 2019, Glenville Co. acquired an 80% interest in Acron Corp. for $500,000. There is no active trading market for Acron’s stock. The fair value of Acron's net assets was $600,000 and Glenville accounts for its interest using the acquisition method.Determine the value assigned to the noncontrolling interest as of the date of the acquisition.

105) On January 1, 2019, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Techron Co. was appraised at $530,000. The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $98,000 in 2019 and $126,000 in 2020 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2019 and $364,000 in 2020.Prepare a proper presentation of consolidated net income and its allocation for 2019.

106) On January 1, 2019, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Techron Co. was appraised at $530,000. The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $98,000 in 2019 and $126,000 in 2020 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2019 and $364,000 in 2020.Prepare a proper presentation of consolidated net income and its allocation for 2020.

107) On January 1, 2019, Jannison Inc. acquired 90% of Techron Co. by paying $477,000 cash. There is no active trading market for Techron stock. Techron Co. reported a Common Stock account balance of $140,000 and Retained Earnings of $280,000 at that date. The fair value of Techron Co. was appraised at $530,000. The total annual amortization was $11,000 as a result of this transaction. The subsidiary earned $98,000 in 2019 and $126,000 in 2020 with dividend payments of $42,000 each year. Without regard for this investment, Jannison had income of $308,000 in 2019 and $364,000 in 2020.What is the noncontrolling interest balance as of December 31, 2020?

108) On January 1, 2018, Vacker Co. acquired 70% of Carper Inc. by paying $650,000. This included a $20,000 control premium. Carper reported common stock on that date of $420,000 with retained earnings of $252,000. A building was undervalued in the company's financial records by $28,000. This building had a ten-year remaining life. Copyrights of $80,000 were to be recognized and amortized over 20 years.Carper earned income and paid cash dividends as follows:

On December 31, 2020, Vacker owed $30,800 to Carper. There have been no changes in Carper’s common stock account since the acquisition.Required:If the equity method had been applied by Vacker for this acquisition, what were the consolidation entries needed as of December 31, 2020?

109) On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million cash and 500,000 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $16,970,000.On January 1, JDE stock had a market value of $14.90 per share and there was no control premium in this transaction. Any consideration transferred over book value is assigned to goodwill. BMI had the following balances on January 1, 2020.

For internal reporting purposes, JDE employed the equity method to account for this investment.The following account balances are for the year ending December 31, 2020 for both companies.

Required:Prepare a consolidation worksheet for this business combination. Assume goodwill has been reviewed and there is no goodwill impairment.

110) McLaughlin, Inc. acquires 70% of Ellis Corporation on September 1, 2019, and an additional 10 percent on November 1, 2020. Annual amortization of $12,000 relates to the first acquisition. Ellis reports the following figures for 2020:

Without regard for this investment, McLaughlin earns $480,000 in net income ($840,000 revenues less $360,000 expenses; incurred evenly through the year) during 2020.Required:Prepare a schedule of consolidated net income and apportionment to noncontrolling and controlling interests for 2020.

111) Select True (T) or False (F) for each of the following statements:_____1. A parent will recognize a gain or loss if it sells a portion of its investment in a subsidiary and maintains control after the sale._____2. A parent sells a portion of its investment in a subsidiary and no longer maintains control. This sale of shares represents a remeasurement event for the investee._____3. International financial reporting standards (IFRS) allow an option to value the noncontrolling interest with goodwill or to value the noncontrolling interest without goodwill._____4. Consolidated net income represents the combined net income of the parent and subsidiary after subtracting the noncontrolling interest in the net income of the subsidiary._____5. The total acquisition-date fair value of an acquired firm is the sum of the fair value of the controlling interest and the fair value of the noncontrolling interest._____6. When control of a subsidiary is acquired on a date other than the first day of a fiscal year, excess amortization expenses are pro-rated to include only the post-acquisition period._____7. For a mid-year acquisition following an equity method investment of the same company, the consolidated income statement will report consolidated revenues and expenses for the entire year._____8. In a step acquisition where the parent previously held a noncontrolling interest in the acquired firm, the parent remeasures the prior interest to fair value._____9. When a parent has control over a subsidiary with less than 100 percent ownership, and thereafter increases its ownership, the parent remeasures the prior interest to fair value.

ESSAY. Write your answer in the space provided or on a separate sheet of paper.
112) Where should a noncontrolling interest appear on a consolidated balance sheet?

113) What is pre-acquisition income?

114) Beta Corp. owns less than one hundred percent of the voting common stock of Shedds Co. Under what conditions will Beta be required to prepare consolidated financial statements?

115) Why is it important to know if the parent paid a premium to acquire control of a subsidiary?

116) How would you determine the amount of goodwill to be recognized at date of acquisition when there is a noncontrolling interest present?

117) How is a noncontrolling interest in the net income of an entity reported in the income statement?

118) One company buys a controlling interest in another company on April 1 during a company’s calendar year of operations. How should the pre-acquisition subsidiary revenues and expenses be handled in the consolidated balances for the year of acquisition?

119) Prevatt, Inc. owns 80% of Franklin Company. During the current year, a portion of the investment in Franklin is sold. Prior to recording the sale, Prevatt adjusts the carrying value of its investment. What is the purpose of the adjustment?

120) How does a parent company account for the sale of a portion of an investment in a subsidiary?

121) When a parent company acquires a less-than-100 percent controlling interest in another firm, the acquisition method requires a determination of the acquisition-date fair value of the acquired firm for consolidated financial reporting. How can the fair value of the noncontrolling interest be determined?

122) When a parent company acquires a less-than-100 percent controlling interest in a subsidiary, what portion of that subsidiary’s financial data does the parent consolidate?

123) On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million cash and 500,000 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $16,970,000.On January 1, JDE stock had a market value of $14.90 per share and there was no control premium in this transaction. Any consideration transferred over book value is assigned to goodwill. BMI had the following balances on January 1, 2020.

For internal reporting purposes, JDE employed the equity method to account for this investment.Prepare a fair-value allocation and amortization schedule, including goodwill allocation.