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How will dividends be reported in consolidated statement of cash flows?


A) $15,000 decrease as a financing activity.
B) $25,000 decrease as a financing activity.
C) $10,000 decrease as a financing activity.
D) $23,000 decrease as a financing activity.
E) $17,000 decrease as a financing activity.

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Rojas Co.owned 7,000 shares (70%) of the outstanding 10%, $100 par, preferred stock and 60% of the outstanding common stock of Brett Co.Assuming there are no excess amortizations or intra-entity transactions, and Brett reports net income of $780,000, what is the noncontrolling interest in the subsidiary's income?


A) $234,000.
B) $273,000.
C) $302,000.
D) $312,000.
E) $284,000.

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What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2019?

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Regency Corp.recently acquired $500,000 of the bonds of Safire Co., one of its subsidiaries, paying more than the carrying value of the bonds.According to the most practical view of this intra-entity transaction, to whom should the loss be attributed?


A) To Safire because the bonds were issued by Safire.
B) The loss should be allocated between Safire and Regency based on the purchase price and the original face value of the debt.
C) The loss should be amortized over the life of the bonds and need not be attributed to either party.
D) The loss should be deferred until it can be determined to whom the attribution can be made.
E) To Regency because Regency is the controlling party in the business combination.

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Net cash flow from financing activities was:


A) $(28,000) .
B) $(35,000) .
C) $(13,000) .
D) $(63,000) .
E) $(61,000) .

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What adjustment is needed for Webb's investment in Jones account?


A) $180,000 increase.
B) $180,000 decrease.
C) $ 45,000 decrease.
D) $ 45,000 increase.
E) No adjustment is necessary.

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What is the controlling interest share of Thomas' net income for the year ended December 31, 2018?

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What is the adjusted book value of Jones after the sale of the shares?


A) $ 200,000.
B) $1,400,000.
C) $1,280,000.
D) $1,050,000.
E) $1,440,000.

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How do outstanding subsidiary stock warrants affect the calculation of consolidated earnings per share?


A) They will be included in both basic and diluted earnings per share if they are dilutive.
B) They will only be included in diluted earnings per share if they are dilutive.
C) They will only be included in basic earnings per share if they are dilutive.
D) Only the warrants owned by the parent company affect consolidated earnings per share.
E) Because the warrants are for subsidiary shares, there will be no effect on consolidated earnings per share.

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Where do intra-entity transfers of inventory appear in a consolidated statement of cash flows?


A) They do not appear in the consolidated statement of cash flows.
B) Supplemental schedule of noncash investing and financing activities.
C) Cash flows from operating activities.
D) Cash flows from investing activities.
E) Cash flows from financing activities.

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In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true?


A) Parent company earnings per share equals consolidated earnings per share when the equity method is used.
B) Parent company earnings per share is equal to consolidated earnings per share when the initial value method is used.
C) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value exceeds book value.
D) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value is less than book value.
E) Preferred dividends are not deducted from net income for consolidated earnings per share.

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A

Pursley, Inc.owns 70 percent of Harry Corp.The consolidated income statement for a year reports $50,000 Noncontrolling Interest in Harry Corp.'s Net Income.Harry paid dividends in the amount of $80,000 for the year.What are the effects of these transactions in the consolidated statement of cash flows for the year? Pursley, Inc.owns 70 percent of Harry Corp.The consolidated income statement for a year reports $50,000 Noncontrolling Interest in Harry Corp.'s Net Income.Harry paid dividends in the amount of $80,000 for the year.What are the effects of these transactions in the consolidated statement of cash flows for the year?

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On January 1, 2018, Riley Corp.acquired some of the outstanding bonds of one of its subsidiaries.The bonds had a carrying value of $421,620, and Riley paid $401,937 for them.How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2018?


A) The difference is added to the carrying value of the debt.
B) The difference is deducted from the carrying value of the debt.
C) The difference is treated as a loss from the extinguishment of the debt.
D) The difference is treated as a gain from the extinguishment of the debt.
E) The difference does not influence the consolidated financial statements.

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Which of the following statements is true concerning variable interest entities (VIEs) ? (1.) The role of the VIE equity investors can be fairly minor. (2) ) A VIE may be created specifically to benefit the business enterprise that established it with low-cost financing. (3) ) VIE governing agreements often limit activities and decision-making. (4) ) VIEs usually have a well-defined and limited business activity.


A) 2 and 4.
B) 2, 3, and 4.
C) 1, 2, and 4.
D) 1, 2, and 3.
E) 1, 2, 3, and 4.

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Which one of the following characteristics of preferred stock would make the stock a dilutive security for purposes of calculating earnings per share?


A) The preferred stock is callable.
B) The preferred stock is convertible.
C) The preferred stock is cumulative.
D) The preferred stock is noncumulative.
E) The preferred stock is participating.

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What was Kuried's balance in the Investment in Thomas Inc.account as of December 31, 2018?

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The consolidation entry at date of acquisition will include (referring to Smith) :


A) Debit Common stock $500,000 and debit Preferred stock $120,000.
B) Debit Common stock $400,000 and debit Additional paid-in capital $160,000.
C) Debit Common stock $500,000 and debit Preferred stock $300,000.
D) Debit Common stock $500,000, debit Preferred stock $120,000, and debit Additional paid-in capital $200,000.
E) Debit Common stock $400,000, debit Preferred stock $300,000, debit Additional paid-in capital $200,000, and debit Retained earnings $500,000.

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Parent Corporation loaned money to its subsidiary with a five-year note at the market interest rate.How would the note be accounted for in the consolidation process?

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The note would be eliminated i...

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Carlson, Inc.owns 80 percent of Madrid, Inc.Carlson reports net income for 2018 (without consideration of its investment in Madrid, Inc.) of $1,500,000.For the same year, Madrid reports net income of $705,000.Carlson had bonds payable outstanding on January 1, 2018 with a carrying value of $1,200,000.Madrid acquired the bonds on the open market on January 3, 2018 for $1,090,000.For the year 2018, Carlson reported interest expense on the bonds in the amount of $96,000, while Madrid reported interest income of $94,000 for the same bonds.Assuming there are no excess amortizations or other intra-entity transactions, what is Carlson's share of consolidated net income?


A) $2,064,000.
B) $2,066,000.
C) $2,176,000.
D) $2,207,000.
E) $2,317,000.

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C

A subsidiary issues new shares of common stock.If the parent acquires all of these shares at an amount greater than book value, which of the following statements is true?


A) The investment in subsidiary will decrease.
B) Additional paid-in capital will decrease.
C) Retained earnings will increase.
D) The investment in subsidiary will increase.
E) No adjustment will be necessary.

Correct Answer

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Showing 1 - 20 of 117

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