ch 04 consolidation of wholly owned subsidiaries
Chapter 04
Consolidation of Wholly Owned Subsidiaries
Multiple Choice Questions On July 1, 2009, Link Corporation paid $340,000 for all of Tinsel Company's outstanding common stock. On that date, the costs and fair values of Tinsel's recorded assets and liabilities were as follows:
1. Based on the preceding information, the differential reflected in a consolidation workpaper to prepare a consolidated balance sheet immediately after the business combination is:
A. $0.
B. $25,000.
C. $70,000.
D. $45,000. 2. Based on the preceding information, what amount should be allocated to goodwill in the consolidated balance sheet, prepared after this business combination?
A. $0
B. $25,000
C. $70,000
D. $45,000 On December 31, 2009, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000. Balance sheet information Venus just prior to the acquisition is given here:
At the date of the business combination, Venus's net assets and liabilities approximated fair value except for inventory, which had a fair value of $60,000, land which had a fair value of $125,000, and buildings and equipment (net), which had a fair value of $250,000. 3. Based on the information provided, what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?
A. $60,000
B. $75,000
C. $15,000
D. $45,000 4. Based on the information provided, what amount of goodwill will be included in the consolidated balance sheet immediately following the acquisition?
A. $30,000
B. $15,000
C. $85,000
D. $45,000 5. Based on the information provided, what amount of differential will be reflected in a consolidation workpaper to prepare a consolidated balance sheet immediately after the business combination?
A. $0
B. $45,000
C. $15,000
D. $85,000 6. Based on the information provided, what amount will be included as investment in Venus Corporation in the consolidated balance sheet immediately following the
Consolidation of Wholly Owned Subsidiaries
Multiple Choice Questions On July 1, 2009, Link Corporation paid $340,000 for all of Tinsel Company's outstanding common stock. On that date, the costs and fair values of Tinsel's recorded assets and liabilities were as follows:
1. Based on the preceding information, the differential reflected in a consolidation workpaper to prepare a consolidated balance sheet immediately after the business combination is:
A. $0.
B. $25,000.
C. $70,000.
D. $45,000. 2. Based on the preceding information, what amount should be allocated to goodwill in the consolidated balance sheet, prepared after this business combination?
A. $0
B. $25,000
C. $70,000
D. $45,000 On December 31, 2009, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000. Balance sheet information Venus just prior to the acquisition is given here:
At the date of the business combination, Venus's net assets and liabilities approximated fair value except for inventory, which had a fair value of $60,000, land which had a fair value of $125,000, and buildings and equipment (net), which had a fair value of $250,000. 3. Based on the information provided, what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?
A. $60,000
B. $75,000
C. $15,000
D. $45,000 4. Based on the information provided, what amount of goodwill will be included in the consolidated balance sheet immediately following the acquisition?
A. $30,000
B. $15,000
C. $85,000
D. $45,000 5. Based on the information provided, what amount of differential will be reflected in a consolidation workpaper to prepare a consolidated balance sheet immediately after the business combination?
A. $0
B. $45,000
C. $15,000
D. $85,000 6. Based on the information provided, what amount will be included as investment in Venus Corporation in the consolidated balance sheet immediately following the