Subsidiary and Goods

Only available on StudyMode
  • Download(s) : 251
  • Published : April 13, 2012
Open Document
Text Preview
Chapter 05
Consolidated Financial Statements - Intra-Entity Asset Transactions  

Multiple Choice Questions
 

1. On November 8, 2011, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized?  A. Proportionately over a designated period of years.

B. When Wood Co. sells the land to a third party.
C. No gain can be recognized.
D. As Wood uses the land.
E. When Wood Co. begins using the land productively.

 

 Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011, Edgar made several sales of inventory to Stendall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2011. Consolidated cost of goods sold for 2011 was $2,140,000 because of a consolidating adjustment for intra-entity sales less the entire profit remaining in Stendall's ending inventory.

 

2. How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Stendall to Edgar?  A. Consolidated cost of goods sold would have remained $2,140,000. B. Consolidated cost of goods sold would have been more than $2,140,000 because of the controlling interest in the subsidiary. C. Consolidated cost of goods sold would have been less than $2,140,000 because of the noncontrolling interest in the subsidiary. D. Consolidated cost of goods sold would have been more than $2,140,000 because of the noncontrolling interest in the subsidiary. E. The effect on consolidated cost of goods sold cannot be predicted from the information provided.

 

3. How would noncontrolling interest in net income have differed if the transfers had been for the same amount and cost, but from Stendall to Edgar?  A. Noncontrolling interest in net income would have decreased by $6,000. B. Noncontrolling interest in net income would have increased by $24,000. C. Noncontrolling interest in net income would have increased by $20,000. D. Noncontrolling interest in net income would have decreased by $18,000. E. Noncontrolling interest in net income would have decreased by $56,000.

 

4. On January 1, 2011, Race Corp. acquired 80% of the voting common stock of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods which cost $330,000. Gallow still owned 15% of the goods at year-end. Gallow's reported net income was $204,000, and Race's net income was $806,000. Race decided to use the equity method to account for this investment. What was the noncontrolling interest's share of consolidated net income?  A. $3,600.

B. $22,800.
C. $30,900.
D. $32,900.
E. $40,800.

 

5. Webb Co. acquired 100% of Rand Inc. on January 5, 20011. During 2011, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000. Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand. What was consolidated cost of goods sold?  A. $17,200,000.

B. $15,040,000.
C. $14,800,000.
D. $16,960,000.
E. $14,560,000.

 

6. Gentry Inc. acquired 100% of Gaspard Farms on January 5, 2010. During 2010, Gentry sold Gaspard Farms for $625,000 goods which had cost $425,000. Gaspard Farms still owned 12% of the goods at the end of the year. In 2011, Gentry sold goods with a cost of $800,000 to Gaspard Farms for $1,000,000, and Gaspard Farms still owned 10% of the goods at year-end. For 2011, cost of goods sold was $5,400,000 for Gentry and $1,200,000 for Gaspard Farms. What was consolidated cost of goods sold for 2011?  A. $6,600,000.

B. $6,604,000.
C. $5,620,000.
D. $5,596,000.
E. $5,625,000.

 

7. X-Beams Inc. owned 70% of the voting common stock of Kent Corp. During 2011, Kent made several sales of inventory to X-Beams. The total selling price was $180,000 and the cost was $100,000. At the end of the...
tracking img