5 12 acct 450

Topics: Inventory, Subsidiary, Balance sheet Pages: 216 (50436 words) Published: April 17, 2015
ch5 Key

1. On November 8, 2009, 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

Difficulty: Easy
Hoyle - Chapter 05 #1
2. Edgar Co. acquired 60% of Kindall Co. on January 1, 2009. During 2009, Edgar made several sales of inventory to Kindall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Kindall still owned one-fourth of the goods at the end of 2009. Consolidated cost of goods sold for 2009 was $2,140,000. How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Kindall to Edgar? A. Consolidated cost of goods sold would have been $2,140,000 B. Consolidated cost of goods sold would have been $2,175,000 C. The effect on consolidated cost of goods sold cannot be predicted from the information provided D. Consolidated cost of goods sold would have been reduced because of the non-controlling interest in the subsidiary E. Consolidated cost of goods sold would have been higher because of the non-controlling interest in the subsidiary

Difficulty: Medium
Hoyle - Chapter 05 #2
3. On January 1, 2009, 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 non-controlling interest's share of consolidated net income? A. $37,200

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

Difficulty: Easy
Hoyle - Chapter 05 #3
4. Webb Co. acquired 100% of Rand Inc. on January 5, 2009. During 2009, Webb sold Rand for $2,400,000 goods that cost $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

Difficulty: Hard
Hoyle - Chapter 05 #4
5. Gentry Inc. acquired 100% of Gaspard Farms on January 5, 2009. During 2009, 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 2010, 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 2010, cost of goods sold was $1,200,000 for Gaspard Farms and $5,400,000 for Gentry. What was consolidated cost of goods sold for 2010? A. $6,600,000 B. $6,596,000

C. $5,620,000
D. $5,596,000
E. $5,625,000

Difficulty: Hard
Hoyle - Chapter 05 #5
6. X-Beams Inc. owned 70% of the voting common stock of Kent Corp. During 2009, 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 year, 20% of the goods were still in X-Beams' inventory. Kent's reported net income was $300,000. What was the non-controlling interest in Kent's net income? A. $90,000

B. $85,200
C. $54,000
D. $94,800
E. $86,640

Difficulty: Medium
Hoyle - Chapter 05 #6
7. Justings Co. owned 80% of Evana Corp. During 2009, Justings sold to Evana land with a book value of $48,000. The selling price was $70,000. In its accounting records, Justings should A. Not recognize a gain on the sale of the land since it was made to a related party B. Recognize a gain of $17,600 C. Defer recognition of the gain until Evana sells the land to a third party D. Recognize a gain of $8,000

E. Recognize a gain of $22,000

Difficulty: Medium...
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