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Acct 595 Advanced Accounting Final Exam Answers

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ACCT 595 Advanced Accounting Final Exam Answers FINAL EXAM ADVANCED ACCOUNTING (30 questions x 9 points=270)
1. Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2011 and paid dividends of $60,000 on October 1, 2011. How much income should Gaw recognize on this investment in 2011?
A. $16,500.
B. $9,000.
C. $25,500.
D. $7,500.
E. $50,000.
2. Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2011, Dew reported income of $250,000 and paid dividends of $80,000. There is no amortization associated with the investment. During 2011, how much income should Yaro recognize related to this investment?
A. $24,000.
B. $75,000.
C. $99,000.
D. $51,000.
E. $80,000. 3. On January 1, 2011, Pacer Company paid $1,920,000 for 60,000 shares of Lennon Co.’s voting common stock which represents a 45% investment. No allocation to goodwill or other specific account was made. Significant influence over Lennon was achieved by this acquisition. Lennon distributed a dividend of $2.50 per share during 2011 and reported net income of $670,000. What was the balance in the Investment in Lennon Co. account found in the financial records of Pacer as of December 31, 2011?
A. $2,040,500.
B. $2,212,500.
C. $2,260,500.
D. $2,171,500.
E. $2,071,500. 4. On January 1, 2011, Bangle Company purchased 30% of the voting common stock of Sleat Corp. for $1,000,000. Any excess of cost over book value was assigned to goodwill. During 2011, Sleat paid dividends of $24,000 and reported a net loss of $140,000. What is the balance in the investment account on December 31, 2011?
A. $950,800.
B. $958,000.
C. $836,000.
D. $990,100.
E. $956,400. 5. An upstream sale of inventory is a sale:
A. between subsidiaries owned by a common parent.
B. with the transfer of goods scheduled by contract to occur on a specified future date.
C. in which the goods are physically transported by boat from a subsidiary to its parent.
D. made by the investor to the investee.
E. made by the investee to the investor
6. All of the following would require use of the equity method for investments except:
A. material intra-entity transactions.
B. investor participation in the policy-making process of the investee.
C. valuation at fair value.
D. technological dependency.
E. significant control.
7. Luffman Inc. owns 30% of Bruce Inc. and appropriately applies the equity method. During the current year, Bruce bought inventory costing $52,000 and then sold it to Luffman for $80,000. At year-end, all of the merchandise had been sold by Luffman to other customers. What amount of unrealized intercompany profit must be deferred by Luffman?
A. $0.
B. $8,400.
C. $28,000.
D. $52,000.
E. $80,000.
8. Lisa Co. paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the consolidation of Lisa and Victoria would be recorded in
A. a worksheet.
B. Lisa’s general journal.
C. Victoria’s general journal.
D. Victoria’s secret consolidation journal.
E. the general journals of both companies.
9. How are direct and indirect costs accounted for when applying the acquisition method for a business combination?
A. Entry A.
B. Entry B.
C. Entry C.
D. Entry D.
10. Acquired in-process research and development is considered as
A. a definite-lived asset subject to amortization.
B. a definite-lived asset subject to testing for impairment.
C. an indefinite-lived asset subject to amortization.
D. an indefinite-lived asset subject to testing for impairment.
E. a research and development expense at the date of acquisition E. Entry E
11. Which one of the following is a characteristic of a business combination accounted for as an acquisition?
A. The combination must involve the exchange of equity securities only.
B. The transaction establishes an acquisition fair value basis for the company being acquired.
C. The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company.
D. The transaction may be considered to be the uniting of the ownership interests of the companies involved.
E. The acquired subsidiary must be smaller in size than the acquiring parent.
Prior to being united in a business combination, Botkins Inc. and Volkerson Corp. had the following stockholders’ equity figures:
Botkins issued 56,000 new shares of its common stock valued at $3.25 per share for all of the outstanding stock of Volkerson. 12. Assume that Botkins acquired Volkerson on January 1, 2010. At what amount did Botkins record the investment in Volkerson?
A. $56,000.
B. $182,000.
C. $209,000.
D. $261,000.
E. $312,000. Use the following information for 13-15
Carnes has the following account balances as of May 1, 2010 before an acquisition transaction takes place.
The fair value of Carnes’ Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2010, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes’ common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account.
13. On May 1, 2010, what value is assigned to Riley’s investment account?
A. $150,000.
B. $300,000.
C. $750,000.
D. $760,000.
E. $1,350,000. 14. At the date of acquisition, by how much does Riley’s additional paid-in capital increase or decrease?
A. $0.
B. $440,000 increase.
C. $450,000 increase.
D. $640,000 increase.
E. $650,000 decrease. 15. What will be Riley’s balance in its common stock account as a result of this acquisition?
A. $300,000.
B. $990,000.
C. $1,000,000.
D. $1,590,000.
E. $1,600,000.
16. Under the equity method of accounting for an investment,
A. The investment account remains at initial value.
B. Dividends received are recorded as revenue.
C. Goodwill is amortized over 20 years.
D. Income reported by the subsidiary increases the investment account.
E. Dividends received increase the investment account.
17. When a company applies the initial method in accounting for its investment in a subsidiary and the subsidiary reports income in excess of dividends paid, what entry would be made for a consolidation worksheet?
A. A above
B. B above
C. C above
D. D above
E. E above 18. When a company applies the initial value method in accounting for its investment in a subsidiary and the subsidiary reports income less than dividends paid, what entry would be made for a consolidation worksheet?
A. A above
B. B above
C. C above
D. D above
E. E above
19. When a company applies the partial equity method in accounting for its investment in a subsidiary and the subsidiary’s equipment has a fair value greater than its book value, what consolidation worksheet entry is made in a year subsequent to the initial acquisition of the subsidiary?
A. A above
B. B above
C. C above
D. D above
E. E above
20. When consolidating a subsidiary under the equity method, which of the following statements is true?
A. Goodwill is never recognized.
B. Goodwill required is amortized over 20 years.
C. Goodwill may be recorded on the parent company’s books.
D. The value of any goodwill should be tested annually for impairment in value.
21. Hoyt Corporation agreed to the following terms in order to acquire the net assets of Brown Company on January 1, 2011:
(1.) To issue 400 shares of common stock ($10 par) with a fair value of $45 per share.
(2.) To assume Brown’s liabilities which have a fair value of $1,500.
On the date of acquisition, the consideration transferred for Hoyt’s acquisition of Brown would be
A. $18,000.
B. $16,500.
C. $20,000.
D. $18,500.
E. $19,500.E. Goodwill should be expensed in the year of acquisition.
When Jolt Co. acquired 75% of the common stock of Yelts Corp., Yelts owned land with a book value of $70,000 and a fair value of $100,000.
22. 2What amount should have been reported for the land in a consolidated balance sheet at the acquisition date?
A. $52,500.
B. $70,000.
C. $75,000.
D. $92,500.
E. $100,000. 23. 2What is the total amount of excess land allocation at the acquisition date?
A. $0.
B. $30,000.
C. $22,500.
D. $25,000.
E. $17,500. Use this information for 24-26
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2010. 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. 24. Compute Pell’s investment in Demers at December 31, 2010.
A. $500,000.
B. $574,400.
C. $625,000.
D. $542,400.
E. $532,000. 25. Compute Pell’s investment in Demers at December 31, 2011.
A. $625,000.
B. $664,800.
C. $592,400.
D. $500,000.
E. $572,000. 26. Compute Pell’s investment in Demers at December 31, 2012.
A. $592,400.
B. $500,000.
C. $625,000.
D. $676,000.
E. $620,000. 27. 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. 28. 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’sshare of consolidated net income?
A. $3,600.
B. $22,800.
C. $30,900.
D. $32,900.
E. $40,800.
29. Bauerly Co. owned 70% of the voting common stock of Devin Co. During 2010, Devin made frequent sales of inventory to Bauerly. There were unrealized gains of $40,000 in the beginning inventory, and $25,000 at the end of the year. Devin reported net income of $137,000 for 2010. Bauerly decided to use the equity method to account for the investment. What is the noncontrolling interest’s share of Devin’snet income for 2010?
A. $41,100.
B. $33,600.
C. $21,600.
D. $45,600.
E. $36,600. 30. Chain Co. owned all of the voting common stock of Shannon Corp. The corporations’ balance sheets dated December 31, 2010, include the following balances for land: for Chain–$416,000, and for Shannon–$256,000. On the original date of acquisition, the book value of Shannon’s land was equal to its fair value. On April 4, 2011, Chain sold to Shannon a parcel of land with a book value of $65,000. The selling price was $83,000. There were no other transactions which affected the companies’ land accounts during 2010. What is the consolidated balance for land on the 2011 balance sheet?
A. $672,000.
B. $690,000.
C. $755,000.
D. $737,000.
E. $654,000.…...

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...ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit here: http://mindsblow.us/question_des/ACCT557FINALEXAM/2767 contact us at: help@mindblows.us ACCT 557 FINAL EXAM ACCT 557 FINAL EXAM To purchase this tutorial visit......

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Acct 557 Final Exam

...ACCT 557 Final Exam Purchase here http://sellfy.com/p/zBqx/ Product Description . (TCO A) Benny Building, Inc. won a bid for a new warehouse building contract.Below is information from the project accountant. Total Construction Fixed Price $25,000,000 Construction Start Date June 13, 2012 Construction Complete Date December 16, 2013 As of Dec. 31… 2012 2013 Actual cost incurred $11,500,000 $8,360,000 Estimated remaining costs $8,250,000 $- Billed to customer $9,000,000 $16,000,000 Received from customer $7,500,000 $16,500,000 Assuming Benny Building, Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013? 2. (TCO B) At the beginning of 2012, Barbara, Inc. has a deferred tax asset of $8,000 and deferred tax liability of $6,500. In 2012, pretax financial income was $600,000 and the tax rate was 35%. Pretax income included: Interest income from municipal bonds $25,000 Accrued warranty costs, estimated to be used in 2013 $74,000 Prepaid rent expense, will be used in 2013 $16,000 Installment sales revenue, to be collected in 2013 $45,000 Operating loss carryforward $36,000 What is the adjustment needed to correct the balance of deferred tax asset for 2012? 3. (TCO C) Presented below is pension information related to Baked Goods, Inc. for the year 2013. Service cost $103,000 Interest on projected benefit obligation $65,000 Interest on vested benefits $12,000 Amortization of prior service...

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Acct Final Exam

...of the business. must show transactions every accounting period. is increased with debits and decreased with credits. is considered a long term asset of the firm. 6. (TCO A, B) Kerner Company showed the following balances at the end of its first year: Cash $10,000 Prepaid insurance 1,000 Accounts receivable 5,000 Accounts payable 4,000 Notes payable 6,000 Common stock 2,000 Dividends 1,000 Revenues 30,000 Expenses 25,000 What did Kerner Company show as total credits on its trial balance?(Points: 5) $43,000 $41,000 $42,000 $44,000 7. (TCO B, E) Under the accrual basis of accounting (Points: 5) cash must be received before revenue is recognized. net income is calculated by matching cash outflows against cash inflows. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. 8. (TCO A, B) Reese Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed......

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