江西财经大学高级财务会计国际学院题库chapter09.docx

1、江西财经大学高级财务会计国际学院题库chapter09Advanced Accounting, 11e (Beams/Anthony/Bettinghaus/Smith)Chapter 9 Indirect and Mutual HoldingsMultiple Choice Questions1) Pallet Corporation owns 80% of Adelt Corporation and Adelt owns 60% of Bajo Inc. Which of the following is correct?A) Bajo should not be consolidated

2、 because noncontrolling interests hold 52%.B) Bajo should be consolidated because the 60% of Bajo stock is held in the affiliate structure.C) Pallet has 8% indirect ownership of Bajo.D) Pallet has 80% indirect ownership of Bajo.Answer: BObjective: LO1Difficulty: Moderate2) Page Corporation acquired

3、a 60% interest in Ace Corporation at a price $40,000 in excess of book value and fair value on January 1, 2010. On the same date, Ace acquired a 70% interest in Bader Corporation at a price $30,000 in excess of book value and fair value. The excess purchase cost paid by Page and Ace was attributed t

4、o goodwill. Separate net incomes (excluding investment income) for the three affiliates for 2010 are as follows: Page, $500,000, Ace, $300,000, and Bader, $400,000.Pages controlling interest share of consolidated net income for 2010 isA) $808,000.B) $848,000.C) $920,000.D) $960,000.Answer: BObjectiv

5、e: LO1Difficulty: ModerateUse the following information to answer the question(s) below.Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation. For the current year, the separate net incomes (excluding investment income) of Paint, Achille, and Badra

6、ck are $120,000, $100,000, and $50,000, respectively. The cost of each investment was equal to the book value of the investment, which was also equal to the fair value.3) Noncontrolling interest share for Badrack isA) $9,000.B) $10,000.C) $20,000.D) $40,000.Answer: BExplanation: B) (0.20 $50,000 = $

7、10,000)Objective: LO1Difficulty: Moderate4) Noncontrolling interest share for Achille isA) $18,000.B) $25,200.C) $36,200.D) $72,000.Answer: BExplanation: B) $100,000 + (0.80) ($50,000) 18% = $25,200Objective: LO1Difficulty: Moderate5) Controlling interest share of consolidated net income for Paint C

8、orporation and Subsidiaries is:A) $234,800.B) $244,800.C) $260,000.D) $270,000.Answer: AExplanation: A) Paint Achille BadrackSeparate incomes $120,000 $100,000 $50,000Allocate 80% of Badrack to Achille _ 40,000 (40,000)Subtotal 120,000 140,000 10,000Allocate 82% of Achille to Paint 114,800 (114,800)

9、Controlling interest share of cons. net income $234,800 _ _Noncontrolling interest share $25,200 $10,000Objective: LO1Difficulty: Moderate6) Pabari Corporation owns an 80% interest in Alders Corporation and Alders owns a 60% interest in Babao Corporation. Both interests were acquired at a cost equal

10、 to book value equal to fair value. During 2010, Alders sells land to Babao at a profit of $12,000. Babao still holds the land at December 31, 2010. Net income(loss) of the three companies (excluding investment income) for 2010 are:Pabari Corporation $180,000Alders Corporation 72,000Babao Corporatio

11、n (30,000)Controlling interest share of consolidated net income and noncontrolling interest share, respectively, for 2010 areA) $211,200 and ($1,200).B) $211,200 and ($3,600).C) $213,600 and ($1,200).D) $213,600 and ($3,600).Answer: DExplanation: D) Noncont. interest share: $8,400 Profit + ($12,000)

12、 Loss Pabari Alders BabaoSeparate incomes $180,000 $72,000 $(30,000)Less: Unrealized profit on land _ (12,000) _Subtotal $180,000 $60,000 (30,000)Allocate Babaos net loss toAlders ($30,000) 60% _ (18,000) 18,000Subtotal 180,000 42,000 (12,000)Allocate 80% of Alders income to Pabari 33,600 (33,600)Co

13、ntrolling interest share of consolidated net income $213,600 _ _Noncontrolling interest share $8,400 $12,000Objective: LO1Difficulty: Moderate7) Pablo Corporation acquired 60% of Abagia Corporation on January 1, 2010, at a cost of $20,000 in excess of book value. Also, on July 1, 2010, Pablo acquire

14、d 60% of Babin Corporation at book value. On January 1, 2011, Abagia acquired a 20% interest in Babin at a cost of $10,000 in excess of book value. The excess purchase costs paid by Pablo and Abagia were attributed to goodwill.On July 1, 2011, Pablo sold land with a book value of $20,000 to Abagia f

15、or $40,000. The $20,000 unrealized gain is included in Pablos separate income. Separate net incomes for the affiliated companies (excluding investment income) for 2011 are:Pablo $250,000Abagia 70,000Babin 100,000Controlling interest share of consolidated net income for 2011 isA) $304,000.B) $324,000

16、.C) $344,000.D) $364,000.Answer: CExplanation: C) Pablo Abagia BabinSeparate incomes $250,000 $70,000 $100,000Less: Unrealized profit on land (20,000) _ _Separate realized incomes $230,000 $70,000 $100,000Allocate Babins income: 60% to Pablo 60,000 (60,000) 20% to Abagia _ 20,000 (20,000)Subtotal 29

17、0,000 90,000 20,000Allocate Abagias net income 60% to Pablo 54,000 (54,000)Controlling interest share of consolidated net income $344,000 _ _Noncontrolling interest share $36,000 $20,000Objective: LO1Difficulty: Moderate8) Paglia Corporation owns 80% of Aburn Corporation and has separate net income

18、of $200,000 for 2010. Aburn Corporation has separate net income of $100,000 and owns 70% of the outstanding stock of Badley Corporation. Badley Corporation has separate net income of $80,000. (Separate net incomes exclude investment income.) The cost of each investment was equal to book value and fa

19、ir value. The controlling interest share of consolidated net income for 2010 isA) $324,800.B) $328,800.C) $344,800.D) $344,800.Answer: AExplanation: A) Paglia Aburn BadleySeparate incomes $200,000 $100,000 $80,000Allocate Badleys income: 70% to Aburn _ 56,000 (56,000)Subtotal $200,000 $156,000 $24,0

20、00Allocate Aburns income: 80% to Paglia 124,800 (124,800) _Controlling interest share of consolidated net income $324,800Noncontrolling interest share $31,200 $24,000Objective: LO1Difficulty: ModerateUse the following information to answer the question(s) below.Pace Corporation owns 70% of Abaza Cor

21、poration and 60% of Babon Corporation. Abaza Corporation owns 20% of Babon Corporation. Paces investment in Abaza was consummated in one transaction at a purchase price $20,000 in excess of the book value. Paces purchase of Babon was made in one transaction at a price $30,000 above book value. Abaza

22、s investment in Babon was completed in one transaction at a purchase price $10,000 in excess of the book value. The purchase price differential for all three investments was attributable to goodwill. (There were no fair value/book value differences in assets and liabilities for each investment.) Pac

23、es separate net income for the current year is $100,000. Abazas separate net income is $190,000, which includes a $10,000 unrealized loss on the sale of land to Pace. Babons separate net income is $150,000. Separate net incomes exclude investment income.9) The controlling interest share of consolida

24、ted net income for the current year isA) $341,000.B) $348,400.C) $351,000.D) $355,000.Answer: CExplanation: C) Pace Abaza BabonSeparate incomes $100,000 $190,000 $150,000Plus: Unrealized loss on land sale to Pace _ 10,000 _Separate realized incomes $100,000 $200,000 $150,000Allocate Babons income: 6

25、0% to Pace 90,000 (90,000) 20% to Abaza _ 30,000 (30,000)Subtotal 190,000 230,000 30,000Allocate Abazas net income to Pace $230,000 70% 161,000 (161,000)Controlling interest share of consolidated net income $351,000 _ _Noncontrolling interest share $69,000 $30,000Objective: LO1Difficulty: Moderate10

26、) The amount of noncontrolling interest share for the current year isA) $69,000.B) $85,000.C) $95,000.D) $99,000.Answer: DExplanation: D) ($69,000 + 30,000 = $99,000)Objective: LO1Difficulty: ModerateUse the following information to answer the question(s) below.Pahm Corporation owns 80% of the outst

27、anding voting common stock of Abussi Corporation, which was purchased for $60,000 over Abussis book value. The excess purchase price was attributable to goodwill. Abussi Corporation owns 60% of the outstanding common stock of Badock Corporation, which was purchased at book value. The separate net in

28、comes of Pahm, Abussi, and Badock (excluding investment income) for the year are $200,000, $240,000, and $260,000, respectively. There were no fair value/book value differences in the assets and liabilities of Pahm, Abussi and Badock.11) Controlling interest share of consolidated net income for the

29、current year isA) $504,800.B) $516,800.C) $545,200.D) $557,200.Answer: BExplanation: B) ($200,000 + (80%) $240,000 + (60%) (260,000) = $516,800)Objective: LO1Difficulty: Moderate12) The amount of income for the current year assigned to the noncontrolling shareholders of Badock Corporation isA) $100,

30、000.B) $104,000.C) $120,000.D) $140,000.Answer: BExplanation: B) (40% $260,000 = $104,000)Objective: LO1Difficulty: Moderate13) The amount of income for the current year assigned to the noncontrolling shareholders of Abussi Corporation isA) $48,000.B) $53,200.C) $74,000.D) $79,200.Answer: DExplanati

31、on: D) (20% $240,000) + (20% $156,000) = $79,200 Pahm Abussi BadockSeparate incomes $200,000 $240,000 $260,000Allocate Badocks income: 60% to Abussi _ 156,000 (156,000)Subtotal $200,000 $396,000 $104,000Allocate Abussis net income toPahm $396,000 80% 316,800 (316,800)Controlling interest share of consolidated net income $516,800 _ _Noncontrolling interest share $79,200 $104,000Objecti