ACCT 405 WEEK 5 QUIZ LATEST

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ACCT 405 Week 5 Quiz Latest

ACCT405

ACCT 405 Week 5 Quiz Latest

Question 1 (TCO 3)

Parent sold land to its subsidiary for a gain in 20×1. The subsidiary sold the land externally for a gain in 20×3. Which of the following statements is true?

• A gain will be reported on the consolidated income statement in 20×1.
• A gain will be reported on the consolidated income statement in 20×3.
• No gain will be reported on the 20×3 consolidated income statement.
• Only the parent company will report a gain in 20×3.
• The subsidiary will report a gain in 20×1.

Question 2 (TCO 3)

During 20×1, Vonsamek Co. sold inventory to its wholly owned subsidiary, Link Co. The inventory cost $30,000 and was sold to Link for $44,000. From the perspective of the combination, when is the $14,000 gain realized?

• When the goods are sold to a third party by Link
• When Link pays Vonsamek for the goods
• When Vonsamek sold the goods to Link
• When the goods are used by Link

Question 3 (TCO 3)

Pop Co. owns 80% of Cool Co., common stock par value $10. On January 1, 20×1, Cool Co. issued 10,000 additional shares of common stock for $35 per share. Pop Co. acquired 8,000 of these shares. How would this transaction affect the additional paid-in capital of the parent company?

• Increase it by $28,700
• Increase it by $200,000
• $0
• Increase it by $280,000
• Increase it by $250,000

Question 4 (TCO 3)

Where do dividends paid to the noncontrolling interest of a subsidiary appear on a consolidated statement of cash flows?

• Cash flows from operating activities
• Cash flows from investing activities
• Cash flows from financing activities
• Supplemental schedule of noncash investing and financing activities
• Not on the consolidated statement of cash flows

Question 5 (TCO 3)

During 20×1, Play Inc. acquired 100% of StrayInc. by issuing 250,000 shares of its common stock. The acquisition was announced on March 31, 20×1, when Play’s common stock was selling for $45 per share, and finalized on October 15, 20×1, when the market price of Play’s common stock was $50 per share. On October 15, 20×1, Stray’s net assets had a book value of $10,750,000. Book value equaled fair value for all recognized assets and liabilities, except land, which had a fair value $500,000 higher than book value. Stray also had unpatented technology with a fair value of $225,000 and in-process research and development with a fair value of $365,000. Which is the goodwill to be reported on Play Inc.’s December 31, 20×1, balance sheet under U.S. GAAP?

• $500,000
• $660,000
• $1,250,000
• $1,750,000