chapter 3

ch3

Student: ___________________________________________________________________________

1. Which one of the following accounts would not appear on the consolidated financial statements at the end of the first fiscal period of the combination? A. Goodwill B. Equipment C. Investment in Subsidiary D. Common Stock E. Additional Paid-In Capital

2. Which of the following internal record-keeping methods can a parent choose to account for a subsidiary acquired in a business combination? A. Initial value or book value B. Initial value, lower-of-cost-or-market-value or equity C. Initial value, equity or partial equity D. Initial value, equity or book value E. Initial value, lower-of-cost-or-market-value or partial equity

3. Which one of the following varies between the equity, initial value and partial equity methods of accounting for an investment? A. The amount of consolidated net income B. Total assets on the consolidated balance sheet C. Total liabilities on the consolidated balance sheet D. The balance in the investment account on the parent's books E. The amount of consolidated cost of goods sold

4. Under the partial equity method, the parent recognizes income when A. Dividends are received from the investee B. Dividends are declared by the investee C. The related expense has been incurred D. The related contract is signed by the subsidiary E. It is earned by the subsidiary

5. Push-down accounting is concerned with the A. Impact of the purchase on the subsidiary's financial statements B. Recognition of goodwill by the parent C. Correct consolidation of the financial statements D. Impact of the purchase on the separate financial statements of the parent E. Recognition of dividends received from the subsidiary

6. Racer Corp. purchased all of the common stock of Tangiers Co. several years ago. Tangiers maintained its incorporation. Balances in which of Racer's accounts would vary between the equity method and the initial value method? A. Goodwill, Investment in Tangiers Co. and Retained Earnings B. Expenses, Investment in Tangiers Co. and Equity in Subsidiary Earnings C. Investment in Tangiers Co., Equity in Subsidiary Earnings and Retained Earnings D. Common Stock, Goodwill and Investment in Tangiers Co E. Expenses, Goodwill and Investment in Tangiers Co

7. How does the partial equity method differ from the equity method? A. In the total assets reported on the consolidated balance sheet B. In the treatment of dividends C. In the total liabilities reported on the consolidated balance sheet D. Under the partial equity method, subsidiary income does not increase the balance in the parent's investment account E. Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary

8. Jansen Inc. acquired all of the outstanding common stock of Merriam Co. on January 1, 2009, for $257,000. Annual amortization of $19,000 resulted from this acquisition. Jansen reported net income of $70,000 in 2009 and $50,000 in 2010 and paid $22,000 in dividends each year. Merriam reported net income of $40,000 in 2009 and $47,000 in 2010 and paid $10,000 in dividends each year. What is the Investment in Merriam Co. balance on Jansen's books as of December 31, 2010, if the equity method has been applied? A. $286,000 B. $296,000 C. $276,000 D. $344,000 E. $300,000

9. Velway Corp. acquired Joker Inc. on January 1, 2009. The parent paid more than the fair value of the subsidiary's net assets. On that date, Velway had equipment with a book value of $500,000 and a fair value of $640,000. Joker had equipment with a book value of $400,000 and a fair value of $470,000. Joker decided to use push-down accounting. Immediately after the acquisition, what Equipment amount would appear on Joker's separate balance sheet and on Velway's consolidated balance sheet, respectively? A. $400,000 and $900,000 B. $400,000 and $970,000 C. $470,000 and $900,000 D. $470,000 and $970,000 E. $470,000 and $1,040,000

10. Parrett Corp. bought one hundred percent of Jones Inc. on January 1, 2009, at a price in excess of the subsidiary's fair value. On that date, Parrett's equipment (ten-year life) had a book value of $360,000 but a fair value of $480,000. Jones had equipment (ten-year life) with a book value of $240,000 and a fair value of $350,000. Parrett used the partial equity method to record its investment in Jones. On December 31, 2011, Parrett had equipment with a book value of $250,000 and a fair value of $400,000. Jones had equipment with a book value of $170,000 and a fair value of $320,000. What is the consolidated balance for the Equipment account as of December 31, 2011? A. $710,000 B. $580,000 C. $474,000 D. $497,000 E. $565,000

On January 1, 2009, Cale Corp. paid $1,020,000 to acquire Kaltop Co. Kaltop maintained separate incorporation. Cale used the equity method to account for the investment. The following information is available for Kaltop's assets, liabilities and stockholders' equity accounts:

Kaltop earned net income for 2009 of $126,000 and paid dividends of $48,000 during the year.

11. The 2009 total amortization of allocations is calculated to be A. $4,000 B. $6,400 C. $(2,400) D. $(1,000) E. $3,800

12. In Cale's accounting records, what amount would appear on December 31, 2009 for equity in subsidiary earnings? A. $79,000 B. $129,800 C. $126,000 D. $127,000 E. $81,800

13. What is the balance in Cale's investment in subsidiary account at the end of 2009? A. $1,099,000 B. $1,020,000 C. $1,096,200 D. $1,098,000 E. $1,144,400

14. At the end of 2009, the consolidation entry to eliminate Cale's accrual of Kaltop's earnings would include a credit to Investment in Kaltop Co. for A. $124,400 B. $126,000 C. $127,000 D. $76,400 E. $0

15. If Cale Corp. had net income of $444,000, exclusive of the investment, what is the amount of consolidated net income? A. $568,400 B. $570,000 C. $571,000 D. $566,400 E. $444,000

On January 1, 2009, Franel Co. acquired all of the common stock of Hurlem Corp. For 2009, Hurlem earned net income of $360,000 and paid dividends of $190,000. Amortization of the patent allocation that was included in the acquisition was $6,000.

16. How much difference would there have been in Franel's income with regard to the effect of the investment, between using the equity method or using the initial value method of internal recordkeeping? A. $190,000 B. $360,000 C. $164,000 D. $354,000 E. $150,000

17. How much difference would there have been in Franel's income with regard to the effect of the investment, between using the equity method or using the partial equity method of internal recordkeeping? A. $170,000 B. $354,000 C. $164,000 D. $6,000 E. $174,000

Cashen Co. paid $2,400,000 to acquire all of the common stock of Janex Corp. on January 1, 2009. Janex's reported earnings for 2009 totaled $432,000 and it paid $120,000 in dividends during the year. The amortization of allocations related to the investment was $24,000. Cashen's net income, not including the investment, was $3,180,000 and it paid dividends of $900,000.

18. On the consolidated financial statements, what amount should have been shown for Equity in Subsidiary Earnings? A. $432,000 B. $-0- C. $408,000 D. $120,000 E. $312,000

19. On the consolidated financial statements, what amount should have been shown for consolidated dividends? A. $900,000 B. $1,020,000 C. $876,000 D. $996,000 E. $948,000

20. What is the amount of consolidated net income? A. $3,180,000 B. $3,612,000 C. $3,300,000 D. $3,588,000 E. $3,420,000

Jans Inc. acquired all of the outstanding common stock of Tysk Corp. on January 1, 2009, for $372,000. Equipment with a ten-year life was undervalued on Tysk's financial records by $46,000. Tysk also owned an unrecorded customer list with an assessed fair value of $67,000 and an estimated remaining life of five years. Tysk earned reported net income of $180,000 in 2009 and $216,000 in 2010. Dividends of $70,000 were paid in each of these two years. Selected account balances as of December 31, 20011, for the two companies follow.

21. If the partial equity method has been applied, what was 2011 consolidated net income? A. $840,000 B. $768,400 C. $822,000 D. $240,000 E. $600,000

22. If the equity method had been applied, what would be the Investment in Tysk Corp. account balance within the records of Jans at the end of 20011? A. $612,100 B. $744,000 C. $774,150 D. $372,000 E. $844,150

23. Red Co. acquired 100% of Green, Inc. on October 1, 2009. On January 1, Green had inventory with a book value of $42,000 and a fair value of $52,000. This inventory had not yet been sold at December 31, 2009. Green had a building with a book value of $200,000 and a fair value of $390,000. Green had equipment with a book value of $350,000 and a fair value of $280,000. The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life. How much amortization expense will be on the consolidated financial statements for the year ended on December 31, 2009 related to the acquisition of Green? A. $43,000 B. $33,000 C. $5,000 D. $15,000 E. 0

24. All of the following are acceptable methods to account for a majority owned investment in subsidiary except A. The equity method B. The initial value method C. The partial equity method D. The fair-value method E. Book value method

25. 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

26. Under the partial equity method of accounting for an investment, A. The investment account remains at initial value B. Dividends received are recorded as revenue C. Amortization of the excess of fair value allocations over book value of net assets is applied over their useful lives to reduce the investment account D. Amortization of the excess of fair value allocations over book value is ignored in regard to the investment account E. Dividends received increase the investment account

27. Under the initial value method, when accounting for an investment in a subsidiary, A. Dividends received by the subsidiary decrease the investment account B. The investment account is adjusted to fair value at year-end C. Income reported by the subsidiary increases the investment account D. The investment account remains at initial value E. Dividends received are ignored

28. According to SFAS 142, which of the following statements is true? A. Goodwill recognized in consolidation must be amortized over 20 years B. Goodwill recognized in consolidation must be expensed in the period of acquisition C. Goodwill recognized in consolidation will not be amortized but subject to an annual test for impairment D. Goodwill recognized in consolidation can never be written off E. Goodwill recognized in consolidation must be amortized over 40 years

29. 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 consolidated worksheet?

A. A above B. B above C. C above D. D above E. E above

30. 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 consolidated worksheet?


31. 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?


32. When a company applies the partial equity method in accounting for its investment in a subsidiary and initial value, book values and fair values of net assets are all equal, what consolidation worksheet entry would be made?


33. 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 E. Goodwill should be expensed in the year of acquisition

34. When consolidating a subsidiary under the equity method, which of the following statements is true subsequent to the year of acquisition? A. All net assets are revalued to fair value and must be amortized over their useful lives B. Only net assets that had excess fair value over book value when acquired by the parent must be amortized over their useful lives C. All depreciable net assets are revalued to fair value at date of acquisition and must be amortized over their useful lives D. Only depreciable net assets that have excess fair value over book value must be amortized over their useful lives E. Only assets that have excess fair value over book value must be amortized over their useful lives

35. Which of the following statements is false regarding push-down accounting? A. Push-down accounting simplifies the consolidation process B. Fewer worksheet entries are necessary when push-down accounting is applied C. Push-down accounting provides better information for internal evaluation D. Push-down accounting must be applied for combinations under a pooling of interests E. Push-down proponents argue that a change in ownership creates a new basis for subsidiary assets and liabilities

36. In accounting for an acquisition using the pooling of interests method, which of the following statements is true? A. In subsequent periods, the subsidiary's retained earnings is always eliminated by the amount at date of acquisition B. The investment account will always equal the book value of the subsidiary at any date C. Any goodwill will have an indefinite life D. Any goodwill must be amortized over 20 years E. The excess of fair value over book value of the net assets of a subsidiary is amortized over their useful lives

37. Melvin Company applies the equity method to account for its investment in Lang Company. Lang reports income in excess of an extraordinary loss in 2009. Melvin acknowledges that it must separately disclose the extraordinary loss in consolidated financial statements. What entry would be made by Melvin Company to record Lang's results?


38. Consolidated net income using the equity method under a n acquisition combination is computed as follows: A. Parent company's income from its own operations plus the equity from subsidiary's income recorded by the parent B. Parent's reported net income C. Combined revenues less combined expenses less equity in subsidiary's income less amortization of fair value allocations in excess of book value D. Parent's revenues less expenses for its own operations plus the equity from subsidiary's income recorded by parent E. All of the above

Perry Company obtains 100% of the stock of Hurley Corporation on January 1, 2009, for $3,800 cash. As of that date Hurley has the following trial balance;

Any excess of consideration transferred over fair value is considered goodwill with an indefinite life. FIFO inventory valuation method is used.

39. Compute the consideration transferred in excess of book value at January 1, 2009. A. $150 B. $700 C. $2,200 D. $550 E. $2,900

40. Compute goodwill, if any, at January 1, 2009. A. $150 B. $250 C. $700 D. $1,200 E. $550

41. Compute the amount of Hurley's inventory that would be reported on a January 1, 2009, consolidated balance sheet. A. $800 B. $100 C. $900 D. $150 E. $0

42. Compute the amount of Hurley's buildings that would be reported on a December 31, 2009, consolidated balance sheet. A. $1,560 B. $1,260 C. $1,440 D. $1,160 E. $1,140

43. Compute the amount of Hurley's equipment that would be reported on a December 31, 2009, consolidated balance sheet. A. $1,000 B. $1,250 C. $875 D. $1,125 E. $750

44. Compute the amount of Hurley's land that would be reported on a December 31, 2009, consolidated balance sheet. A. $900 B. $400 C. $1,300 D. $1,450 E. $2,200

45. Compute the amount of Hurley's long-term liabilities that would be reported on a December 31, 2009, consolidated balance sheet. A. $1,800 B. $1,700 C. $1,725 D. $1,675 E. $3,500

46. Compute the amount of Hurley's buildings that would be reported on a December 31, 2010, consolidated balance sheet. A. $1,620 B. $1,380 C. $1,320 D. $1,080 E. $1,500

47. Compute the amount of Hurley's equipment that would be reported on a December 31, 2010, consolidated balance sheet. A. $0 B. $1,000 C. $1,250 D. $1,125 E. $1,200

48. Compute the amount of Hurley's land that would be reported on a December 31, 2010, consolidated balance sheet. A. $900 B. $1,300 C. $400 D. $1,450 E. $2,200

49. Compute the amount of Hurley's long-term liabilities that would be reported on a December 31, 2010, consolidated balance sheet. A. $1,700 B. $1,800 C. $1,650 D. $1,750 E. $3,500

Kaye Company acquired 100% of Fiore Company on January 1, 2009. Kaye paid $1,000 excess consideration over book value which is being amortized at $20 per year. Fiore reported net income of $400 in 2009 and paid dividends of $100.

50. Assume the equity method is applied. How much will Kaye's income increase or decrease as a result of Fiore's operations? A. $400 increase B. $300 increase C. $380 increase D. $280 increase E. $480 increase

51. Assume the partial equity method is applied. How much will Kaye's income increase or decrease as a result of Fiore's operations? A. $400 increase B. $300 increase C. $380 increase D. $280 increase E. $480 increase

52. Assume the initial value method is applied. How much will Kaye's income increase or decrease as a result of Fiore's operations? A. $400 increase B. $300 increase C. $380 increase D. $100 increase E. $210 increase

53. Assume the partial equity method is used. In the years following acquisition, what additional worksheet entry must be made for consolidation purposes that is not required for the equity method?

A. Entry A B. Entry B C. Entry C D. Entry D E. Entry E

54. Assume the initial value method is used. In the years subsequent to acquisition, what additional worksheet entry must be made for consolidation purposes that is not required for the equity method?

A. Entry A B. Entry B C. Entry C D. Entry D E. Entry E

55. Hoyt Corporation agreed to the following terms in order to acquire the net assets of Brown Company on January 1, 2009: (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

Following are selected accounts for Green Corporation and Vega Company as of December 31, 2010. Several of Green's accounts have been omitted.

Green obtained 100% of Vega on January 1, 2006, by issuing 10,500 shares of its $10 par value common stock with a fair value of $95 per share. On January 1, 2006, Vega's land was undervalued by $40,000, its buildings were overvalued by $30,000 and equipment was undervalued by $80,000. The buildings have a 20-year life and the equipment has a 10-year life. $50,000 was attributed to an unrecorded trademark with a 16-year remaining life. There was no goodwill associated with this investment.

56. Compute the book value of Vega at January 1, 2006. A. $997,500 B. $857,500 C. $1,200,000 D. $1,600,000 E. $827,500

57. Compute the December 31, 2010, consolidated revenues. A. $1,400,000 B. $800,000 C. $500,000 D. $1,590,375 E. $1,390,375

58. Compute the December 31, 2010, consolidated total expenses. A. $620,000 B. $280,000 C. $900,000 D. $909,625 E. $299,625

59. Compute the December 31, 2010, consolidated buildings. A. $1,037,500 B. $1,007,500 C. $1,000,000 D. $1,022,500 E. $1,012,500

60. Compute the December 31, 2010, consolidated equipment. A. $800,000 B. $808,000 C. $840,000 D. $760,000 E. $848,000

61. Compute the December 31, 2010, consolidated land. A. $220,000 B. $180,000 C. $670,000 D. $630,000 E. $450,000

62. Compute the December 31, 2010, consolidated trademark. A. $50,000 B. $46,875 C. $0 D. $34,375 E. $37,500

63. Compute the December 31, 2010, consolidated common stock. A. $450,000 B. $530,000 C. $555,000 D. $635,000 E. $525,000

64. Compute the December 31, 2010, consolidated additional paid-in capital. A. $210,000 B. $75,000 C. $1,102,500 D. $942,500 E. $525,000

65. Compute the December 31, 2010 consolidated retained earnings. A. $1,645,375 B. $1,350,000 C. $1,565,375 D. $2,845,375 E. $1,265,375

66. Compute the equity in Vega's income reported by Green for 2010. A. $500,000 B. $300,000 C. $190,375 D. $200,000 E. $290,375

67. One company acquires another company in a combination accounted for as an acquisition. The acquiring company decides to apply the initial value method in accounting for the combination. What is one reason the acquiring company might have made this decision? A. It is the only method allowed by the SEC B. It is relatively easy to apply C. It is the only internal reporting method allowed by generally accepted accounting principles D. Operating results on the parent's financial records reflect consolidated totals E. When the initial method is used, no worksheet entries are required in the consolidation process

68. One company acquires another company in a combination accounted for as an acquisition. The acquiring company decides to apply the equity method in accounting for the combination. What is one reason the acquiring company might have made this decision? A. It is the only method allowed by the SEC B. It is relatively easy to apply C. It is the only internal reporting method allowed by generally accepted accounting principles D. Operating results on the parent's financial records reflect consolidated totals E. When the equity method is used, no worksheet entries are required in the consolidation process

69. When is a goodwill impairment loss recognized? A. Annually on a systematic and rational basis B. Never C. If both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying values D. If the fair value of a reporting unit falls below its original acquisition price E. Whenever the fair value of the entity declines significantly

70. Which of the following will result in the recognition of an impairment loss on goodwill? A. Goodwill amortization is to be recognized annually on a systematic and rational basis B. Both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying values C. The fair value of the entity declines significantly D. The fair value of a reporting unit falls below the original consideration transferred for the acquisition E. The entity is investigated by the SEC and its reputation has been severely damaged

Goehler, Inc. acquires all of the voting stock of Kenneth, Inc. on January 4, 2009, at a price in excess of Kenneth's fair value. On that date, Kenneth has equipment with a book value of $90,000 and a fair value of $120,000 (10-year remaining life). Goehler has equipment with a book value of $800,000 and a fair value of $1,200,000 (10-year remaining life). On December 31, 2010, Goehler has equipment with a book value of $975,000 but a fair value of $1,350,000 and Kenneth has equipment with a book value of $105,000 but a fair value of $125,000.

71. If Goehler applies the equity method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2010? A. $1,080,000 B. $1,104,000 C. $1,100,000 D. $1,468,000 E. $1,475,000

72. If Goehler applies the partial equity method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2010? A. $1,080,000 B. $1,104,000 C. $1,100,000 D. $1,468,000 E. $1,475,000

73. If Goehler applies the initial value method in accounting for Kenneth, what is the consolidated balance for the Equipment account as of December 31, 2010? A. $1,080,000 B. $1,104,000 C. $1,100,000 D. $1,468,000 E. $1,475,000

74. How is the fair value allocation of an intangible asset allocated to expense when the asset has no legal, regulatory, contractual, competitive, economic or other factors that limit its life? A. Equally over 20 years B. Equally over 40 years C. Equally over 20 years with an annual impairment review D. No amortization, but annually reviewed for impairment and adjusted accordingly E. No amortization over an indefinite period time

Harrison, Inc. acquires 100% of the voting stock of Rhine Company on January 1, 2009 for $400,000 cash. A contingent payment of $16,500 will be paid on April 15, 2010 if Rhine generates cash flows from operations of $27,000 or more in the next year. Harrison estimates that there is a 20% probability that Rhine will generate at least $27,000 next year and uses an interest rate of 5% to incorporate the time value of money. The fair value of $16,500 at 5%, using a probability weighted approach is $3,142.

75. Under SFAS 141(R), what will Harrison record as the acquisition price on January 1, 2009? A. $400,000 B. $403,142 C. $406,000 D. $409,142 E. $416,500

76. Assuming Rhine generates cash flow from operations of $27,200 in 2009, how will Harrison record the $16,500 payment of cash on April 15, 2010 according to SFAS 141(R)? A. Debit Contingent performance obligation $16,500 and Credit Cash $16,500 B. Debit Contingent performance obligation $3,142, debit Loss from contingent performance obligation $13,358 and Credit Cash $16,500 C. Debit Investment in Subsidiary and Credit Cash, $16,500 D. Debit Goodwill and Credit Cash, $16,500 E. No entry

77. If the combination transaction had taken place on January 1, 2008, under SFAS 141, Business Combinations, what would Harrison have recorded as the acquisition price on that date? A. $400,000 B. $403,142 C. $406,000 D. $409,142 E. $416,500

Beatty, Inc. acquires 100% of the voting stock of Gataux Company on January 1, 2009 for $500,000 cash. A contingent payment of $12,000 will be paid on April 1, 2010 if Gataux generates cash flows from operations of $26,500 or more in the next year. Harrison estimates that there is a 30% probability that Rhine will generate at least $26,500 next year and uses an interest rate of 4% to incorporate the time value of money. The fair value of $12,000 at 4%, using a probability weighted approach is $3,461.

78. Under SFAS 141(R), what will Beatty record as the acquisition price on January 1, 2009? A. $500,000 B. $503,461 C. $512,000 D. $515,461 E. $526,500

79. Assuming Gataux generates cash flow from operations of $27,200 in 2009, how will Beatty record the $12,000 payment of cash on April 1, 2010 according to SFAS 141(R)? A. Debit Contingent performance obligation $3,461, debit Goodwill $8,539 and Credit Cash $12,000 B. Debit Contingent performance obligation $3,461, debit Loss from contingent performance obligation $8,539 and Credit Cash $12,000 C. Debit Goodwill and Credit Cash, $12,000 D. Debit Goodwill $27,200, credit Contingent performance obligation $15,200 and Credit Cash $12,000 E. No entry

80. Under SFAS 141 for purchase Business Combinations, what will Beatty record as the cost of the investment in Gataux if the purchase had occurred on January 1, 2008? A. $500,000 B. $503,461 C. $512,000 D. $515,461 E. $526,500

Prince Company acquires Duchess, Inc. on January 1, 2009. The consideration transferred exceeds the fair value of Duchess' net assets. On that date, Prince has a building with a book value of $1,200,000 and a fair value of $1,500,000. Duchess has a building with a book value of $400,000 and fair value of $500,000.

81. If push-down accounting is used, what amounts in the Building account appear on Duchess' separate balance sheet and on the consolidated balance sheet immediately after acquisition? A. $400,000 and $1,600,000 B. $500,000 and $1,700,000 C. $400,000 and $1,700,000 D. $500,000 and $2,000,000 E. $500,000 and $1,600,000

82. If push-down accounting is not used, what amounts in the Building account appear on Duchess' separate balance sheet and on the consolidated balance sheet immediately after acquisition? A. $400,000 and $1,600,000 B. $500,000 and $1,700,000 C. $400,000 and $1,700,000 D. $500,000 and $2,000,000 E. $500,000 and $1,600,000

Watkins, Inc. acquires all of the outstanding stock of Glen Corporation on January 1, 2009. At that date, Glen owns only three assets and has no liabilities:

83. If Watkins pays $450,000 in cash for Glen, what amount would be represented as the subsidiary's Building in a consolidation at December 31, 2011, assuming the book value at that date is still $200,000? A. $200,000 B. $285,000 C. $290,000 D. $295,000 E. $300,000

84. If Watkins pays $400,000 in cash for Glen, what amount would be represented as the subsidiary's Building in a consolidation at December 31, 2011, assuming the book value at that date is still $200,000? A. $200,000 B. $285,000 C. $260,000 D. $268,000 E. $300,000

85. If Watkins pays $450,000 in cash for Glen, what amount would be represented as the subsidiary's Equipment in a consolidation at December 31, 2011, assuming the book value at that date is still $80,000? A. $70,000 B. $73,500 C. $75,000 D. $76,500 E. $80,000

86. If Watkins pays $450,000 in cash for Glen, what allocation should be assigned to the subsidiary's Equipment in preparing for consolidation at December 31, 2011, assuming the book value at that date is still $80,000? A. $5,000 B. $80,000 C. $75,000 D. $73,500 E. $3,500

87. If Watkins pays $300,000 in cash for Glen, at what amount would the subsidiary's Building be represented in a January 2, 2009 consolidation? A. $200,000 B. $225,000 C. $273,000 D. $279,000 E. $300,000

88. If the transaction instead occurred on January 1, 2008 under a SFAS 141 purchase combination and Watkins pays $300,000 in cash for Glen, at what amount would the subsidiary's Equipment be represented in a December 31, 2011 consolidation? A. $48,000 B. $50,000 C. $52,000 D. $77,000 E. $80,000

89. If Watkins issued common stock valued at $410,000 for Glen, rather than paying cash, in a pooling of interests on June 15, 1999, at what amount would the subsidiary's Building be represented in a December 31, 2009, consolidation, assuming there are no acquisitions or disposals of buildings and equipment? A. $190,000 B. $193,000 C. $197,000 D. $199,400 E. $200,000

90. If Watkins issued common stock valued at $410,000 for Glen, rather than paying cash, in a pooling of interests on June 15, 1999, at what amount would the subsidiary's Equipment be represented in a December 31, 2009, consolidation, assuming no acquisitions or disposals of buildings or equipment? A. $75,000 B. $77,400 C. $80,000 D. $82,100 E. $84,000

91. For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping is the easiest for the parent to use?

92. For an acquisition when the subsidiary retains its incorporation, which method of internal recordkeeping gives the most accurate portrayal of the accounting results for the entire business combination?

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