1. CCES Corporation acquires a controlling interest in Schmaling, Inc. CCES may utilize any one ofthree methods to internally account for this investment. Describe each of these methods, and indicatetheir advantages and disadvantages.

2. Maguire Company obtains 100 percent control over Williams Company. Several years after thetakeover, consolidated financial statements are being produced. For each of the following accounts,briefly describe the values that should be included in consolidated totals.

a. Equipment.

b. Investment in Williams Company.

c. Dividends Declared.

d. Goodwill.

e. Revenues.

f. Expenses.

g. Common Stock.

h. Net Income.

3. When a parent company uses the equity method to account for an investment in a subsidiary, why doboth the parent's Net Income and Retained Earnings account balances agree with the consolidated totals?

4. When a parent company uses the equity method to account for investment in a subsidiary, theamortization expense entry recorded during the year is eliminated on a consolidation worksheet asa component of Entry I. What is the necessity of removing this amortization?

5. When a parent company applies the initial value method or the partial equity method to an investment,a worksheet adjustment must be made to the parent's beginning Retained Earnings account(Entry *C) in every period after the year of acquisition. What is the necessity for this entry? Why isno similar entry found when the parent utilizes the equity method?

6. Several years ago, Jenkins Company acquired a controlling interest in Lambert Company. Lambertrecently borrowed P100,000 from Jenkins. In consolidating the financial records of these two companies,how will this debt be handled?

7. Benns adopts the equity method for its 100 percent investment in Waters. At the end of six years,Benns reports an investment in Waters of P920,000. What figures constitute this balance?

8. One company acquired another in a transaction in which P100,000 of the acquisition price isassigned to goodwill. Several years later, a worksheet is being produced to consolidate these twocompanies. How is the reported value of the goodwill determined at this date?

9. When should a parent consider recognizing an impairment loss for goodwill associated with a subsidiary?How should the loss be reported in the financial statements?

10. Reimers Company acquires Rollins Corporation on January 1, 2017. As part of the agreement, theparent states that an additional P100,000 payment to the former owners of Rollins will be madein 2018, if Rollins achieves certain income thresholds during the first two years following theacquisition. How should Reimers account for this contingency in its 2017 consolidated financialstatements?