Cleaverland purchased 100% of Omaha on January 1, 2019 for $650,000. On that date, Omaha's stockholders' equity was $650,000, and the recognized book values of Omahas individual net assets approximated their fair values. Omaha had net incomes of $150,000 and $190,000 for 2019 and 2020, respectively. The subsidiary paid dividends amounting to $30,000 in both years. Cleaverland uses the equity method to account for its pre-consolidation investment in Omaha. What was the balance in Equity Investment at December 31, 2020? Select one: A. $650,000 B. $990,000 C. $930,000 D. $710,000

Question 13 Not yet answered Marked out of 5.00 Assume that Bailey Company gains control of Moloney, its subsidiary, with the purchase of a 30% interest paid in cash. The Equity Investment account reports a balance of $250,000 on the acquisition date and represents a 40% interest in Moloney. The total value of Moloney on the acquisition date is $700,000 (assume no premium for control). The journal entry to record the acquisition includes: Select one: A. Cash, credit, $700,000 B. Gain on revaluation of Moloney, credit, $30,000 C. Loss on revaluation of Moloney, debit, $30,000 D. None of the above

Question 14 Not yet answered Marked out of 5.00 Clearwater Co. owned all of the voting common stock of Kelley, Inc. On January 2, 2020 Clearwater sold equipment to Kelley for $350,000. The equipment had cost Clearwater $425,000. At the time of the sale, the balance in accumulated depreciation was $125,000. The equipment had a remaining useful life of eight years and no salvage value. For the consolidated balance sheet at December 31, 2021, at would amount would the equipment (net) be included? Select one: A. $306,250 B. $-0- C. $262,500 D. $225,000

Which of the following answers is false in justifying why the acquisition-date consolidation process is not just a matter of adding together the balance sheet of the investor and the balance sheet of the investee?

Select one: A. Such a procedure would result in double counting of investee net assets. B. The subsidiarys net assets must be reported at fair value, regardless of the amounts recorded in the subsidiarys accounting records. C. If the parent and subsidiary each has marketable securities accounted for as trading securities (i.e., fair value), the consolidated amount will be incorrect if simply added together without adjustment. D. The subsidiary's stockholders' equity does not represent ownership by those outside the economic entity.

Which of the following statements best describes how goodwill is measured? Select one: A. Acquisition price fair value of net tangible assets fair value of identifiable intangible assets = goodwill B. Acquisition price book value of net assets = goodwill C. Acquisition price fair value of net tangible assets = goodwill D. Acquisition price goodwill = fair value of net tangible assets