I attached my question.

1 ) Which of the following statements is true regarding inventory transfers between a parent and its subsidiary, using the initial value method? (3pts) The sale of merchandise between a parent and its subsidiary represents an arm'slength transaction and thus provides the basis for the recognition of profit on such transfers. Profits on upstream transfers associated with the parent's ending inventory are subtracted from subsidiary net income for the current year in the calculation of parent's income from subsidiary. These yearend deferrals are then added to next year's subsidiary net income in the calculation of parent's income from subsidiary. This procedure is inappropriate because all the intraentity transactions unsold at yearend may not be sold in the next year. Profits on upstream transfers associated with the parent's ending inventory are subtracted from subsidiary net income for the current year in the calculation of parent's income from subsidiary. These yearend deferrals are then added to next year's subsidiary net income in the calculation of parent's income from subsidiary. This procedure is appropriate even if all the intraentity transactions unsold at yearend may not be sold in the next year. Merchandise transfers from a parent to its subsidiary that have not been sold to unaffiliated parties should be included in consolidated inventory at their transfer price. Noncontrolling interest in subsidiary's net income should not be reduced for upstream or downstream ending inventory profits. 2 ) Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2010, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2010, 2011, and 2012, respectively. Parker sold the land it purchased from Stark in 2010 for $92,000 in 2012. Compute income from Stark reported on Parker's books for 2011. (3pts) $185,000. $157,500. $166,500. $162,000. $180,000. 3 ) Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2010, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2010 and 2011, respectively. Leo uses the equity method to account for its investment. Compute the gain or loss on the intraentity sale of land. (3pts) $15,000 loss. $15,000 gain. $50,000 loss. $50,000 gain. $65,000 gain. 4 ) Justings Co. owned 80% of Evana Corp. During 2011, Justings sold to Evana land with a book value of $48,000. The selling price was $70,000. In its accounting records, Justings should (3pts) not recognize a gain on the sale of the land since it was made to a related party. recognize a gain of $17,600. defer recognition of the gain until Evana sells the land to a third party. recognize a gain of $8,000. recognize a gain of $22,000. 5 ) XBeams Inc. owned 70% of the voting common stock of Kent Corp. During 2011, Kent made several sales of inventory to XBeams. The total selling price was $180,000 and the cost was $100,000. At the end of the year, 20% of the goods were still in XBeams' inventory. Kent's reported net income was $300,000. What was the noncontrolling interest in Kent's net income? (3pts) $90,000. $85,200. $54,000. $94,800. $86,640. 6 ) Which of the following statements is true concerning an intraentity transfer of a depreciable asset? (3pts) Noncontrolling interest in subsidiary's net income is never affected by a gain on the transfer. Noncontrolling interest in subsidiary's net income is always affected by a gain on the transfer. Noncontrolling interest in subsidiary's net income is affected by a downstream gain only. Noncontrolling interest in subsidiary's net income is affected only when the transfer is upstream. Noncontrolling interest in subsidiary's net income is increased by an upstream gain in the year of transfer. 7 ) Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2010. One third of the inventory is sold by Walsh uses the equity method to account for its investment in Fisher. In the consolidation worksheet for 2011, which of the following choices would be a debit entry to eliminate unrealized intraentity gross profit with regard to the 2010 intraentity sales? (3pts) Retained earnings. Cost of goods sold. Inventory. Investment in Fisher Company. Sales. 8 ) Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2010. One third of the inventory is sold by Walsh uses the equity method to account for its investment in Fisher. In the consolidation worksheet for 2010, which of the following choices would be a credit entry to eliminate unrealized intraentity gross profit with regard to the 2010 intraentity sales? (3pts) Retained earnings. Cost of goods sold. Inventory. Investment in Fisher Company. Sales. 9 ) Parent sold land to its subsidiary for a gain in 2008. The subsidiary sold the land externally for a gain in 2011. Which of the following statements is true? (3pts) A gain will be reported in the consolidated income statement in 2008. A gain will be reported in the consolidated income statement in 2011. No gain will be reported in the 2011 consolidated income statement. Only the parent company will report a gain in 2011. The subsidiary will report a gain in 2008. 10 ) On January 1, 2010, Smeder Company, an 80% owned subsidiary of Collins, Inc., transferred equipment with a 10year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash. At the date of transfer, Smeder's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straightline depreciation is used. Smeder reported net income of $28,000 and $32,000 for 2010 and 2011, respectively. All net income effects of the intraentity transfer are attributed to the seller for consolidation purposes. Compute Collins' share of Smeder's net income for 2010. (3pts) $12,400. $14,400. $11,200. $12,800. $18,000. 11 ) When comparing the difference between an upstream and downstream transfer of inventory, and using the initial value method, which of the following statements is true when there is a noncontrolling interest? (3pts) Income from subsidiary will be lower by the amount of the ending inventory profit multiplied by the noncontrolling interest percentage for downstream transfers. Income from subsidiary will be higher by the amount of the ending inventory profit multiplied by the noncontrolling interest percentage for downstream transfers. Income from subsidiary will be reduced for downstream ending inventory profit but not for upstream profit, before the effect of the noncontrolling interest. Income from subsidiary will be reduced for upstream ending inventory profit but not for downstream profit, before the effect of the noncontrolling interest. Income from subsidiary will be the same for upstream and downstream profit. Chapter 6 12 ) If newly issued debt is issued from a parent to its subsidiary, which of the following statements is false? (3pts) Any premium or discount on bonds payable is exactly offset by a premium or discount on bond investment. There will be $0 net gain or loss on the bond transaction. Interest expense needs to be eliminated on the consolidated income statement. Interest revenue needs to be eliminated on the consolidated income statement. A net gain or loss on the bond transaction will be reported. 13 ) Which of the following statements is false concerning variable interest entities (VIEs)? (3pts) Sometimes VIEs do not have independent management. Most VIEs are established for valid business purposes. VIEs may be formed as a source of lowcost financing. VIEs have little need for voting stock. A VIE cannot take the legal form of a partnership or corporation. 14 ) If a subsidiary reacquires its outstanding shares from outside ownership for more than book value, which of the following statements is true? (3pts) Additional paidin capital on the parent company's books will decrease. Investment in subsidiary will increase. Treasury stock on the parent's books will increase. Treasury stock on the parent's books will decrease. No adjustment is necessary. 15 ) In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true? (3pts) Parent company earnings per share equals consolidated earnings per share when the equity method is used. Parent company earnings per share is equal to consolidated earnings per share when the initial value method is used. Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisitiondate fair value exceeds book value. Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisitiondate fair value is less than book value. Preferred dividends are not deducted from net income for consolidated earnings per share. 16 ) On January 1, 2011, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620, and Riley paid $401,937 for them. How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2011? (3pts) The difference is added to the carrying value of the debt. The difference is deducted from the carrying value of the debt. The difference is treated as a loss from the extinguishment of the debt. The difference is treated as a gain from the extinguishment of the debt. The difference does not influence the consolidated financial statements. 17 ) Carlson, Inc. owns 80 percent of Madrid, Inc. Carlson reports net income for 2011 (without consideration of its investment in Madrid, Inc.) of $1,500,000. For the same year, Madrid reports net income of $705,000. Carlson had bonds payable outstanding on January 1, 2011 with a carrying value of $1,200,000. Madrid acquired the bonds on the open market on January 3, 2011 for $1,090,000. For the year 2011, Carlson reported interest expense on the bonds in the amount of $96,000, while Madrid reported interest income of $94,000 for the same bonds. What is Carlson's share of consolidated net income? (3pts) $2,064,000. $2,066,000. $2,176,000. $2,207,000. $2,317,000. 18 ) Keenan Company has had bonds payable of $20,000 outstanding for several years. On January 1, 2011, there was an unamortized premium of $2,000 with a remaining life of 10 years, Keenan's parent, Ross, Inc., purchased the bonds in the open market for $19,000. Keenan is a 90% owned subsidiary of Ross. The bonds pay 8% interest annually on December 31. The companies use the straightline method to amortize interest revenue and expense. Compute the consolidated gain or loss on a consolidated income statement for 2011. (3pts) $3,000 gain. $3,000 loss. $1,000 gain. $1,000 loss. $2,000 gain. 19 ) Which of the following statements is false regarding the assignment of a gain or loss on intercompany bond transfer? (3pts) Subsidiary net income is not affected by a gain on bond transaction. Subsidiary net income is not affected by a loss on bond transaction. Parent Company net income is not affected by a gain on bond transaction. Parent Company net income is not affected by a loss on bond transaction. Consolidated net income is not affected by a gain or loss on bond transaction. 20 ) A parent company owns a 70 percent interest in a subsidiary whose stock has a book value of $27 per share. The last day of the year, the subsidiary issues new shares for $27 per share, and the parent buys its 70 percent interest in the new shares. Which of the following statements is true? (3pts) Since the sale was made at the end of the year, the parent's investment account is not affected. Since the shares were sold for book value, the parent's investment account must be increased. Since the shares were sold for book value, the parent's investment account must be decreased. Since the shares were sold for book value and the parent bought 70 percent of the shares, the parent's investment account is not affected except for the price of the new shares. None of the above. 21 ) Which of the following statements is true for a consolidated statement of cash flows? (3pts) Parent's dividends and subsidiary's dividends are deducted as a financing activity. Only parent's dividends are deducted as a financing activity. Parent's dividends and its share of subsidiary's dividends are deducted as a financing activity. All of parent's dividends and noncontrolling interest of subsidiary's dividends are deducted as a financing activity. Neither parent's or subsidiary's dividends are deducted as a financing activity. 22 ) Johnson, Inc. owns control over Kaspar, Inc. Johnson reports sales of $400,000 during 2011 while Kaspar reports $250,000. Kaspar transferred inventory during 2011 to Johnson at a price of $50,000. On December 31, 2011, 30 percent of the transferred goods are still in Johnson's inventory. Consolidated accounts receivable on January 1, 2011 was $120,000, and on December 31, 2011 is $130,000. Johnson uses the direct approach in preparing the statement of cash flows. How much is cash collected from customers in the consolidated statement of cash flows? (3pts) $590,000. $610,000. $625,000. $635,000. $650,000