kindly show me all workings . Thanks

Multiple-choice questions Select the best answer from the alternatives given and circle the letter of your choice. 1. On November 30, Pindar Co. purchased for cash at $30 per share all 250,000 shares of the outstanding common stock of Shimada Co., a business entity. Shimada reported net assets on that date with a carrying amount of S6 million. This amount reflected acquisition-date Fair value except for property, plant, and equipment, which had a fair value that exceeded its carrying amount by S800,000. In its November 30 consolidated balance sheet, what amount should Pindar report as goodwill? a. S1,500,000 b. $800,000 c. $700,000 d. SO 2. MAJ Corporation acquired 90% of the common stock of Min Co. for $420,000. MAJ previously held no equity interest in Min. On the date of acquisition, the carrying amount of Min's identifiable net assets equaled S300,000. The acquisition-date fair values of Min's inventory and equipment exceeded their carrying amounts by $60,000 and S40,000, respectively. The carrying amounts of the other assets and liabilities were equal to their acquisition- date fair values, and the fair value of the noncontrolling interest was $45,000. What amount should MAJ recognize as goodwill immediately after the acquisition? a. $150,000 b. $90,000 c. $65,000 d. $114,000 3. Practicum Co. paid $1.2 million for an 80% interest in the common stock of Sarong Co. Practicum had no previous equity interest in Sarong. On the acquisition date, Sarong's identifiable net assets had a S1.3 million carrying amount, and their fair value equaled $1.4 million. The fair lue of the noncontrolling interest (NCI) equals 20% of the implied fair value of the acquiree's Practicum should record goodwill of a. S(200,000) b. S(100,000) c. $100,000 d. $160,000 7. On December 31, year 1, Saxe Corporation was acquired by Poe Corporation. In the business combination, Poe issued 200,000 shares of its S10 par common stock, with a market price of S18 a share, for all of Saxe's common stock. The stockholders' equity section of each company's balance sheet immediately before the combination was Saxe S3,000,000 $1,500,000 150,000 Common stock Additional paid in capital Retained earnings Total 1,300,000 2,500,000 S6,800,000 2,500,000 In the December 31, year 1 consolidated balance sheet, common stock should be reported at a. $3,000,000 b. $3,500,000 c. $4,000,000 d. $5,000,000 8. On December 31, year 1, Neal Co. issued 100,000 shares of its $10 par value common stock in exchange for all of Prey Inc.'s outstanding stock. The fair value of Neal's common stock on December 31, year 1, was $19 per share. The carrying amounts and fair values of Prey's assets and liabilities on December 31, year 1, were as follows: Carrying amount Cash Receivables Inventory Property, plant, and equipment Liabilities Net assets S 240,000 270,000 435,000 1,305,000 (525,000 $1,725,000 Fair value S 240,000 270,000 405,000 1,440,000 (525.000 $1,830,000 What is the amount of goodwill resulting from the business combination? a. S175,000 b. S105,000 c. $70,000 d. S0 9. On January I, year 1, Polk Corp. and Strass Corp. had condensed balance sheets as follows: Polk S 70,000 $20,000 90,000 $160,000 $60,000 S 30,000 $10,000 50,000 80.00050.000 $160,000 Strass Current assets Noncurrent assets Total assets Current liabilities Long-term debt Stockholders' equity Total liabilities and stockholders' equity 60,000 On January 2, year i,Polk borrowed S60 000 and used the proceeds to purchase 90% of the outstanding common shares of Strass. This debt is payable in ten equal annual principal payments, lus interest, beginning December 30, year 1.The excess cost of the investment over Struss' book value of acquired net assets should be allocated 60% to inventory and 40% to goodwill. On January I, year L, the fair value of Polk shares held by noncontrolling parties was $10,000. On Polk's January 2, year I consolidated balance sheet, noncurrent assets should be b. $136,000 c. $138,000 d. $140,000 10. On January 2, Parma borrowed S60,000 and used the proceeds to purchase 90% of the outstanding common shares of Seville. Parma had no prior equity interest in Seville. Ten equal principal and interest payments begin December 30. The excess of the implied fair value of Seville over the carrying amount of its identifiable net assets should be assigned 60% to inventory and 40% to goodwill. Moreover, the fair value of the noncontrolling interest (NCI) is 10% of the implied fair value of the acquiree. The following are the balance sheets of Parma and Seville on January 1 Parma S70,000 S20 000 90,000 40,000 Seville Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Equity S160,000 S30, 000 $10,000 50,000 Total liabilities and equity S160,000 S60,000 On Parma's January 2 consolidated balance sheet, noncurrent assets equal a. $130,000 b. $134,000 e. $136,667 d. $140,000 11. On January 2, Parma borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Seville. Parma had no prior equity interest inS principal and interest payments begin December 30. The excess of the implied fair value of Seville over the carrying amount of its identifiable net assets should be assigned 60% to inventory and 40% to goodwill. Moreover, implied fair value of the acquiree. The following are the balance sheets of Parma and Seville on January 1- eville. Ten equal the fair value of the noncontrolling interest (NCI) is 10% of the Parma Seville $20 000 40.000 S60,000 $10,000 Current assets Noncurrent assets $70,000 90,000 $160,000 S30,000 50,000 80,000 $160,000 Total assets Current liabilities Equity Total liabilities and equity On Parma's January 2 consolidated balance sheet, Parma's equity should be $60,000 a. $80,000 b. $86,667 c. $90,000 d. $130,000 12. Parker Corp. owns 80% of Smith, Inc.'s comamon stock. During the year, Parker sold inventory costing during the year, and there was no beginning inventory from intercompany transactions. The following information pertains to Smith's and Parker's sales for the year $100,000 to Smith for $250,000. Smith sold all of the inventory purchased from Parker Smith Parker $1,000,000 $700,000 Sales Cost of sales (400,000) 350,000) Gross Profit S 600 000 $350,000 What amount should Parker report as cost of sales in its consolidated income statement? a. $750,000 b. $680,000 c. $500,000 d. $430,000 13. Clark Co. had the following transactions with affiliated parties during the year just ended: Sales of $50,000 to Dean, Inc., with S20,000 gross profit. Dean had S15,000 of this inventory on hand at year-end. Clark owns a 15% interest in Dean and does not exert significant influence. Purchases of inventories totaling $240,000 from Kent Corp., a wholly owned subsidiary. Kent's gross profit on the sale was $48,000. Clark had S60,000 of this inventory remaining on December 31. Before eliminating entries, Clark had consolidated current assets of $320,000. What amount should Clark report in its December 31 consolidated balance sheet for current assets? a. $320,000 b. S314,000 c. $308,000 d. $302,000 14. A subsidiary, acquired for cash in a business combination, owned inventories with a market value greater than the book value as of the date of combination. A consolidated balance sheet prepared immediately after the acquisition would include this difference as part of a. Deferred credits. b. Goodwill. c. Inventories. d. Retained earnings. 15. Company J acquired all of the outstanding common stock of Company K in exchange for cash. The acquisition price exceeds the fair value of net assets acquired. How should Company J determine the amounts to be reported for the plant and equipment and long-term debt acquired from Company K? Plant and equipmentLong-term debt a. K's carrying amountK's carrying amount b. K's carrying amount c. Fair value d. Fair value Fair value K's carrying amount Fair value the book value of Scott Corp.'s net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. Net income from separate company operations and dividends paid were On June 30, year 1, Purl Corp. issued 150,000 shares of its $20 par common stock for which it recerived all of Soott Corp.'s common stock. The fair value of the common stock issued is equal to 16. Scott Purl $750,000 $225,000 Net income for six months ended - Jun 30,year 1 Net income for six months ended -Dec 31, year 1 Dividends paid - March 25, year 1 Dividends paid - November 15, year 1 825,000 375,000 950,000 300,000 On December 31, year 1, Scott held in its inventory merchandise acquired from Purl on December 1, year 1, for $150,000, which included a $45,000 markup. In the year 1 consolidated income statement, net income should be report ed at a. $1,650,000 b. $1,905,000 c. $1,950,000 d. $2,130,000 17. Clark Co. had the following transactions with affliated parties during year 1: Sales of $60,000 to Dean, Inc., with $20,000 gross profit. Dean had $15,000 of this inventory on hand at year end. Clark owns a 15% interest in Dean and does not exert significant influence. Purchases of raw materials totaling $240,000 from Kent Corp, a wholly owned subsidiary. Kent's gross profit on the sale was $48,000. Clark had $85,000 of this inventory remaining on December 31, year 1. Before eliminating entries, Clark had consolidated current assets of $320,000. What amount should Clark report in its December 31, year 1 consolidated balance sheet for current assets? a. $320,000 b. $317,000 c. $308,000 d. S303,000 18, Parker Corp. owns 80% of Smith Inc.'s common stock. During year 1, Parker sold inventory costing $100,000 to Smith for $250,000. Smith sold all of the inventory purchased from Parker in year 1. The following information pertains to Smith and Parker's sales for year 1: Parker Smith $1,000,000 $700,000 Sales Cost of sales 400,000 350,000 Gross profit S600,000 $350,000 What amount should Parker report as sales in its year 1 consolidated income statement? a. S1,450,000 b. $1,600,000 c. $1,700,000 d. $1,850,000 19. Selected information from the separate and consolidated balance sheets and income of Pare, Inc. and its subsidiary, Shel Co., as of December 31, year 1, and for the year then ended is as follows: Pare Shel Consolidated Balance sheet accounts Accounts receivable Inventory Income statement accounts/amounts Revenues Cost of goods sold Gross Profit s 52,000 S 38,000 $ 78,000 60,000 50,000 104,000 $400,000 $280,000 $616,000 300,000 220,000 462,000 S100,000 S60,000 $154.000 During year 1, Pare sold goods to Shel at the same markup on cost that Pare uses for all sales. In Pare's consolidating worksheet, what amount of unrealized intercompany profit was eliminated? a. $6,000 b. $12,000 e. $58,000 d. $64,000 20. During year 1, Pard Corp. sold goods to its 80%, owned subsidiary, Seed Corp. At December 31, year 1, one-half of these goods were included in Seed's ending inventory. Reported year 1 selling expenses were $1, 1 00,000 and $400,000 for Pard and Seed, respectively. Pard's selling expenses included $50,000 in freight-out costs for goods sold to Seed. What amount of selling expenses should be reported in Pard's year 1 consolidated income statement? a. $1,500,000 b. $1,480,000 c. $1,475,000 d. $1,450,000 sold a machine for $900,000 to Saxe Corp, its wholly subsidiary. Poe paid $1,100,000 for this machine, which had accumulated depreciation of S250,000. Poe estimated a $100,000 salvage value and depreciated the machine on the straight- line method over twenty years, a policy which Saxe continued. In Poe's December 31, year 1 consolidated balance sheet, this machine should be included in cost and accumulated depreciation as Accumulated depreciation Cost a. $1,100,000 b. $1,100,000 C. $900,000 d. $850,000 S300,000 $290,000 $40,000 $42,500 22. Sun, Inc. is a wholly owned subsidiary of Patton, Inc. On June 1, year 1, Patton declared and paid a S1 per share cash dividend to stockholders of record on May 15, year 1. On May 1, year 1, Sun bought 10,000 shares of Patton's common stock for $700,000 on the open market, when the book value per share was $30. What amount of gain should Patton report from this transaction in its consolidated income statement for the year ended December 31, year 1? a. $0 b. S390,000 c. $400,000 d. $410,000 to Senior. Senior sold all of these goods in year 1. For year 1 consolidated financial stat how should the summation of Perez and Senior income statement items be adjusted? 23 Perez, Inc. owns 80% ofSerior, Inc. During year l, Perez sold goods with a 40% gross profit b. Sales and cost ofgoods sold should be reduced by 80% of the intercompany sales. c. Net income should be reduced by 80% of the gross profit on intercompany sales. a. Sales and cost of goods sold should be reduced by the intercompany sales. d. No adjustment is necessary 24 Winston Co. owns 80% of the outstanding common stock of Foster Co. On December 31, year 2, Winston sold equipment to Foster at a price in excess of the carrying amount of the equipment for Winston, but at less than the original cost of the equipment. On a consolidated balance sheet at December 31, year 2, the carrying amount of the equipment should he reported at a. Foster's original cost. b. Winston's original cost. c. Foster's original cost less Winston's recorded gain. d. Foster's original cost less 80% of Winston's recorded gain. 25. Port, Inc. owns 100% ofSalem, Inc. On January 1, year 6, Port sold Salem delivery equipment at a gain. Port had owned the equipment for two years and used a seven-year straight-line depreciation rate with no residual value. Salem is using a five-year straight-line depreciation rate with no residual value for the equipment. In the consolidated income statement, Salem's recorded depredation expense on the equipment for year 6 will be decreased by 20% of the gain on sale. b, 33 1/3% ofthe gain on sale. c, 50% of the gain on sale. d. 100% of the gain on sale. 26, Planet Company acquired a 70% interest in the Star Company in year l. For the year ended December 31, year 2, Star reported net income of $80,000. During year 2, Planet sold merchandise to Star for $10,000 at a profit of $2,000. The merchandise remained in Star's inventory at the end, of year 2. For consolidation purposes what is the noncontrolling interest's share of Star's net income for year 2? a. $23,400 b. $24,000 c. $24,600 d. $26,000 27, Ahm Corp. owns 90% of Bee Corp.'s common stock and 80% of Cee Corp.'s common stock. The remaining common shares of Bee and Cee are owned by their respective employees. Bee sells exclusively to Cee, Cee buys exclusively from Bee, and Cee sells exclusively to unrelated companies. Selected year 1 information for Bee and Cee follows: Sales Cost of sales Bee Corp. Cee Corp. $130,000 91,000 100,000 65,000 None 65,000 Ending inventory None 65 t amount should be reported as gross profit in Bee and Cee's combined income the year ended December 31, year 1? income statement for a. $26,000 b. $41,000 c. $47,800 d. $56,000 28. The follo during year 1: following information pertains to shipments of merchandise fromH Home Office's cost of merchandise Intracompany billing Sales by Branch Unsold merchandise at Branch on December 31, year S160,000 200,000 250,000 20,000 In the combined income statement of Home Office and Branch for the year ended December 31 year I, what amount of the above transactions should be included in sales? a. $250,000 b. $230,000 c. $200,000 d.S180,000 29. Scroll. Inc, a wholly owned subsidiary of Pim, Inc. began operations on January 1, Year 4. The following information is from the condensed Year 4 income statements: Scroll Pim $ 100,000 Sales to Scroll Sales to others 400,000 300,000 S500,000 300,000 Cost of goods sold: Acquired from Pim Acquired from others Gross proft Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before income taxes 80,000 350,000 190,000 $150,000 $30,000 40,000 10,000 60,000 15,000 S50,000 $5,000 12.000 $38,000 $5,000 Sales by Pim to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll from Pim for $36,000 on January 1, Year 4, is depreciated using the straight-line method over 4 years. In Pim's December 31, Year 4, consolidating worksheet, how much intercompany profit should be eliminated from Scroll's inventory? a. $30,000 b. $20,000 c. $10,000 d. $6,000 30. Scroll. Inc., a wholly owned subsidiary of Pim, Inc. began operations on January 1, Year 4. The following information is from the condensed Year 4 income statements: S100,000 Scroll 400,000 300,000 $500,000 300,000 Pim Sales to Scroll Sales to others Cost of goods sold: Acquired from Pim Acquired from others Gross profit Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before income taxes 80,000 350,000 190,000 S150,000 $30,000 40,000 10,000 60,000 15,000 S50,000$5,000 12,000 S38,000$5,000 Sales by Pim to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll rom Pim for $36,000 on January 1, Year 4, is depreciated using straight-line method over 4 years. The remaining estimated economic life by Scroll is consistent with the original estimate by Pim. What amount should be reported as depreciation income statement? a. $50,000 b. $47,000 c. $44,000 d. $41,000 31, Power Co. is a manufacturer and Slack Co., its 100%-owned subsidiary, is a retailer. The companies are vertically integrated. Thus, Slack purchases all of its inventory from Power. On January 1, Slack's inventory was $30,000. For the year ended December 31, its purchases were $150,000, and its cost of sales was S 166,500. Power's sales to Slack reflect a 50% markup on cost. Slack then resells the goods to outside entities at a 100% markup on cost. At what amount should the intercompany inventory purchase be reported in the consolidated balance sheet at December 31? a. $16,500 b. $9,000 c. $13,500 d. $6,750 32, Port, Inc., owns 100% of Salem, Inc. On January 1, Port sold Salem delivery equipment at a gain. Port had owned the equipment for 2 years and used a 5-year straight-line depreciation rate with no residual value. Salem is using a 3-year straight-line depreciation rate with no residual value for the equipment. In the consolidated income statement, Salem's recorded depreciation expense on the equipment for the year will be decreased by .20% of the gain on sale. b, 33 1/3% of the gain on sale. c, 50% of the gain on sale. d, 100% of the gain on sale. 10 Multiple-choice questions Select the best answer from the alternatives given and circle the letter of your choice. 1. On November 30, Pindar Co. purchased for cash at $30 per share all 250,000 shares of the outstanding common stock of Shimada Co., a business entity. Shimada reported net assets on that date with a carrying amount of S6 million. This amount reflected acquisition-date Fair value except for property, plant, and equipment, which had a fair value that exceeded its carrying amount by S800,000. In its November 30 consolidated balance sheet, what amount should Pindar report as goodwill? a. S1,500,000 b. $800,000 c. $700,000 d. SO 2. MAJ Corporation acquired 90% of the common stock of Min Co. for $420,000. MAJ previously held no equity interest in Min. On the date of acquisition, the carrying amount of Min's identifiable net assets equaled S300,000. The acquisition-date fair values of Min's inventory and equipment exceeded their carrying amounts by $60,000 and S40,000, respectively. The carrying amounts of the other assets and liabilities were equal to their acquisition- date fair values, and the fair value of the noncontrolling interest was $45,000. What amount should MAJ recognize as goodwill immediately after the acquisition? a. $150,000 b. $90,000 c. $65,000 d. $114,000 3. Practicum Co. paid $1.2 million for an 80% interest in the common stock of Sarong Co. Practicum had no previous equity interest in Sarong. On the acquisition date, Sarong's identifiable net assets had a S1.3 million carrying amount, and their fair value equaled $1.4 million. The fair lue of the noncontrolling interest (NCI) equals 20% of the implied fair value of the acquiree's Practicum should record goodwill of a. S(200,000) b. S(100,000) c. $100,000 d. $160,000 7. On December 31, year 1, Saxe Corporation was acquired by Poe Corporation. In the business combination, Poe issued 200,000 shares of its S10 par common stock, with a market price of S18 a share, for all of Saxe's common stock. The stockholders' equity section of each company's balance sheet immediately before the combination was Saxe S3,000,000 $1,500,000 150,000 Common stock Additional paid in capital Retained earnings Total 1,300,000 2,500,000 S6,800,000 2,500,000 In the December 31, year 1 consolidated balance sheet, common stock should be reported at a. $3,000,000 b. $3,500,000 c. $4,000,000 d. $5,000,000 8. On December 31, year 1, Neal Co. issued 100,000 shares of its $10 par value common stock in exchange for all of Prey Inc.'s outstanding stock. The fair value of Neal's common stock on December 31, year 1, was $19 per share. The carrying amounts and fair values of Prey's assets and liabilities on December 31, year 1, were as follows: Carrying amount Cash Receivables Inventory Property, plant, and equipment Liabilities Net assets S 240,000 270,000 435,000 1,305,000 (525,000 $1,725,000 Fair value S 240,000 270,000 405,000 1,440,000 (525.000 $1,830,000 What is the amount of goodwill resulting from the business combination? a. S175,000 b. S105,000 c. $70,000 d. S0 9. On January I, year 1, Polk Corp. and Strass Corp. had condensed balance sheets as follows: Polk S 70,000 $20,000 90,000 $160,000 $60,000 S 30,000 $10,000 50,000 80.00050.000 $160,000 Strass Current assets Noncurrent assets Total assets Current liabilities Long-term debt Stockholders' equity Total liabilities and stockholders' equity 60,000 On January 2, year i,Polk borrowed S60 000 and used the proceeds to purchase 90% of the outstanding common shares of Strass. This debt is payable in ten equal annual principal payments, lus interest, beginning December 30, year 1.The excess cost of the investment over Struss' book value of acquired net assets should be allocated 60% to inventory and 40% to goodwill. On January I, year L, the fair value of Polk shares held by noncontrolling parties was $10,000. On Polk's January 2, year I consolidated balance sheet, noncurrent assets should be b. $136,000 c. $138,000 d. $140,000 10. On January 2, Parma borrowed S60,000 and used the proceeds to purchase 90% of the outstanding common shares of Seville. Parma had no prior equity interest in Seville. Ten equal principal and interest payments begin December 30. The excess of the implied fair value of Seville over the carrying amount of its identifiable net assets should be assigned 60% to inventory and 40% to goodwill. Moreover, the fair value of the noncontrolling interest (NCI) is 10% of the implied fair value of the acquiree. The following are the balance sheets of Parma and Seville on January 1 Parma S70,000 S20 000 90,000 40,000 Seville Current assets Noncurrent assets Total assets Current liabilities Noncurrent liabilities Equity S160,000 S30, 000 $10,000 50,000 Total liabilities and equity S160,000 S60,000 On Parma's January 2 consolidated balance sheet, noncurrent assets equal a. $130,000 b. $134,000 e. $136,667 d. $140,000 11. On January 2, Parma borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Seville. Parma had no prior equity interest inS principal and interest payments begin December 30. The excess of the implied fair value of Seville over the carrying amount of its identifiable net assets should be assigned 60% to inventory and 40% to goodwill. Moreover, implied fair value of the acquiree. The following are the balance sheets of Parma and Seville on January 1- eville. Ten equal the fair value of the noncontrolling interest (NCI) is 10% of the Parma Seville $20 000 40.000 S60,000 $10,000 Current assets Noncurrent assets $70,000 90,000 $160,000 S30,000 50,000 80,000 $160,000 Total assets Current liabilities Equity Total liabilities and equity On Parma's January 2 consolidated balance sheet, Parma's equity should be $60,000 a. $80,000 b. $86,667 c. $90,000 d. $130,000 12. Parker Corp. owns 80% of Smith, Inc.'s comamon stock. During the year, Parker sold inventory costing during the year, and there was no beginning inventory from intercompany transactions. The following information pertains to Smith's and Parker's sales for the year $100,000 to Smith for $250,000. Smith sold all of the inventory purchased from Parker Smith Parker $1,000,000 $700,000 Sales Cost of sales (400,000) 350,000) Gross Profit S 600 000 $350,000 What amount should Parker report as cost of sales in its consolidated income statement? a. $750,000 b. $680,000 c. $500,000 d. $430,000 13. Clark Co. had the following transactions with affiliated parties during the year just ended: Sales of $50,000 to Dean, Inc., with S20,000 gross profit. Dean had S15,000 of this inventory on hand at year-end. Clark owns a 15% interest in Dean and does not exert significant influence. Purchases of inventories totaling $240,000 from Kent Corp., a wholly owned subsidiary. Kent's gross profit on the sale was $48,000. Clark had S60,000 of this inventory remaining on December 31. Before eliminating entries, Clark had consolidated current assets of $320,000. What amount should Clark report in its December 31 consolidated balance sheet for current assets? a. $320,000 b. S314,000 c. $308,000 d. $302,000 14. A subsidiary, acquired for cash in a business combination, owned inventories with a market value greater than the book value as of the date of combination. A consolidated balance sheet prepared immediately after the acquisition would include this difference as part of a. Deferred credits. b. Goodwill. c. Inventories. d. Retained earnings. 15. Company J acquired all of the outstanding common stock of Company K in exchange for cash. The acquisition price exceeds the fair value of net assets acquired. How should Company J determine the amounts to be reported for the plant and equipment and long-term debt acquired from Company K? Plant and equipmentLong-term debt a. K's carrying amountK's carrying amount b. K's carrying amount c. Fair value d. Fair value Fair value K's carrying amount Fair value the book value of Scott Corp.'s net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. Net income from separate company operations and dividends paid were On June 30, year 1, Purl Corp. issued 150,000 shares of its $20 par common stock for which it recerived all of Soott Corp.'s common stock. The fair value of the common stock issued is equal to 16. Scott Purl $750,000 $225,000 Net income for six months ended - Jun 30,year 1 Net income for six months ended -Dec 31, year 1 Dividends paid - March 25, year 1 Dividends paid - November 15, year 1 825,000 375,000 950,000 300,000 On December 31, year 1, Scott held in its inventory merchandise acquired from Purl on December 1, year 1, for $150,000, which included a $45,000 markup. In the year 1 consolidated income statement, net income should be report ed at a. $1,650,000 b. $1,905,000 c. $1,950,000 d. $2,130,000 17. Clark Co. had the following transactions with affliated parties during year 1: Sales of $60,000 to Dean, Inc., with $20,000 gross profit. Dean had $15,000 of this inventory on hand at year end. Clark owns a 15% interest in Dean and does not exert significant influence. Purchases of raw materials totaling $240,000 from Kent Corp, a wholly owned subsidiary. Kent's gross profit on the sale was $48,000. Clark had $85,000 of this inventory remaining on December 31, year 1. Before eliminating entries, Clark had consolidated current assets of $320,000. What amount should Clark report in its December 31, year 1 consolidated balance sheet for current assets? a. $320,000 b. $317,000 c. $308,000 d. S303,000 18, Parker Corp. owns 80% of Smith Inc.'s common stock. During year 1, Parker sold inventory costing $100,000 to Smith for $250,000. Smith sold all of the inventory purchased from Parker in year 1. The following information pertains to Smith and Parker's sales for year 1: Parker Smith $1,000,000 $700,000 Sales Cost of sales 400,000 350,000 Gross profit S600,000 $350,000 What amount should Parker report as sales in its year 1 consolidated income statement? a. S1,450,000 b. $1,600,000 c. $1,700,000 d. $1,850,000 19. Selected information from the separate and consolidated balance sheets and income of Pare, Inc. and its subsidiary, Shel Co., as of December 31, year 1, and for the year then ended is as follows: Pare Shel Consolidated Balance sheet accounts Accounts receivable Inventory Income statement accounts/amounts Revenues Cost of goods sold Gross Profit s 52,000 S 38,000 $ 78,000 60,000 50,000 104,000 $400,000 $280,000 $616,000 300,000 220,000 462,000 S100,000 S60,000 $154.000 During year 1, Pare sold goods to Shel at the same markup on cost that Pare uses for all sales. In Pare's consolidating worksheet, what amount of unrealized intercompany profit was eliminated? a. $6,000 b. $12,000 e. $58,000 d. $64,000 20. During year 1, Pard Corp. sold goods to its 80%, owned subsidiary, Seed Corp. At December 31, year 1, one-half of these goods were included in Seed's ending inventory. Reported year 1 selling expenses were $1, 1 00,000 and $400,000 for Pard and Seed, respectively. Pard's selling expenses included $50,000 in freight-out costs for goods sold to Seed. What amount of selling expenses should be reported in Pard's year 1 consolidated income statement? a. $1,500,000 b. $1,480,000 c. $1,475,000 d. $1,450,000 sold a machine for $900,000 to Saxe Corp, its wholly subsidiary. Poe paid $1,100,000 for this machine, which had accumulated depreciation of S250,000. Poe estimated a $100,000 salvage value and depreciated the machine on the straight- line method over twenty years, a policy which Saxe continued. In Poe's December 31, year 1 consolidated balance sheet, this machine should be included in cost and accumulated depreciation as Accumulated depreciation Cost a. $1,100,000 b. $1,100,000 C. $900,000 d. $850,000 S300,000 $290,000 $40,000 $42,500 22. Sun, Inc. is a wholly owned subsidiary of Patton, Inc. On June 1, year 1, Patton declared and paid a S1 per share cash dividend to stockholders of record on May 15, year 1. On May 1, year 1, Sun bought 10,000 shares of Patton's common stock for $700,000 on the open market, when the book value per share was $30. What amount of gain should Patton report from this transaction in its consolidated income statement for the year ended December 31, year 1? a. $0 b. S390,000 c. $400,000 d. $410,000 to Senior. Senior sold all of these goods in year 1. For year 1 consolidated financial stat how should the summation of Perez and Senior income statement items be adjusted? 23 Perez, Inc. owns 80% ofSerior, Inc. During year l, Perez sold goods with a 40% gross profit b. Sales and cost ofgoods sold should be reduced by 80% of the intercompany sales. c. Net income should be reduced by 80% of the gross profit on intercompany sales. a. Sales and cost of goods sold should be reduced by the intercompany sales. d. No adjustment is necessary 24 Winston Co. owns 80% of the outstanding common stock of Foster Co. On December 31, year 2, Winston sold equipment to Foster at a price in excess of the carrying amount of the equipment for Winston, but at less than the original cost of the equipment. On a consolidated balance sheet at December 31, year 2, the carrying amount of the equipment should he reported at a. Foster's original cost. b. Winston's original cost. c. Foster's original cost less Winston's recorded gain. d. Foster's original cost less 80% of Winston's recorded gain. 25. Port, Inc. owns 100% ofSalem, Inc. On January 1, year 6, Port sold Salem delivery equipment at a gain. Port had owned the equipment for two years and used a seven-year straight-line depreciation rate with no residual value. Salem is using a five-year straight-line depreciation rate with no residual value for the equipment. In the consolidated income statement, Salem's recorded depredation expense on the equipment for year 6 will be decreased by 20% of the gain on sale. b, 33 1/3% ofthe gain on sale. c, 50% of the gain on sale. d. 100% of the gain on sale. 26, Planet Company acquired a 70% interest in the Star Company in year l. For the year ended December 31, year 2, Star reported net income of $80,000. During year 2, Planet sold merchandise to Star for $10,000 at a profit of $2,000. The merchandise remained in Star's inventory at the end, of year 2. For consolidation purposes what is the noncontrolling interest's share of Star's net income for year 2? a. $23,400 b. $24,000 c. $24,600 d. $26,000 27, Ahm Corp. owns 90% of Bee Corp.'s common stock and 80% of Cee Corp.'s common stock. The remaining common shares of Bee and Cee are owned by their respective employees. Bee sells exclusively to Cee, Cee buys exclusively from Bee, and Cee sells exclusively to unrelated companies. Selected year 1 information for Bee and Cee follows: Sales Cost of sales Bee Corp. Cee Corp. $130,000 91,000 100,000 65,000 None 65,000 Ending inventory None 65 t amount should be reported as gross profit in Bee and Cee's combined income the year ended December 31, year 1? income statement for a. $26,000 b. $41,000 c. $47,800 d. $56,000 28. The follo during year 1: following information pertains to shipments of merchandise fromH Home Office's cost of merchandise Intracompany billing Sales by Branch Unsold merchandise at Branch on December 31, year S160,000 200,000 250,000 20,000 In the combined income statement of Home Office and Branch for the year ended December 31 year I, what amount of the above transactions should be included in sales? a. $250,000 b. $230,000 c. $200,000 d.S180,000 29. Scroll. Inc, a wholly owned subsidiary of Pim, Inc. began operations on January 1, Year 4. The following information is from the condensed Year 4 income statements: Scroll Pim $ 100,000 Sales to Scroll Sales to others 400,000 300,000 S500,000 300,000 Cost of goods sold: Acquired from Pim Acquired from others Gross proft Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before income taxes 80,000 350,000 190,000 $150,000 $30,000 40,000 10,000 60,000 15,000 S50,000 $5,000 12.000 $38,000 $5,000 Sales by Pim to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll from Pim for $36,000 on January 1, Year 4, is depreciated using the straight-line method over 4 years. In Pim's December 31, Year 4, consolidating worksheet, how much intercompany profit should be eliminated from Scroll's inventory? a. $30,000 b. $20,000 c. $10,000 d. $6,000 30. Scroll. Inc., a wholly owned subsidiary of Pim, Inc. began operations on January 1, Year 4. The following information is from the condensed Year 4 income statements: S100,000 Scroll 400,000 300,000 $500,000 300,000 Pim Sales to Scroll Sales to others Cost of goods sold: Acquired from Pim Acquired from others Gross profit Depreciation Other expenses Income from operations Gain on sale of equipment to Scroll Income before income taxes 80,000 350,000 190,000 S150,000 $30,000 40,000 10,000 60,000 15,000 S50,000$5,000 12,000 S38,000$5,000 Sales by Pim to Scroll are made on the same terms as those made to third parties. Equipment purchased by Scroll rom Pim for $36,000 on January 1, Year 4, is depreciated using straight-line method over 4 years. The remaining estimated economic life by Scroll is consistent with the original estimate by Pim. What amount should be reported as depreciation income statement? a. $50,000 b. $47,000 c. $44,000 d. $41,000 31, Power Co. is a manufacturer and Slack Co., its 100%-owned subsidiary, is a retailer. The companies are vertically integrated. Thus, Slack purchases all of its inventory from Power. On January 1, Slack's inventory was $30,000. For the year ended December 31, its purchases were $150,000, and its cost of sales was S 166,500. Power's sales to Slack reflect a 50% markup on cost. Slack then resells the goods to outside entities at a 100% markup on cost. At what amount should the intercompany inventory purchase be reported in the consolidated balance sheet at December 31? a. $16,500 b. $9,000 c. $13,500 d. $6,750 32, Port, Inc., owns 100% of Salem, Inc. On January 1, Port sold Salem delivery equipment at a gain. Port had owned the equipment for 2 years and used a 5-year straight-line depreciation rate with no residual value. Salem is using a 3-year straight-line depreciation rate with no residual value for the equipment. In the consolidated income statement, Salem's recorded depreciation expense on the equipment for the year will be decreased by .20% of the gain on sale. b, 33 1/3% of the gain on sale. c, 50% of the gain on sale. d, 100% of the gain on sale. 10