[MC01] Company A owns 80% of (and controls) Company B. Company B owns 70% of (and controls) Company C. Assume no differential and no intercompany transactions. On their own books, Company A and Company B both use the equity method to account for their respective investments. For the year: Company C reports net income of $200,000. Company B has income (exclusive of equity method income) of $500,000. Company A has income (exclusive of equity method income) of $900,000. What is Company B's reported net income for the year? [A] $200,000 [B] $500,000 [C] $550,000 [D] $640,000 [E] $660,000 [F] $700,000 [G] $900,000 [H] $1,250,000 [MC02] Continue with MC01. What is Company A's reported net income for the year? [A] $900,000 [B] $1,250,000 [C] $1,300,000 [D] $1,348,000 [E] $1,362,000 [F] $1,412,000 [G] $1,428,000 [H] $1,400,000 [1] $1,600,000 [MC03] Continue with MC01. What is the non-controlling interest in consolidated net income for the year? [A] $160,000 [B] $188,000 [C] $190,000 [D] $192,000 [E] $238,000 [F] $320,000 [G] $480,000 IMC04] Company P (which is in the United States) controls Company S (which is in Japan). Company S's recording currency JPY. If Company S's functional currency is JPY, then Company S's financial statements will be [a] into USD. If Company S's functional currency is USD, then Company S's financial statements will be [B] into USD. [a] [B] [A] Translated Translated [B] Translated Remeasured [C] Remeasured Translated [DJ Remeasured Remeasured [MC05] On October 1, Year 1, Company A acquires 100% of Company B's outstanding shares. When preparing its equity method journal entries, how should Company A determine its share of Company B's net income for Year 1? [A] Only the net income that Company B generated after October 1 can be included in Company A's equity method income. Income that was generated prior to October 1 is not included. [B] None of Company B's net income in Year 1 can be included in Company A's Year 1 equity method income. [C] All of Company B's net income for Year 1 is included in Company A's equity method income. [D] Company A should include 25% of Company B's net income in its equity method income, because Company A acquired Company B when there was 25% of the year remaining. [MC06] On a foreign subsidiary's balance sheet, which exchange rate should be used to convert (either by translation or remeasurement) property, plant and equipment? [a] The exchange rate on the balance sheet date. [B] The relevant historical exchange rate. [y] The average exchange rate for the year. a. Remeasurement Translation [A] a a [B] a B [C] a 7 IDB LEJB B [FDB Y [G] Y B UY Y a. HY [MC07] Company A owns 80% of (and controls) Company B. Company B owns 10% of Company A. During the year, Company A declared $300,000 of cash dividends, and Company B declared $80,000 of cash dividends. On the consolidated statement of stockholders' equity, what will be the dividends declared? [A] $0 [B] $8,000 [C] $30,000 [D] $64,000 [E] $94,000 [F] $240,000 [G] $264,000 [H] $270,000 [ $300,000 [J$364,000 [K] $380,000 (MC08] Continue with MC07. Company B, on its own books, uses the cost method to account for its investment in Company A. Company A, on its own books, uses the equity method to account for its investment in Company B. Company A reports net income $1,000,000 on its income statement. Company B reports net income $200,000 on its income statement. What is the consolidated net income for the year? [A] $934,000 [B] $1,000,000 [C] $1,030,000 [D] $1,034,000 [E] $1,170,000 [F] $1,200,000 [MC09] Continue with MC07. What is the non-controlling interest in consolidated net income for the year? [A] $27,200 [B] $34,000 [C] $40,000 [D] $200,000 [E] $206,800 [F] $240,000 [MC10] When converting a foreign subsidiary's financial statements into the Parent's currency... [a] adjustments are reported in net income [B] adjustments are reported in other comprehensive income. [a] [B] [A] Translation Translation [B] Translation Remeasurement [C] Remeasurement Translation [D) Remeasurement Remeasurement [MC11] On July 1, Year 1, a company based in France (and keeps its books in EUR) receives a certain number of U.S. dollars. On December 31, Year 1, the French company is still holding on to those dollars. This is the only foreign currency the French company possesses. If the Euro [a] against the dollar from July 1, Year 1 to December 31, Year 1, then the French company will record a foreign currency transaction loss. If the Euro [B] against the dollar from July 1, Year 1 to December 31, Year 1, then the French company will record a foreign currency transaction gain. [a] [B] [A] Depreciates Depreciates [B] Depreciates Appreciates [C] Appreciates Depreciates [D] Appreciates Appreciates