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1、1Copyright 2012 Pearson Education, Inc. Publishing as Prentice HallAdvanced Accounting, 11e (Beams/Anthony/Bettinghaus/Smith) Chapter 8 Consolidations - Changes in Ownership InterestsMultiple Choice Questions1) Which of the following is correct? The direct sale of additional shares of stock at book
2、value per share to only the parent company from a subsidiary A) decreases the parents interest and decreases the noncontrolling shareholders interest. B) decreases the parents interest and increases the noncontrolling shareholders interest. C) increases the parents interest and increases the noncont
3、rolling shareholders interest. D) increases the parents interest and decreases the noncontrolling shareholders interest. Answer: D Objective: LO3 Difficulty: ModerateUse the following information to answer the question(s) below.On December 31, 2010, Giant Corporations Investment in Penguin Corporati
4、on account had a balance of $500,000. The balance consisted of 80% of Penguins $625,000 stockholders equity on that date. Giant owns 80% of Penguin. On January 2, 2011, Penguin increased its outstanding common stock from 15,000 to 18,000 shares.2) Assume that Penguin sold the additional 3,000 shares
5、 directly to Giant for $150,000 on January 2, 2011. Giants percentage ownership in Penguin immediately after the purchase of the additional stock is A) 66-2/3%. B) 80%. C) 83-1/3%. D) 86-2/3% Answer: C Explanation: C) (Parent had 80% of 15,000 shares, or 12,000 shares. They now hold 15,000 of 18,000
6、 shares) = 83.33% Objective: LO3 Difficulty: Moderate3) Assume that Penguin sold the additional 3,000 shares to outside interests for $150,000 on January 2, 2011. Giants percentage ownership immediately after the sale of additional stock would be A) 66-2/3%. B) 75%. C) 80%. D) 83-1/3%. Answer: A Exp
7、lanation: A) (12,000 shares/18,000 shares) = 66.67% Objective: LO3 Difficulty: Moderate2Copyright 2012 Pearson Education, Inc. Publishing as Prentice HallUse the following information to answer the question(s) below.Bird Corporation purchased an 80% interest in Brush Corporation on July 1, 2010 at i
8、ts book value, and on January 1, 2011 its Investment in Brush account was $300,000, equal to its book value. Brushs net income for 2011 was $99,000 (earned uniformly); no dividends were declared. On March 1, 2011, Bird reduced its interest in Brush by selling a 20% interest, one-fourth of its invest
9、ment, for $84,000.4) If Bird uses a “beginning-of-the-year“ sale assumption, its gain on sale and income from Brush for 2011 will be A) Gain on SaleIncome from Brush $5,700$59,400B) Gain on SaleIncome from Brush $5,700$62,700C) Gain on SaleIncome from Brush $9,000$59,40D) Gain on SaleIncome from Bru
10、sh $9,000$62,70Answer: C Explanation: C) Selling price$84,000 Book value of interest sold $300,000 (20% / 80%) =75,000 Gain on sale$9,000Income from Brush $99,000 (80% - 20%) =$59,400 Objective: LO2 Difficulty: Moderate3Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall5) If Bird use
11、s the “actual-sale-date“ sales assumption, its gain on the sale and income from Brush for 2011 will be A) Gain on SaleIncome from Brush $5,700$59,400B) Gain on SaleIncome from Brush $5,700$62,700C) Gain on SaleIncome from Brush $21,360$59,400D) Gain on SaleIncome from Brush $21,360$62,700Answer: B E
12、xplanation: B) Selling price$84,000 Book value of interest sold: Beginning balance$300,000 Income for 2 months $99,000 x 1/6 80% =13,200 Adjusted book value313,200 Percentage of interest sold 1/4 Book value applied78,30078,300 Gain on sale$5,700Income from Brush: Jan 1 - Mar 1 $99,000 2/12 80% =$13,
13、200 Mar 1 - Dec 31 $99,000 10/12 60% =49,500 Income from Brush$62,700 Objective: LO2 Difficulty: Moderate4Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall6) Jersey Company acquired 90% of York Company on April 1, 2011. Both Jersey Company and York Company have December 31 fiscal ye
14、ar ends. Under current GAAP, which of the following statements is false? A) The consolidated income statement in 2011 should not include Yorks revenues and expenses prior to April 1, 2011. B) When preparing consolidating work papers in 2011, Yorks revenues prior to April 1, 2011 are eliminated. C) Y
15、orks earnings prior to April 1, 2011 should appear as a deduction on the consolidated income statement in 2011. D) The consolidated income statement in 2011 should include Yorks revenues and expenses after April 1, 2011. Answer: C Objective: LO1 Difficulty: Moderate7) Utah Company holds 80% of the s
16、tock of a subsidiary company. The subsidiary issues 100 additional shares of stock to Utah Company at a price above book value per share. The subsidiary does not issue any additional shares at the same time. How will Utah Company record the purchase? A) Utah Company records a gain on sale of stock. B) Utah Company increases additional paid-in capital. C) Utah Company decreases additional paid-in ca
