Balance Sheet and Net Income Essay Example

Balance Sheet and Net Income Paper Balance Sheet and Net Income BY 990 On January 4, 2010, Harley, Inc. acquired 40% of the outstanding common stock of Bike Co. for $2,400,000. This investment gave Harley the ability to exercise significant influence over Bike. Bikes assets on that date were recorded at $10,500,000 with liabilities of $4,500,000. There were no other differences between book and fair values. During 2010, Bike reported net income of $500,000. For 2011, Bike reported net income of $800,000. Dividends of $300,000 were paid in each of these two years. 49. How much income did Harley report from Bike for 2010? DA. 120,000. 0 B. $200,000. OC. $300,000. 0D. 320,000. 0E. $500,000. 26. Under the equity method, when the companys share of cumulative losses equals its investment and the company has no obligation or intention to fund such additional losses, which of the following statements is true? 0 A. The investor should change to the fair-value method to account for its investment. o B. The investor should suspe nd applying the equity method until the investee reports income. 0 C. The investor should suspend applying the equity method and not record any equity in income of investee until its share of future rofits is sufficient to recover losses that have not previously been recorded. D. The cumulative losses should be reported as a prior period adjustment. o E. The investor should report these losses as extraordinary items. 7. What is the primary accounting difference between accounting for when the subsidiary is dissolved and when the subsidiary retains its incorporation? A. lf the subsidiary is dissolved, it will not be operated as a separate division B. lf the subsidiary is dissolved, assets and liabilities are consolidated at their book values C. If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition D. f the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values E. If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company Which one of the following accounts would not appear on the consolidated financial statements at the end of the first fiscal period of the combination? Goodwill Equipment Investment in Subsidiary Common Stock Additional Paid-ln Capital . Jansen Inc. acquired all of the outstanding common stock of Merriam Co. on January 1, 2009, for $257,000. Annual amortization of $19,000 resulted from this acquisition. Jansen reported net income of $70,000 in 2009 and $50,000 in 2010 and and $47,000 in 2010 and paid $10,000 in dividends each year. What is the Investment in Merriam Co. balance on Jansens books as of December 31, 2010, if the equity method has been applied? A. $286,OOO B. $296,OOO c. $276,ooo D. $344,OOO E. $300,OOO Webb Co. acquired 100% of Rand Inc. on January 5, 20011. During 2011, Webb sold oods to Rand for $2,400,000 that cost Webb $1 Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand. What was consolidated cost of goods sold? Clemente Co. owned all of the voting common stock of Snider Co. On January 2, 2010, Clemente sold equipment to Snider for $125,000. The equipment had cost Clemente $140,000. At the time of the sale, the balance in accumulated depreciation was $40,000. The equipment had a remaining useful life of five years and a $0 salvage value. Straight-line depreciation is used by both Clemente and Snider. At what amount should the equipment (net of depreciation) be included in the consolidated balance sheet dated December 31, 2011? A) $110,000. B) $105,000. We will write a custom essay sample on Balance Sheet and Net Income specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Balance Sheet and Net Income specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Balance Sheet and Net Income specifically for you FOR ONLY $16.38 $13.9/page Hire Writer C) $90,000. D) $60,000. E) $100,000. Dalton Corp. owned 70% of the outstanding common stock of Shrugs Inc. On January 1, 2009, Dalton acquired a building with a ten-year life for $420,000. No salvage value was anticipated and the building was to be depreciated on the straight-line basis. On January 1, 2011, Dalton sold this building to Shrugs for $392,000. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2011, how does this transfer affect the calculation of Daltons share of consolidated net income? A. Consolidated net income must be B. Consolidated net income must be reduced by $50,400. C. Consolidated net income must be reduced by $49,000. D. Consolidated net income must be reduced by $56,000. E. Consolidated net income must be reduced by $34,300. 8. How would consolidated earnings per share be calculated if the subsidiary has no convertible securities or warrants? A. Parents earnings per share plus subsidiarys earnings per share B. Parents net ncome divided by parents number of shares outstanding C. Consolidated net income divided by parents number of shares outstanding D. Average of parents earnings per share and subsidiarys earnings per share E. consolidated income divided by total number of shares outstanding for the parent and subsidiary Campbell Inc. owned all of Gordon Corp. For 2014, Campbell reported net income (without consideration of its investment in Gordon) of while the subsidiary reported . The subsidiary had bonds payable outstanding on January 1, 2014, with a book value of . The parent acquired the bonds on that date for During 2014, Campbell reported interest income while Gordon reported . What is consolidated net income for 2014? nterest expense consolidated NCI = $406,000 All of the following are variable interests except A. Asset purchase options B. Participation rights C. Lease residual value guarantees D. Guarantees of debt E. Stock Options 8. On June 1, Camco received a contract to sell inventory for 500,000. The sale would take place in 90 days. Camco immediately signed a 90-day forward contract to sell the yen as soon as they a re received. The spot rate on June 1 was $1 = 0240 and the 90-day forward rate was $1 = 0234. At what amount would Camco record the Forward Contract on June 1? 8. Mills Inc. ad a receivable from a foreign customer that is due in the local currency of the customer (stickles). On December 31, 2010, this receivable for 5200,000 was correctly included in Mills balance sheet at $132,000. When the receivable was collected on February 15, 2011, the U. S. dollar equivalent was $144,000. In Mills 2011 consolidated income statement, how much should have been reported as a foreign exchange gait-I? O A. $0. 08. $36,000. OC. $48,000. 0D. $10,000. 0E. $12,000. contract at any point in time except0 A. The forward rate when the forward contract was entered into. B. The current forward rate for a contract that matures on the same date as the forward contract entered into. C. The future spot rate. D. A discount rate. E. The companys incremental borrowing rate. Which of the following funds is a govern mental fund? a) Enterprise fund. 0 b) Debt service fund. 0 c) Internal service fund. 0 d) Agency fund 10. Under modified accrual accounting, revenues should be recognized when they are A. collected. B. realizable. C. reasonably estimable. D. measurable and available. E. earned. 4. Which of the following funds is a fiduciary fund? a) Permanent fund. 0b) Agency fund. DC) Capital project fund. 0d) Debt service fund. The partnership of Clapton, Seidel, and Thomas was insolvent and will be unable to pay $30,000 in liabilities currently due. What recourse was available to the partnerships creditors? A. They must present equal claims to the three partners as individuals. B. They must try obtain a payment from the partner with the largest capital account balance. C. They cannot seek remuneration from the partners as individuals. D. They may seek remuneration from any partner they choose Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $1 50,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011. A. $63 B. $53,000. c. $58000 D. $29,000. E. $51,000.