03 Chapter - Consolidations - Subsequent to the Date of Acquisition Chapter 03 Consolidations - Subsequent to the Date of Acquisition Multiple Choice Questions

1. Which one of the followin accounts would not appear in the consolidated financial state!ents at the end of the first fiscal period of the co!bination" C. Investment in Subsidiary. #. Which of the followin internal record-$eepin !ethods can a parent choose to account for a subsidiar% acquired in a business co!bination? C. Initial value, equity, or partial equity. 3. Which one of the followin &aries between the equit%' initial &alue' and partial equit% !ethods of accountin for an in&est!ent" A. The amount of consolidated net income. (. )nder the partial equit% !ethod' the parent reco ni*es inco!e when E. it is earned by the subsidiary. +. ,ush-down accountin is concerned with the A. impact of the purchase on the subsidiary's financial statements . -. .acer Corp. acquired all of the co!!on stoc$ of /an iers Co. in #000. /an iers !aintained its incorporation. Which of .acer1s account balances would &ar% between the equit% !ethod and the initial &alue !ethod" . Common Stoc!, "ood#ill, and Investment in Tan$iers Co. 2. 3ow does the partial equit% !ethod differ fro! the equit% !ethod" E. %nder the partial equity method, the balance in the investment account is not decreased by amorti&ation on allocations made in the acquisition of the subsidiary. 4. 5ansen 6nc. acquired all of the outstandin co!!on stoc$ of Merria! Co. on 5anuar% 1' #010' for 7#+2'000. Annual a!orti*ation of 710'000 resulted fro! this acquisition. 5ansen reported net inco!e of 720'000 in #010 and 7+0'000 in #011 and paid 7##'000 in di&idends each %ear. Merria! reported net inco!e of 7(0'000 in #010 and 7(2'000 in #011 and paid 710'000 in di&idends each %ear. What is the 6n&est!ent in Merria! Co. balance on 5ansen1s boo$s as of Dece!ber 31' #011' if the equit% !ethod has been applied" A. '()*,+++. 0. 8elwa% Corp. acquired 5o$er 6nc. on 5anuar% 1' #010. /he parent paid !ore than the fair &alue of the subsidiar%1s net assets. 9n that date' 8elwa% had equip!ent with a boo$ &alue of 7+00'000 and a fair &alue of 7-(0'000. 5o$er had equip!ent with a boo$ &alue of 7(00'000 and a fair &alue of 7(20'000. 5o$er decided to use push-down accountin . 6!!ediatel% after the acquisition' what :quip!ent a!ount would appear on 5o$er1s separate balance sheet and on 8elwa%1s consolidated balance sheet' respecti&el%" . ',-+,+++ and '.-+,+++ 10. ,arrett Corp. acquired one hundred percent of 5ones 6nc. on 5anuar% 1' #000' at a price in e;cess of the subsidiar%1s fair &alue. 9n that date' ,arrett1s equip!ent <ten-%ear life= had a boo$ &alue of 73-0'000 but a fair &alue of 7(40'000. 5ones had equip!ent <ten-%ear life= with a boo$ &alue of 7#(0'000 and a fair &alue of 73+0'000. ,arrett used the partial equit% !ethod to record its in&est!ent in 5ones. 9n Dece!ber 31' #011' ,arrett had equip!ent with a boo$ &alue of 7#+0'000 and a fair &alue of 7(00'000. 5ones had equip!ent with a boo$ &alue of 7120'000 and a

fair &alue of 73#0'000. What is the consolidated balance for the :quip!ent account as of Dece!ber 31' #011" A. 7342'000. >. 7(02'000. C. 7+04.000. D. 7+32'000. :. 7+20'000///. 9n 5anuar% 1' #010' Cale Corp. paid 71'0#0'000 to acquire ?altop Co. ?altop !aintained separate incorporation. Cale used the equit% !ethod to account for the in&est!ent. /he followin infor!ation is a&ailable for ?altop1s assets' liabilities' and stoc$holders1 equit% accounts@ ?altop earned net inco!e for #010 of 71#-'000 and paid di&idends of 7(4'000 durin the %ear. 11. /he #010 total a!orti*ation of allocations is calculated to be . '01,+++2. 1#. 6n Cale1s accountin records' what a!ount would appear on Dece!ber 31' #010 for equit% in subsidiar% earnin s" . '1(-,+++. 13. What is the balance in Cale1s in&est!ent in subsidiar% account at the end of #010" A. '1,+..,+++. 1(. At the end of #010' the consolidation entr% to eli!inate Cale1s accrual of ?altop1s earnin s would include a credit to 6n&est!ent in ?altop Co. for C. '1(-,+++. 1+. 6f Cale Corp. had net inco!e of 7((('000 in #010' e;clusi&e of the in&est!ent' what is the a!ount of consolidated net inco!e" C. '3-1,+++. 9n 5anuar% 1' #010' Aranel Co. acquired all of the co!!on stoc$ of 3urle! Corp. Aor #010' 3urle! earned net inco!e of 73-0'000 and paid di&idends of 7100'000. A!orti*ation of the patent allocation that was included in the acquisition was 7-'000. 1-. 3ow !uch difference would there ha&e been in Aranel1s inco!e with re ard to the effect of the in&est!ent' between usin the equit% !ethod or usin the initial &alue !ethod of internal record$eepin " A. 7100'000. >. 73-0'000. C. 71-('000. D. 73+('000. :. 71+0'000 ///. 12. 3ow !uch difference would there ha&e been in Aranel1s inco!e with re ard to the effect of the in&est!ent' between usin the equit% !ethod or usin the partial equit% !ethod of internal record$eepin " . '*,+++. Cashen Co. paid 7#'(00'000 to acquire all of the co!!on stoc$ of 5ane; Corp. on 5anuar% 1' #010. 5ane;1s reported earnin s for #010 totaled 7(3#'000' and it paid 71#0'000 in di&idends durin the %ear. /he a!orti*ation of allocations related to the in&est!ent was 7#('000. Cashen1s net inco!e' not includin the in&est!ent' was 73'140'000' and it paid di&idends of 7000'000. 14. 9n the consolidated financial state!ents for #010' what a!ount should ha&e been shown for :quit% in Subsidiar% :arnin s" 4. '5+5. 10. 9n the consolidated financial state!ents for #010' what a!ount should ha&e been shown for consolidated di&idends" A. 7000'000. >. 71'0#0'000. C. 742-'000. D. 700-'000. :. 70(4'000./// #0. What is the a!ount of consolidated net inco!e for the %ear #010" . '6,3)),+++. 5ans 6nc. acquired all of the outstandin co!!on stoc$ of /%s$ Corp. on 5anuar% 1' #000' for 732#'000. :quip!ent with a ten-%ear life was under&alued on /%s$1s financial records b% 7(-'000. /%s$ also owned an unrecorded custo!er list with an assessed fair &alue of 7-2'000 and an esti!ated re!ainin life of fi&e %ears. /%s$ earned reported net inco!e of 7140'000 in #000 and 7#1-'000 in #010. Di&idends of 720'000 were paid in each of these

two %ears. Selected account balances as of Dece!ber 31' #011' for the two co!panies follow. #1. 6f the partial equit% !ethod had been applied' what was #011 consolidated net inco!e" 4. '-*),,++. ##. 6f the equit% !ethod had been applied' what would be the 6n&est!ent in /%s$ Corp. account balance within the records of 5ans at the end of #011" . '-,,,+++. #3. .ed Co. acquired 100B of Creen' 6nc. on 5anuar% 1' #010. 9n that date' Creen had in&entor% with a boo$ &alue of 7(#'000 and a fair &alue of 7+#'000. /his in&entor% had not %et been sold at Dece!ber 31' #010. Also' on the date of acquisition' Creen had a buildin with a boo$ &alue of 7#00'000 and a fair &alue of 7300'000. Creen had equip!ent with a boo$ &alue of 73+0'000 and a fair &alue of 7#40'000. /he buildin had a 10-%ear re!ainin useful life and the equip!ent had a +-%ear re!ainin useful life. 3ow !uch total e;pense will be in the consolidated financial state!ents for the %ear ended Dece!ber 31' #010 related to the acquisition allocations of Creen" . '13,+++. #(. All of the followin are acceptable !ethods to account for a !aDorit%-owned in&est!ent in subsidiar% e;cept . The fair5 value method. #+. )nder the equit% !ethod of accountin for an in&est!ent' A. /he in&est!ent account re!ains at initial &alue. >. Di&idends recei&ed are recorded as re&enue. C. Coodwill is a!orti*ed o&er #0 %ears. D. 6nco!e reported b% the subsidiar% increases the in&est!ent account. :. Di&idends recei&ed increase the in&est!ent account. #-. )nder the partial equit% !ethod of accountin for an in&est!ent' . Amorti&ation of the e7cess of fair value allocations over boo! value is i$nored in re$ard to the investment account. #2. )nder the initial &alue !ethod' when accountin for an in&est!ent in a subsidiar%' . The investment account remains at initial value. #4. Accordin to CAA, re ardin a!orti*ation of oodwill and other intan ible assets' which of the followin state!ents is true" C. "ood#ill reco$ni&ed in consolidation #ill not be amorti&ed but sub8ect to an annual test for impairment. #0. When a co!pan% applies the initial !ethod in accountin for its in&est!ent in a subsidiar% and the subsidiar% reports inco!e in e;cess of di&idends paid' what entr% would be !ade for a consolidation wor$sheet" E. E above 30. When a co!pan% applies the initial &alue !ethod in accountin for its in&est!ent in a subsidiar% and the subsidiar% reports inco!e less than di&idends paid' what entr% would be !ade for a consolidation wor$sheet" A. A abo&e >. > abo&e C. C abo&e D. D abo&e :. : abo&e 31. When a co!pan% applies the partial equit% !ethod in accountin for its in&est!ent in a subsidiar% and the subsidiar%1s equip!ent has a fair &alue reater than its boo$ &alue' what consolidation wor$sheet entr% is !ade in a %ear subsequent to the initial acquisition of the subsidiar%" A. A above 3#. When a co!pan% applies the partial equit% !ethod in accountin for its in&est!ent in a subsidiar% and initial &alue' boo$ &alues' and fair &alues of net assets acquired are all equal' what consolidation

wor$sheet entr% would be !ade" E. E above 33. When consolidatin a subsidiar% under the equit% !ethod' which of the followin state!ents is true" A. Coodwill is ne&er reco ni*ed. >. Coodwill required is a!orti*ed o&er #0 %ears. C. Coodwill !a% be recorded on the parent co!pan%1s boo$s. D. /he &alue of an% oodwill should be tested annuall% for i!pair!ent in &alue. :. Coodwill should be e;pensed in the %ear of acquisition. 3(. When consolidatin a subsidiar% under the equit% !ethod' which of the followin state!ents is true with re ard to the subsidiar% subsequent to the %ear of acquisition" A. All net assets are revalued to fair value and must be amorti&ed over their useful lives. 3+. Which of the followin state!ents is false re ardin push-down accountin " . 9ush5do#n accountin$ must be applied for all business combinations under a poolin$ of interests. 3-. Which of the followin is false re ardin contin ent consideration in business co!binations" C. Contin$ent consideration is recorded because of its substantial probability of eventual payment. 32. Aactors that should be considered in deter!inin the useful life of an intan ible asset include C. The entity's e7pected use of the intan$ible asset. 34. Consolidated net inco!e usin the equit% !ethod for an acquisition co!bination is co!puted as follows@ . 9arent's revenues less e7penses for its o#n operations plus the equity from subsidiary's income recorded by parent. ,err% Co!pan% acquires 100B of the stoc$ of 3urle% Corporation on 5anuar% 1' #010' for 73'400 cash. As of that date 3urle% has the followin trial balanceE An% e;cess of consideration transferred o&er fair &alue of net assets acquired is considered oodwill with an indefinite life. A6A9 in&entor% &aluation !ethod is used. 30. Co!pute the consideration transferred in e;cess of boo$ &alue acquired at 5anuar% 1' #010. 4. '-++. (0. Co!pute oodwill' if an%' at 5anuar% 1' #010. A. '13+. (1. Co!pute the a!ount of 3urle%1s in&entor% that would be reported in a 5anuar% 1' #010' consolidated balance sheet. C. '.++. (#. Co!pute the a!ount of 3urle%1s buildin s that would be reported in a Dece!ber 31' #010' consolidated balance sheet. 4. '1,(*+. (3. Co!pute the a!ount of 3urle%1s equip!ent that would be reported in a Dece!ber 31' #010' consolidated balance sheet. . '1,1(3. ((. Co!pute the a!ount of total e;penses reported in an inco!e state!ent for the %ear ended Dece!ber 31' #010' in order to reco ni*e acquisition-date allocations of fair &alue and boo$ &alue differences' 4. '1.+. (+. Co!pute the a!ount of 3urle%1s lon ter! liabilities that would be reported in a Dece!ber 31' #010' consolidated balance sheet. C. '1,-(3. (-. Co!pute the a!ount of 3urle%1s buildin s that would be reported in a Dece!ber 31' #011' consolidated balance sheet. C. '1,6(+. (2. Co!pute the a!ount of 3urle%1s equip!ent that would be reported in a Dece!ber 31' #011' consolidated balance sheet. 4. '1,+++. (4. Co!pute the a!ount of 3urle%1s land that would be reported in a Dece!ber 31' #011'

consolidated balance sheet. 4. '1,6++.. (0. Co!pute the a!ount of 3urle%1s lon -ter! liabilities that would be reported in a Dece!ber 31' #011' consolidated balance sheet. . '1,-3+. ?a%e Co!pan% acquired 100B of Aiore Co!pan% on 5anuar% 1' #011. ?a%e paid 71'000 e;cess consideration o&er boo$ &alue which is bein a!orti*ed at 7#0 per %ear. Aiore reported net inco!e of 7(00 in #011 and paid di&idends of 7100. +0. Assu!e the equit% !ethod is applied. 3ow !uch will ?a%e1s inco!e increase or decrease as a result of Aiore1s operations" A. 7(00 increase. >. 7300 increase. C. 7340 increase. D. 7#40 increase. :. 7(40 increase. +1. Assu!e the partial equit% !ethod is applied. 3ow !uch will ?a%e1s inco!e increase or decrease as a result of Aiore1s operations" A. 7(00 increase. >. 7300 increase. C. 7340 increase. D. 7#40 increase. :. 7(40 increase. +#. Assu!e the initial &alue !ethod is applied. 3ow !uch will ?a%e1s inco!e increase or decrease as a result of Aiore1s operations". . '1++ increase. +3. Assu!e the partial equit% !ethod is used. 6n the %ears followin acquisition' what additional wor$sheet entr% !ust be !ade for consolidation purposes that is not required for the equit% !ethod" A. :ntr% A. >. :ntr% >. C. :ntr% C. D. :ntr% D. :. :ntr% :. +(. Assu!e the initial &alue !ethod is used. 6n the %ear subsequent to acquisition' what additional wor$sheet entr% !ust be !ade for consolidation purposes that is not required for the equit% !ethod" A. :ntr% A. >. :ntr% >. C. :ntr% C. D. :ntr% D. :. :ntr% :. ++. 3o%t Corporation a reed to the followin ter!s in order to acquire the net assets of >rown Co!pan% on 5anuar% 1' #011@ <1.= /o issue (00 shares of co!!on stoc$ <710 par= with a fair &alue of 7(+ per share. <#.= /o assu!e >rown1s liabilities which ha&e a fair &alue of 71'+00. 9n the date of acquisition' the consideration transferred for 3o%t1s acquisition of >rown would be@ E. '1.,3++. Aollowin are selected accounts for Creen Corporation and 8e a Co!pan% as of Dece!ber 31' #013. Se&eral of Creen1s accounts ha&e been o!itted. Creen acquired 100B of 8e a on 5anuar% 1' #000' b% issuin 10'+00 shares of its 710 par &alue co!!on stoc$ with a fair &alue of 70+ per share. 9n 5anuar% 1' #000' 8e a1s land was under&alued b% 7(0'000' its buildin s were o&er&alued b% 730'000' and equip!ent was under&alued b% 740'000. /he buildin s ha&e a #0-%ear life and the equip!ent has a 10-%ear life. 7+0'000 was attributed to an unrecorded trade!ar$ with a 1--%ear re!ainin life. /here was no oodwill associated with this in&est!ent. +-. Co!pute the boo$ &alue of 8e a at 5anuar% 1' #000. 4. ')3-,3++. +2. Co!pute the Dece!ber 31' #013' consolidated re&enues. A. 71'(00'000. >. 7400'000. C. 7+00'000. D. 71'+00'32+. :. 71'300'32+. +4. Co!pute the Dece!ber 31' #013' consolidated total e;penses. . '.+.,*(3. +0. Co!pute the Dece!ber 31' #013' consolidated buildin s. 4. '1,++-,3++. -0. Co!pute the Dece!ber 31' #013' consolidated equip!ent. A. 7400'000. >. 7404'000. C. 74(0'000. D. 72-0'000. :. 74(4'000. -1. Co!pute the Dece!ber 31' #013' consolidated land. A. 7##0'000. >.

7140'000. C. 7-20'000. D. 7-30'000. :. 7(+0'000. -#. Co!pute the Dece!ber 31' #013' consolidated trade!ar$. A. 7+0'000. >. 7(-'42+. C. 70. D. 73('32+. :. 732'+00. -3. Co!pute the Dece!ber 31' #013' consolidated co!!on stoc$. A. 7(+0'000. >. 7+30'000. C. 7+++'000. D. 7-3+'000. :. 7+#+'000. -(. Co!pute the Dece!ber 31' #013' consolidated additional paid-in capital. A. 7#10'000. >. 72+'000. C. 71'10#'+00. D. 70(#'+00. :. 7+#+'000. -+. Co!pute the Dece!ber 31' #013 consolidated retained earnin s. A. 71'-(+'32+. >. 71'3+0'000. C. 71'+-+'32+. D. 71'4(0'32+. :. 71'#-+'32+. --. Co!pute the equit% in 8e a1s inco!e to be included in Creen1s consolidated inco!e state!ent for #013. A. 7+00'000. >. 7300'000. C. 7100'32+. D. 7#00'000. :. 7#00'32+. -2. 9ne co!pan% acquires another co!pan% in a co!bination accounted for as an acquisition. /he acquirin co!pan% decides to appl% the initial &alue !ethod in accountin for the co!bination. What is one reason the acquirin co!pan% !i ht ha&e !ade this decision" A. 6t is the onl% !ethod allowed b% the S:C. >. 6t is relati&el% eas% to appl%. C. 6t is the onl% internal reportin !ethod allowed b% enerall% accepted accountin principles. D. 9peratin results on the parent1s financial records reflect consolidated totals. :. When the initial !ethod is used' no wor$sheet entries are required in the consolidation process. -4. 9ne co!pan% acquires another co!pan% in a co!bination accounted for as an acquisition. /he acquirin co!pan% decides to appl% the equit% !ethod in accountin for the co!bination. What is one reason the acquirin co!pan% !i ht ha&e !ade this decision" A. 6t is the onl% !ethod allowed b% the S:C. >. 6t is relati&el% eas% to appl%. C. 6t is the onl% internal reportin !ethod allowed b% enerall% accepted accountin principles. D. 9peratin results on the parent1s financial records reflect consolidated totals. :. When the equit% !ethod is used' no wor$sheet entries are required in the consolidation process. -0. When is a oodwill i!pair!ent loss reco ni*ed" A. Annuall% on a s%ste!atic and rational basis. >. Fe&er. C. 6f both the fair &alue of a reportin unit and its associated i!plied oodwill fall below their respecti&e carr%in &alues. D. 6f the fair &alue of a reportin unit falls below its ori inal acquisition price. :. Whene&er the fair &alue of the entit% declines si nificantl%. 20. Which of the followin will result in the reco nition of an i!pair!ent loss on oodwill" A. Coodwill a!orti*ation is to be reco ni*ed annuall% on a s%ste!atic and rational basis. >. >oth the fair &alue of a reportin unit and its associated i!plied oodwill fall below their respecti&e carr%in &alues. C. /he fair &alue of the entit% declines si nificantl%. D. /he fair &alue of a reportin unit falls below the ori inal consideration transferred for the acquisition. :. /he entit% is in&esti ated b% the S:C and its reputation has been se&erel% da!a ed. Coehler' 6nc. acquires all of the &otin stoc$ of ?enneth' 6nc. on 5anuar% (' #010' at an a!ount in e;cess of ?enneth1s fair &alue. 9n that date' ?enneth has equip!ent with a boo$ &alue of 700'000 and a fair &alue of 71#0'000

<10-%ear re!ainin life=. Coehler has equip!ent with a boo$ &alue of 7400'000 and a fair &alue of 71'#00'000 <10-%ear re!ainin life=. 9n Dece!ber 31' #011' Coehler has equip!ent with a boo$ &alue of 702+'000 but a fair &alue of 71'3+0'000 and ?enneth has equip!ent with a boo$ &alue of 710+'000 but a fair &alue of 71#+'000. 21. 6f Coehler applies the equit% !ethod in accountin for ?enneth' what is the consolidated balance for the :quip!ent account as of Dece!ber 31' #011" 4. '1,1+,,+++. 2#. 6f Coehler applies the partial equit% !ethod in accountin for ?enneth' what is the consolidated balance for the :quip!ent account as of Dece!ber 31' #011" A. 71'040'000. >. 71'10('000. C. 71'100'000. D. 71'(-4'000. :. 71'(2+'000. 23. 6f Coehler applies the initial &alue !ethod in accountin for ?enneth' what is the consolidated balance for the :quip!ent account as of Dece!ber 31' #011" A. 71'040'000. >. 71'10('000. C. 71'100'000. D. 71'(-4'000. :. 71'(2+'000. 2(. 3ow is the fair &alue allocation of an intan ible asset allocated to e;pense when the asset has no le al' re ulator%' contractual' co!petiti&e' econo!ic' or other factors that li!it its life" E. :o amorti&ation over an indefinite period time. ;arrison, Inc. acquires 1++< of the votin$ stoc! of =hine Company on >anuary 1, (+1+ for ',++,+++ cash. A contin ent pa%!ent of 71-'+00 will be paid on April 1+' #011 if .hine enerates cash flows fro! operations of 7#2'000 or !ore in the ne;t %ear. 3arrison esti!ates that there is a #0B probabilit% that .hine will enerate at least 7#2'000 ne;t %ear' and uses an interest rate of +B to incorporate the ti!e &alue of !one%. /he fair &alue of 71-'+00 at +B' usin a probabilit% wei hted approach' is 73'1(#. 2+. What will 3arrison record as its 6n&est!ent in .hine on 5anuar% 1' #010" 4. ',+6,1,(. 2-. Assu!in .hine enerates cash flow fro! operations of 7#2'#00 in #010' how will 3arrison record the 71-'+00 pa%!ent of cash on April 1+' #011 in satisfaction of its contin ent obli ation" A. Debit Contin ent perfor!ance obli ation 71-'+00' and Credit Cash 71-'+00. >. Debit Contin ent perfor!ance obli ation 73'1(#' debit Goss fro! re&aluation of contin ent perfor!ance obli ation 713'3+4' and Credit Cash 71-'+00. C. Debit 6n&est!ent in Subsidiar% and Credit Cash' 71-'+00. D. Debit Coodwill and Credit Cash' 71-'+00. :. Fo entr%. 22. When recordin consideration transferred for the acquisition of .hine on 5anuar% 1' #010' 3arrison will record a contin ent perfor!ance obli ation in the a!ount of@ A. 7-#4.(0. >. 7#'-21.-0. C. 73'1(#. D. 713'3+4. :. 71-'+00. >eatt%' 6nc. acquires 100B of the &otin stoc$ of Catau; Co!pan% on 5anuar% 1' #010 for 7+00'000 cash. A contin ent pa%!ent of 71#'000 will be paid on April 1' #011 if Catau; enerates cash flows fro! operations of 7#-'+00 or !ore in the ne;t %ear. >eatt% esti!ates that there is a 30B probabilit% that Catau; will enerate at least 7#-'+00 ne;t %ear' and uses an interest rate of (B to incorporate the ti!e &alue of !one%. /he fair &alue of 71#'000 at (B' usin a probabilit% wei hted approach' is 73'(-1. 24.

What will >eatt% record as its 6n&est!ent in Catau; on 5anuar% 1' #010" 4. '3+6,,*1. 20. Assu!in Catau; enerates cash flow fro! operations of 7#2'#00 in #010' how will >eatt% record the 71#'000 pa%!ent of cash on April 1' #011 in satisfaction of its contin ent obli ation" 4. ebit Contin$ent performance obli$ation '6,,*1, debit ?oss from revaluation of contin$ent performance obli$ation '),36., and Credit Cash '1(,+++. 40. When recordin consideration transferred for the acquisition of Catau; on 5anuar% 1' #010' >eatt% will record a contin ent perfor!ance obli ation in the a!ount of@ C. '6,,*1. ,rince Co!pan% acquires Duchess' 6nc. on 5anuar% 1' #000. /he consideration transferred e;ceeds the fair &alue of Duchess1 net assets. 9n that date' ,rince has a buildin with a boo$ &alue of 71'#00'000 and a fair &alue of 71'+00'000. Duchess has a buildin with a boo$ &alue of 7(00'000 and fair &alue of 7+00'000. 41. 6f push-down accountin is used' what a!ounts in the >uildin account appear in Duchess1 separate balance sheet and in the consolidated balance sheet i!!ediatel% after acquisition" 4. '3++,+++ and '1,-++,+++. 4#. 6f push-down accountin is not used' what a!ounts in the >uildin account appear on Duchess1 separate balance sheet and on the consolidated balance sheet i!!ediatel% after acquisition? A. ',++,+++ and '1,*++,+++. Wat$ins' 6nc. acquires all of the outstandin stoc$ of Clen Corporation on 5anuar% 1' #010. At that date' Clen owns onl% three assets and has no liabilities@ 43. 6f Wat$ins pa%s 7(+0'000 in cash for Clen' what a!ount would be represented as the subsidiar%1s >uildin in a consolidation at Dece!ber 31' #01#' assu!in the boo$ &alue of the buildin at that date is still 7#00'000" 4. '()3,+++. 4(. 6f Wat$ins pa%s 7(00'000 in cash for Clen' what a!ount would be represented as the subsidiar%1s >uildin in a consolidation at Dece!ber 31' #01#' assu!in the boo$ &alue of the buildin at that date is still 7#00'000" A. 7#00'000. >. 7#4+'000. C. 7#-0'000. D. 7#-4'000. :. 7300'000. 4+. 6f Wat$ins pa%s 7(+0'000 in cash for Clen' what a!ount would be represented as the subsidiar%1s :quip!ent in a consolidation at Dece!ber 31' #01#' assu!in the boo$ &alue of the equip!ent at that date is still 740'000" A. 720'000. >. 723'+00. C. 72+'000. D. 72-'+00. :. 740'000. 4-. 6f Wat$ins pa%s 7(+0'000 in cash for Clen' what acquisition-date fair &alue allocation' net of a!orti*ation' should be attributed to the subsidiar%1s :quip!ent in consolidation at Dece!ber 31' #01#" A. 7<+'000=. >. 740'000. C. 72+'000. D. 723'+00. :. 7<3'+00=. 42. 6f Wat$ins pa%s 7300'000 in cash for Clen' at what a!ount would the subsidiar%1s >uildin be represented in a 5anuar% #' #010 consolidation" A. 7#00'000. >. 7##+'000. C. 7#23'000. D. 7#20'000. :. 7300'000. 44. 6f Wat$ins pa%s 7(+0'000 in cash for Clen' at what a!ount would Clen1s 6n&entor% acquired be represented in a Dece!ber 31' #010 consolidated balance sheet" A. 7(0'000. >. 7+0'000. C. 70. D. 710'000. :. 700'000. 40. 6f Wat$ins pa%s 7(+0'000 in cash for Clen' and Clen earns 7+0'000 in net

inco!e and pa%s 7#0'000 in di&idends durin #010' what a!ount would be reflected in consolidated net inco!e for #010 as a result of the acquisition" A. 7#0'000 under the initial &alue !ethod. >. 730'000 under the partial equit% !ethod. C. 7+0'000 under the partial equit% !ethod. D. 7(('+00 under the equit% !ethod. :. 73('+00 re ardless of the internal accountin !ethod used.