Question : 120.Eliminations appear the books of a. neither the parent company nor the : 1244281

120.Eliminations appear on the books of

 

a.

neither the parent company nor the subsidiary company.

b.

both the parent company and the subsidiary company.

c.

the subsidiary company only.

d.

the parent company only.

 

 

 

121.Which of the following is a true statement regarding elimination entries necessary for the preparation of consolidated financial statements?

 

a.

The entries are made only for intercompany receivables, payables, and sales.

b.

The entries appear only on the consolidated work sheet.

c.

The entries are recorded in the consolidated journal and posted to the consolidated ledger.

d.

The entries contain either debits or credits, but not both.

 

 

 

122.Minority interest is reported

 

a.

within stockholders’ equity on the consolidated balance sheet.

b.

as a revenue item on the consolidated income statement.

c.

as an asset on the consolidated balance sheet.

d.

as a current liability on the consolidated balance sheet.

 

 

 

123.When a subsidiary has borrowed cash from the parent company, the related receivable and payable are eliminated in preparing a consolidated balance sheet so that

 

a.

assets and liabilities will not be understated.

b.

stockholders’ equity will not be understated.

c.

assets and liabilities will not be overstated.

d.

stockholders’ equity will not be overstated.

 

 

 

124.When a parent company owns 100 percent of the outstanding stock of a subsidiary, Goodwill from Consolidation will appear on the consolidated balance sheet when the

 

a.

cost of the parent’s investment exceeds the book value of the parent’s net assets.

b.

fair value of the investee’s net identifiable assets exceeds the cost of the parent’s investment.

c.

book value of the parent’s net assets exceeds the fair value of the parent’s net assets.

d.

cost of the parent’s investment exceeds the fair market value of the investee’s net identifiable assets.

 

 

 

125.Porter Corporation purchases 60 percent of the voting stock of Ritz Corporation for $48,000. Ritz has common stock of $25,000 and retained earnings of $35,000. Based solely on the above facts, the consolidated balance sheet would contain

 

a.

an investment in Ritz of $48,000.

b.

goodwill of $4,200.

c.

minority interest of $24,000.

d.

minority interest of $36,000.

 

 

 

126.Blau Corporation invests $310,500 in Hills Corporation, buying 80 percent of the voting stock. Hills pays Blau $20,000 in cash dividends and earns a net income of $130,000 during 20×7. On the consolidated balance sheet, the balance in the investments account representing Blau’s interest in Hills will be

 

a.

$440,500.

b.

$310,500.

c.

$420,500.

d.

$0.

 

 

 

127.Isber Corporation purchases 80 percent of the voting stock of Bossart Corporation for $175,000. At the date of acquisition, the fair market value of Bossart’s identifiable net assets was equal to their book value. Bossart has common stock of $80,000 and retained earnings of $120,000. Based solely on the above facts, the consolidated balance sheet would include

 

a.

goodwill of $15,000.

b.

negative goodwill of $25,000.

c.

minority interest of $35,000.

d.

an investment in Bossart Corporation of $175,000.

 

 

 

128.Rapp Corporation purchases 75 percent of the stock of Sikora Corporation for $363,000. Sikora has contributed capital of $200,000 and retained earnings of $284,000. The consolidated financial statements will contain

 

a.

minority interest but not goodwill.

b.

goodwill but not minority interest.

c.

minority interest and negative goodwill.

d.

neither minority interest nor goodwill.

 

 

 

129.Platek Company buys 100 percent of the stock of Brendel Company for $180,000. Brendel Company has contributed capital of $105,000 and retained earnings of $75,000. The consolidated financial statements would contain

 

a.

minority interest and goodwill.

b.

goodwill but not minority interest.

c.

neither minority interest nor goodwill.

d.

minority interest but not goodwill.