Question : 21) A noncontrolling (minority) interest arises when: A) a parent company : 1230235

 

21) A noncontrolling (minority) interest arises when:

A) a parent company excludes the subsidiary company from the consolidated financial statements.

B) a parent company owns less than 100% of the stock of a subsidiary.

C) a subsidiary company is not included in the consolidated financial statements.

D) a subsidiary company represents less than 20% of the value of the consolidated company.

 

22) If one company owns more than 50% of the common stock of another company:

A) the equity method should be used to account for the investment.

B) a partnership exists.

C) a parent-subsidiary relationship exists.

D) the company whose stock is owned must be liquidated.

 

23) When a company owns more than 50% of the common stock of another company:

A) substantial financial statements are prepared.

B) consolidated financial statements are prepared.

C) controlling financial statements are prepared.

D) minority financial statements are prepared.

24) Consolidated financial statements present all of the following EXCEPT the:

A) individual assets and liabilities of the parent company.

B) cash of the subsidiary company.

C) total revenues and expenses of the subsidiary company.

D) stockholders’ equity accounts of the subsidiary company.

 

25) When a parent-subsidiary relationship exists, the consolidated statements include:

A) the balance sheet, income statement and the statement of cash flows.

B) only the balance sheet.

C) only the income statement.

D) only the balance sheet and the income statement.

 

26) Which of the following is the correct matching concerning the appropriate accounting for long-term stock investments?

A)

% of Investor Ownership

Accounting Method

Less than 20%

Minority Interest Method

 

B)

% of Investor Ownership

Accounting Method

Between 20% and 50%

Market Value Method

 

C)

% of Investor Ownership

Accounting Method

More than 50%

Consolidation Method

 

D)

% of Investor Ownership

Accounting Method

Between 20% and 50%

Consolidation Method

 

27) A consolidated balance sheet shows:

A) combined long-term assets, long-term liabilities and stockholders’ equity for the parent and subsidiary.

B) combined assets and liabilities for the parent and the subsidiary, but stockholders’ equity for solely the parent .

C) combined assets, liabilities and stockholders’ equity for the parent and subsidiary.

D) combined assets and stockholders’ equity for the parent and the subsidiary, but liabilities for solely the parent.

 

28) On a worksheet for a consolidated entity balance sheet, the elimination entry requires:

A) a credit to stockholders’ equity accounts of the subsidiary.

B) a credit to the Cash account of the subsidiary.

C) a credit to Investment in Subsidiary.

D) a debit to Investment in Subsidiary.

 

29) Big Time Company owns all of the stock of Peterson Corporation and 80% of the stock of Tysen Corporation. Big Time Company earned net income of $750,000; Peterson earned $250,000; and Tysen earned $175,000. Big Time Company’s consolidated income statement would report net income of:

A) $1,000,000.

B) $1,250,000.

C) $1,140,000.

D) $1,050,000.

30) Dole Company, the subsidiary company, borrowed $80,000 from Anderson Company, the parent company, on a note payable during the year. Before the consolidation entries were made, the balances in Anderson Company’s Notes Receivable and Notes Payable accounts were $180,000 and $275,000, respectively. A consolidated balance sheet shows:

A) Notes Receivable of $180,000 and Notes Payable of $275,000.

B) Notes Receivable of $260,000 and Notes Payable of $275,000.

C) Notes Receivable of $260,000 and Notes Payable of $355,000.

D) Notes Receivable of $100,000 and Notes Payable of $275,000.

 

 

31) Dessert Corporation acquired 100% of the common stock of Tart Company for $270,000. On the date of acquisition, Tart Company’s stockholders’ equity consisted of: Common Stock, $100,000; Retained Earnings, $170,000. The elimination entries to be made on a worksheet to prepare a consolidated balance sheet would include a:

A) debit to Common Stock — Tart $100,000

B) debit to Investment in Tart $270,000

C) debit to Common Stock — Dessert $100,000

D) debit to Retained Earnings-Dessert $170,000.

 

32) A consolidated income statement will show:

A) only the parent’s net income.

B) only the income from partially owned subsidiaries.

C) the parent’s net income plus the parent’s share of the subsidiary’s net income.

D) the parent’s net income plus the subsidiary’s net income.

33) The balancing figure that brings the dollar amount of the total liabilities and stockholders’ equity of the foreign subsidiary into agreement with the dollar amount of its total assets is the:

A) equity adjustment.

B) foreign-currency exchange rate.

C) foreign-currency translation adjustment.

D) foreign consolidation adjustment.