Question : 1.Consolidated statements proper for Neely, Inc., Randle, Inc., and Walker, : 1242722

1.Consolidated statements are proper for Neely, Inc., Randle, Inc., and Walker, Inc., if

a.Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Randle owns 30 percent of Walker.

b.Neely owns 100 percent of the outstanding common stock of Randle and 90 percent of Walker; Neely bought the stock of Walker one month before the balance sheet date and sold it seven weeks later.

c.Neely owns 100 percent of the outstanding common stock of Randle and Walker; Walker is in legal reorganization.

d.Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Reeves, Inc., owns 55 percent of Walker.

2.On October 1, Company X acquired for cash all of the outstanding common stock of Company Y. Both companies have a December 31 year end and have been in business for many years. Consolidated net income for the year ended December 31 should include net income of

a.Company X for3 months and Company Y for 3 months

b.Company X for 12 months and Company Y for 3 months

c.Company X for 12 months and Company Y for 12 months

d.Company X for 12 months, but no income from Company Y until Company Y distributed a dividend

3.Arkin, Inc., owns 90 percent of the outstanding stock of Baldwin Company. Curtis, Inc., owns 10 percent of the outstanding stock of Baldwin Company. On the consolidated financial statements of Arkin, Curtis should be considered as

a.A holding company

b.A subsidiary not to be consolidated

c.An affiliate

d.A noncontrolling interest

4.A sale of goods, denominated in a currency other than the entity’s functional currency, resulted in a receivable that was fixed in terms of the amount of foreign currency that would be received. Exchange rates between the functional currency and the currency in which the transaction was denominated changed. The resulting gain should be include as a (an)

a.Other comprehensive income

b.Deferred credit

c.Component of income from continuing operations

d.Extraordinary item

5.Which of the following is not a consideration in segment reporting for diversified enterprises?

a.Allocation of joint costs

b.Transfer pricing

c.Defining the segments

d.Consolidation policy

6.Which of the following is the appropriate basis for valuing fixed assets acquired in a business combination carried out by exchanging cash for common stock?

a.Historic cost

b.Book value

c.Cost plus any excess of purchase price over book value of asset acquired

d.Fair value

7.Goodwill represents the excess of the cost of an acquired company over the

a.Sum of the fair values assigned to identifiable assets acquired less liabilities assumed

b.Sum of the fair values assigned to tangible assets acquired less liabilities assumed

c.Sum of the fair values assigned to intangible assets acquired less liabilities assumed

d.Book value of an acquired company

8.The theoretically preferred method of presenting noncontrolling  interest on a consolidated balance sheet is

a.As a separate item with the deferred credits section

b.As a reduction from (contra to) goodwill from consolidation, if any

c.By means of notes or footnotes to the balance sheet

d.As a separate item within the stockholders’ equity section

9.Meredith Company and Kyle Company were combined in an acquisition transaction. Meredith was able to acquire Kyle at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Meredith. After revaluing noncurrent assets to zero there was still some of the bargain purchase amount remaining (formerly termed negative goodwill).  Proper accounting treatment by Meredith is to report the amount as

a.An extraordinary item

b.Part of current income in the year of combination

c.A deferred credit and amortize it

d.Paid-in capital

10.When translating foreign currency financial statements, which of the following accounts would be translated using current exchange rates?

Property, Plant, andInventories

Equipmentcarried at cost

a.Yes                                                        Yes

b.No                                                         No

c.Yes                                                        No

d.No                                                        Yes