会计期末练习题

1. In a purchase business combination, the direct costs of registering and issuing equity securities are:a. Added to the parent/investor company’s investment accountb. Charged against other paid-in capital of the combined entityc. Deducted from income in the period of combinationd. None of the above2. On April 1, Jack Company paid $800,000 for all the issued and outstanding common stock of Ann Corporation in a transaction properly accounted for as a purchase. The recorded assets and liabilities of Ann Corporation on April 1 are as follow:Cash $ 80,000 Inventory 240,000 Property and equipment (net of accumulated depreciation of $320,000) 480,000 Liabilities (180,000) On April 1, it was determined that the inventory of Ann had a fair value of $190,000 and the property and equipment (net) had a fair value of $560,000. What is the amount of goodwill resulting from the business combination?a. 0b. $50,000c. $150,000d. $180,0003. Fast Corporation paid $50,000 cash for the net assets of Agge Company, which consisted of the following:Book Value Fair Value Current assets $ 10,000 $ 14,000Plant and equipment 40,000 55,000Liabilities assumed (10,000) (9,000)$ 40,000 $ 60,000The plant and equipment acquired in this business combination should be recorded at:a. $ 55,000b. $ 50,000c. $ 45,833d. $ 45,0004. Jarret Corporation is a 25%-owned equity investee of Marco Corporation. During the current year, Marco receives $12,000 in dividends from Jarret. How does the $12,000 dividend affect Marco’s financial position and results of operations?a. Increases assetsb. Decreases investmentc. Increases incomed. Decreases income5. On January 1 Grade Company paid $300,000 for 20,000 shares of Medium Compa ny’s common stock, which represents a 15% investment in Medium. Grade does not have the ability to exercise significant influence over Medium. Medium declared and paid a dividend of $1 per share to its stockholders during the year.Medium reported net income of $260,000 for the year ended December 31. The balance in Grade’s balance sheet account “Investment in Medium Company” at December 31 should bea. $280,000b. $300,000c. $319,000d. $339,0006. Parent-company and consolidated financial statement amounts would not be the same for:a. Capital stockb. Retained earningsc. Investments in unconsolidated subsidiariesd. Investments in consolidated subsidiaries7. If $1.5625 can be exchanged for 1 British pound, the direct and indirect exchange rate quotations are:a. $1.5625 and 1 British pound, respectivelyb. $1.5625 and 0.64 British pounds, respectivelyc. $1.00 and 1.5625 British pounds, respectivelyd. $1.00 and 0.64 British pounds, respectively8. Mudflat Corporation’s stockholder’s equity at December 31, 2004 included the following:shareholders on January 1, 2005 for $11,600,000. What is the book value of Brolga’s investment in Mudflat?a. $10,800,000b. $11,400,000c. $14,240,000d. $14,880,0009. A U.S. firm purchases merchandise from a Canadian firm with payment due in 60 days and denominated in Canadian dollars. The U.S. firm will report an exchange gain or loss on settlement if the transaction is:a. Recorded in U.S. dollarsb. Measured in U.S. dollarsc. Not hedged through a forward contractd. Settled after an exchange rate change has occurred10. On January 2, 2006, Troquel Corporation bought 15% of Zafacon Corporation’s capital stock for $30,000. Troquel accounts for this investment by the cost method. Zafacon’s net income for the years ended December 31, 2006, and December 31, 2007, were $10,000 and $50,000, respectively. During 2007 Zafacon declared adividend of $70,000. No dividends were declared in 2006. How much should Troquel show on its 2007 income statement as income from this investment?a. $1,575b. $7,500c. $9,000d. $10,500Exercise 1On November 16, 2006, Wick Corporation of the United States sold inventory items to Candle Ltd. of Canada for 90,000 Canadian dollars, to be paid on February 14, 2007. Exchange rates for Canadian dollars on selected dates are as follows:November 16, 2006 $0.80December 31, 2006 $0.84February 14, 2007 $0.83Required:Determine the exchange gain or loss on the sale to Candle Ltd. to be included in Wick’s income statement for the years 2006 and 2007.Exercise 2Dokey Company acquired a 30% interest in Oakey on January 1 for $2,000,000 cash. Dokey assigned the $500,000 cost over book value of the interest acquired to the following assets:Inventories $100,000 (sold in the current year)Building $200,000 (4-year remaining life at January 1)Goodwill $200,000During the year Oakey reported net income of $800,000 and paid $200,000 dividends. Required:1. Determine Dokey’s income from Oakey.2. Determine the December 31 balance of the Investment in Oakey account. Exercise 3Carson Corporation pays $600,000 for a 30% interest in Medley Corporation on July 1, 2007, when the book value of Medley’s net assets equals fair value. Information relating to Medley follows (in thousands):December 31, 2006 December 31, 2007 Capital stock, $1 par $ 600 $ 600Retained earnings 400 500Total stockholders’ equity $ 1,000 $ 1,100Medley’s net income( earned evenly throughout 2007) $ 200Medley’s dividends for 2007( paid $50,000 on March 1 and$50,000 on September 1) $100 Required: Calcul ate Carson’s income from Medley for 2007.Exercise 4Raython Corporation owns a 40% interest in the outstanding common stock of Treaton Corporation, having acquired its interest for $2,400,000 on January 1, 2006, when Treaton’s stockholders’ equity was $4,000,000. The cost/book value differential was allocated to inventories that were undervalued by $100,000 and sold in 2006, to equipment with a four-year remaining life that was undervalued by $200,000, and to goodwill for the remainder. The balance of Trea ton’s stockholders’ equity at December 31, 2010, is $5,500,000, and all changes therein are the result of income earned and dividends paid.Required:Determine the balance of Raython’s investment in Treaton account at December 31, 2010.Exercise 5Pope Corporation acquired a 70% interest in Stubb Corporation on January 1, 2006, for $670,000, when Stubb’s stockholders’ equity consisted of $500,000 capital stock and $300,000 retained earnings. On this date, the book value of Stubb’s assets and liabilities was equal to the fair value, except for inventories that were undervalued by $20,000 and sold in 2006, and plant assets that were undervalued by $80,000 and had a remaining useful life of eight years from January 1. Stubb’s net income and dividends for 2006 were $70,000 and $10,000, respectively. Separate-company balance sheet information for Pope and Stubb Corporations at December 31, 2006, follows (in thousands):Pope Stubb Cash $ 60 $ 20Accounts receivable—customers 440 200Accounts receivable from Pope —10Dividends receivable 7 —Inventories 500 320Land 100 150Plant assets—net 700 350Investment in Stubb 691 —$ 2,498 $ 1,050 Accounts payable—suppliers $ 300 $80Accounts payable to Stubb 10 —Dividends payable 40 10Long-term debt 600 100Capital stock 1,000 500Retained earnings 548 360$ 2,498 $ 1,050 Required:Prepare consolidated balance sheet working papers for Pope Corporation and Subsidiary at December 31, 2006.。