Chapter 5 Exam 2 Review Questions
1. Miller Co. owned 80% of Jackson Corp. During 2011, Miller sold to Jackson land with a book value of
$38,000. The selling price was $80,000. In its accounting records, Miller should ;
2. Norek Corp. owned 70% of the voting common stock of Thelma Co. On January 2, 2010, Thelma sold
a parcel of land to Norek. The land had a book value of $32,000 and was sold to Norek for $45,000.
Thelma's reported net income for 2010 was $119,000. What is the non-controlling interest's share of
Thelma's net income?
3. Webb Co. acquired 100% of Rand Inc. on January 5, 2011. During 2011, Webb sold goods to Rand
for $2,400,000 that cost Webb $1,800,000. Rand still owned 40% of the goods at the end of the year.
Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand. What was consolidated cost of
goods sold?
Chapter 6 Exam 2 Review Questions
1.) On January 1, 2011, Riney Co. owned 80% of the common stock of Garvin Co. On that date, Garvin's
stockholders' equity accounts had the following balances:
The balance in Riney's Investment in Garvin Co. account was $552,000, and the non-controlling interest
was $138,000. On January 1, 2011, Garvin Co. sold 10,000 shares of previously unissued common stock
for $15 per share. Riney did not acquire any of these shares.
What is the balance in Investment in Garvin Co. After the sale of the 10,000 shares of common stock?
2.) Rojas Co. owned 7,000 shares (70%) of the outstanding 10%, $100 par preferred stock and 60% of
the outstanding common stock of Brett Co. When Brett reported net income of $780,000, what was the
non-controlling interest in the subsidiary's income?
3.) Cadion Co. owned a controlling interest in Knieval Inc. Cadion reported sales of $420,000 during 2011
while Knieval reported $280,000. Inventory costing $28,000 was transferred from Knieval to Cadion
(upstream) during the year for $56,000. Of this amount, twenty-five percent was still in ending inventory at
year's end. Total receivables on the consolidated balance sheet were $112,000 at the first of the year and
$154,000 at year-end. No intra-entity debt existed at the beginning or ending of the year. Using the direct
approach, what is the consolidated amount of cash collected by the business combination from its
customers?
4.) These questions are based on the following information and should be viewed as independent
situations.
Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 2009, when Cocker had the
following stockholders' equity accounts.
To acquire this interest in Cocker, Popper paid a total of $682,000 with any excess acquisition date fair
value over book value being allocated to goodwill, which has been measured for impairment annually and
has not been determined to be impaired as of January 1, 2012.
On January 1, 2012, Cocker reported a net book value of $1,113,000 before the following transactions
were conducted. Popper uses the equity method to account for its investment in Cocker, thereby
reflecting the change in book value of Cocker.
On January 1, 2012, Cocker reacquired 8,000 of the outstanding shares of its own common stock for $34
per share. None of these shares belonged to Popper. How would this transaction have affected the
additional paid-in capital of the parent company?
Chapter 7 Exam Review
1. Norton Co., a U.S. corporation, sold inventory on December 1, 2011, with payment of
10,000 British pounds to be received in sixty days. The pertinent exchange rates were as
follows:
For what amount should Sales be credited on December 1?
2. Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with
payment of 10 million Korean won to be received on January 15, 2012. The following exchange
rates applied:
Assuming a forward contract was not entered into, what would be the net impact on Car Corp.'s
2011 income statement related to this transaction?