5 12 acct 450
ch5 Key
1. On November 8, 2009, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost
$61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized?
A. Proportionately over a designated period of years
B. When Wood Co. sells the land to a third party
C. No gain can be recognized
D. As Wood uses the land
E. When Wood Co. begins using the land productively
Difficulty: Easy
Hoyle - Chapter 05 #1
2. Edgar Co. acquired 60% of Kindall Co. on January 1, 2009. During 2009, Edgar made several sales of inventory to Kindall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Kindall still owned one-fourth of the goods at the end of 2009. Consolidated cost of goods sold for 2009 was
$2,140,000. How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Kindall to Edgar?
A. Consolidated cost of goods sold would have been $2,140,000
B. Consolidated cost of goods sold would have been $2,175,000
C. The effect on consolidated cost of goods sold cannot be predicted from the information provided
D. Consolidated cost of goods sold would have been reduced because of the non-controlling interest in the subsidiary
E. Consolidated cost of goods sold would have been higher because of the non-controlling interest in the subsidiary
Difficulty: Medium
Hoyle - Chapter 05 #2
3. On January 1, 2009, Race Corp. acquired 80% of the voting common stock of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods which cost $330,000. Gallow still owned 15% of the goods at year-end. Gallow's reported net income was $204,000 and Race's net income was $806,000. Race decided to use the equity method to account for this investment. What was the non-controlling interest's share of consolidated net income?
A. $37,200
B. $22,800
C. $30,900
D. $32,900
E. $40,800
Difficulty: Easy
Hoyle - Chapter 05 #3
1. On November 8, 2009, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost
$61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized?
A. Proportionately over a designated period of years
B. When Wood Co. sells the land to a third party
C. No gain can be recognized
D. As Wood uses the land
E. When Wood Co. begins using the land productively
Difficulty: Easy
Hoyle - Chapter 05 #1
2. Edgar Co. acquired 60% of Kindall Co. on January 1, 2009. During 2009, Edgar made several sales of inventory to Kindall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Kindall still owned one-fourth of the goods at the end of 2009. Consolidated cost of goods sold for 2009 was
$2,140,000. How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Kindall to Edgar?
A. Consolidated cost of goods sold would have been $2,140,000
B. Consolidated cost of goods sold would have been $2,175,000
C. The effect on consolidated cost of goods sold cannot be predicted from the information provided
D. Consolidated cost of goods sold would have been reduced because of the non-controlling interest in the subsidiary
E. Consolidated cost of goods sold would have been higher because of the non-controlling interest in the subsidiary
Difficulty: Medium
Hoyle - Chapter 05 #2
3. On January 1, 2009, Race Corp. acquired 80% of the voting common stock of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods which cost $330,000. Gallow still owned 15% of the goods at year-end. Gallow's reported net income was $204,000 and Race's net income was $806,000. Race decided to use the equity method to account for this investment. What was the non-controlling interest's share of consolidated net income?
A. $37,200
B. $22,800
C. $30,900
D. $32,900
E. $40,800
Difficulty: Easy
Hoyle - Chapter 05 #3