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2010-08-12 103926 Mcqs For Artick Light
2010-08-12 103926 Mcqs For Artick Light
2) Raphael Company paid $2,000,000 for the net assets of Paris Corporation and Paris was then
dissolved. Paris had no liabilities. The fair values of Paris? assets were $2,500,000. Paris?s only non-
current assets were land and equipment with fair values of $160,000 and $640,000, respectively. At
what value will the equipment be recorded by Raphael?
$0
$240,000
$400,000
$640,000
3) Jacana Corporation paid $200,000 for a 25% interest in Lilypad Corporation?s common stock on
January 1, 2005, but was not able to exercise significant influence over Lilypad. During 2006, Jacana
reported income of $120,000, excluding its income from Lilypad, and paid dividends of $50,000. Lilypad
reported net income of $40,000 during 2006 and paid dividends of $20,000. Jacana should report net
income for 2006 in the amount of:
$115,000.
$120,000.
$125,000.
$130,000.
4) Jabiru Corporation purchased a 20% interest in Fish Company common stock on January 1, 2002 for
$300,000. This investment is accounted for using the complete equity method and the correct balance in
the Investment in Fish account on December 31, 2004 is $440,000. The original excess purchase
transaction included $60,000 for a patent amortized at a rate of $6,000 per year. In 2005, Fish
Corporation has net income of $4,000 per month earned uniformly throughout the year and pays
$20,000 of dividends in May. If Jabiru sells one-half of its investment in Fish on August 1, 2005 for
$500,000, how much gain will be recognized on this transaction?
$278,950
$280,000
$280,950
$282,000
5) Pardolate Corporation paid $200,000 for a 60% interest in Arthropod Inc on January 1, 2005, when
Arthropod had Capital Stock of $200,000 and Retained Earnings of $100,000. Fair values of identifiable
net assets were the same as recorded book values. During 2005, Arthropod had income of $30,000;
declared dividends of $10,000 and paid $5,000 of dividends. On December 31, 2005, Pardolate will have
Goodwill of $20,000.
6) Spinebill Corporation bought 80% of Nectar Company?s common stock at its book value of $500,000
on January 1, 2005. During 2005, Nectar reported net income of $150,000 and paid dividends of
$45,000. At what amount should Spinebill?s Investment in Nectar account be reported on December 31,
2005?
$500,000
$548,000
$584,000
$605,000
7) On January 1, 2006, Finch Corporation owned a 90% interest in Nest Corporation at which time the
Investment in Nest account had a balance of $350,000, which was 90% of Nest?s $370,000 in
stockholders? equity and $17,000 of goodwill. During 2006, Nest had income of $35,000 and paid
dividends of $3,000 on June 1 and another $3,000 on November 1. On May 1, 2006, Finch sold one-fifth
of its interest in Nest for $92,000. If the ?beginning-of-the-period? sales assumption is used, the balance
in the Investment in Nest account on December 31, 2006 is:
$300,300.
$300,880.
$304,480.
$306,100.
8) Bowerbird Corporation purchased a 70% interest in Stage Corporation on June 1, 2006 at a purchase
price of $390,400. On this date, Stage?s book values were equal to its fair values except for an
unrecorded copyright, and its stockholders? equity consisted of $290,000 of Common Stock and
$210,000 of Retained Earnings. All cost-book differentials were attributed to the copyright, which had an
estimated economic life of ten years.
During 2006, Stage earned $120,000 of net income earned uniformly throughout the year and paid
$6,000 of dividends on March 1 and another $6,000 on September 1.
$36,000.
$32,400.
$61,200.
$50,000.
9) Bowerbird Corporation purchased a 70% interest in Stage Corporation on June 1, 2006 at a purchase
price of $390,400. On this date, Stage?s book values were equal to its fair values except for an
unrecorded copyright, and its stockholders? equity consisted of $290,000 of Common Stock and
$210,000 of Retained Earnings. All cost-book differentials were attributed to the copyright, which had an
estimated economic life of ten years.
10) During 2006, Stage earned $120,000 of net income earned uniformly throughout the year and paid
$6,000 of dividends on March 1 and another $6,000 on September 1.
$315.
$560.
$815.
$960.