Chapter 2 Buscom

CHAPTER 2
CONSOLIDATION AT DATE OF ACQUISITION

SUMMARY OF ITEMS BY TOPIC
Conceptual Computational
True- Multiple Multiple Short
False Choice Choice Problems Answer
Consolidated financial 1-5 66-68 180-183
statements
Consolidation - 100 6-12 69 90-91 146-147
percent, beginning of
year, book value
Consolidation - 100 13-22 70-74 92-103 148-150 184-185
percent, price greater
than book value, positive
goodwill
Consolidation - 100 23-27 75 104-109 151-154 186
percent, price greater
than book value, negative
goodwill
Consolidation - 100 28-35 76-77 110-115 155-164 187-188
percent, during the year
Concepts of consolidated 36-46 78-81 189-192
financial statements
Consolidation - less than 47-48 82 116-117 165-166 193
100 percent, book value
Consolidation - less than 49-51 83 118-127 167-169 194
100 percent, price greater
than book value, positive
goodwill
Consolidation - less than 52-55 84-86 128-137 170-172 195-196
100 percent, price greater
than book value, negative
goodwill
Purchase and pooling of 56-58
interests
Consolidation - separate 59-61 87-88 138-145 173-179
accumulated depreciation
account
Push-down accounting 62-65 89
True-False Statements
1. Consolidated financial statements are prepared for a parent company and all subsidiaries
under control of the parent company.
2. The FASB allows subsidiaries to be excluded from the consolidated financial statements
if that subsidiary has operations very different from the parent company, i.e.,
nonhomogeneous operations.
3. The FASB, in Statement No. 94, concluded that the equity method of accounting for
investments is not a valid substitute for inclusion in the consolidated financial statements.
4. Financial ratios calculated from consolidated financial statements are averages and do not
represent any particular part of the consolidated entity.
5. The FASB, in Statement No. 94, decided that all subsidiaries are to be included in the
consolidated financial statements.
6. The parent company often pays an acquisition price equal to the subsidiary corporation’s
book value.
7. At the date of acquisition, the parent’s Investment in Subsidiary account shows the
amount of the initial investment.
8. Consolidated financial statements allow the user to see more detailed information than
does the parent company financial statements under the equity method.
9. The inclusion of both the parent’s Investment in Subsidiary account and the individual
subsidiary asset and liability accounts would result in a double counting of the
subsidiary’s net assets.
10. The reason the parent’s Investment in Subsidiary account is eliminated when preparing a
consolidation worksheet is that no one cares what the parent paid for the subsidiary’s
stock.
11. The subsidiary’s owners’ equity accounts are eliminating when preparing consolidated
financial statements because the consolidated statements are prepared for the parent
company stockholders and the parent’s net worth is equal to the parent’s net assets,
including the Investment in Subsidiary.
12. Worksheet eliminations are not posted to the financial records of the subsidiary or the
parent.
13. The price paid to acquire a company is typically greater than book value because
accounting principles tend to be conservative so market values tend to exceed book
values.
14. The subsidiary’s book values always become the book values to the consolidated entity as
of the date of acquisition.
15. The amount by which the market value and the book value of a subsidiary differ is called
the purchase differential.
16. The purchase differential that exists at the date a subsidiary is acquired is allocated to all
assets in equal amounts.
17. Goodwill is the positive amount of purchase differential that exists after all identifiable
assets and liabilities have been assigned an amount equal to the difference that exists
between the market value and book value of that asset or liability.
18. The values in worksheet elimination number 1 are always date of acquisition or
beginning of period values.
19. At the date of acquisition, purchase differentials can only be assigned to tangible assets.
20. Worksheet eliminations can be made to accounts that do not exist prior to the worksheet
elimination.
21. Goodwill is only separately recognized on the consolidated financial statements.
22. Individual accounts on the consolidated balance sheet at the date of acquisition always
reflects the parent’s book value plus the subsidiary’s book value.
23. Negative goodwill exists when the price pair to acquire a subsidiary is less than the net
appraised market value of the identifiable assets and liabilities.
24. Negative goodwill that exists as a result of acquiring a subsidiary is allocated to the
stockholders’ equity section of the balance sheet.
25. The extraordinary gain that exists on the consolidated income statement as a result of
acquiring a subsidiary only exists on the consolidated financial statements. It is not
recorded on the financial records of the parent or the subsidiary.
26. The investment in subsidiary account created at the acquisition date will not equal the
cash given for the subsidiary when there is negative goodwill.
27. The investment in subsidiary account at the date of acquisition is established at the
market value of the subsidiary’s underlying net assets.
28. When consolidating multiple financial statements, worksheet eliminations are never
posted to the retained earnings account in the balance sheet.
29. When consolidating multiple financial statements, worksheet eliminations must be made
to income statement accounts and then to retained earnings to transfer the income
statement effect to the balance sheet.
30. When an acquisition occurs at a time other than at the beginning of the year, a
preacquisition earnings account will be created to eliminate the subsidiary’s income from
the beginning of the period to the acquisition date.
31. The preacquistion earnings account created in the acquisition date worksheet elimination
represents the change in the subsidiary’s book value from the beginning of the period
until the acquisition date.
32. The preacquisition earnings account created in the acquisition date worksheet elimination
is part of consolidated assets.
33. At the acquisition date, consolidated net income is the sum of the parent’s income and the
subsidiary’s income from the beginning of the period to the acquisition date.
34. The most common acquisition is one that occurs during the period at a price greater than
book value.
35. The creation of preacquisition earnings at the acquisition date only occurs when the
subsidiary is acquired for an amount greater than book value.
36. When less than 100 percent of a subsidiary is acquired, the remaining stockholders are
referred to as the noncontrolling interest.
37. The noncontrolling interest has a voice in management of the parent company because
the parent company controls the subsidiary.
38. The three consolidation concepts differ with regard to the recognition of the parent’s
ownership interest in the subsidiary’s assets and liabilities.
39. Proponents of all three consolidation concepts agree that the parent’s ownership interest
in the subsidiary’s revenues and expenses should be included in the consolidated income
statement.
40. Proponents of the proportionate consolidation concept contend that all of the subsidiary’s
revenues and expenses should be included in the consolidated financial statements but
only the parent’s ownership percentage of the subsidiary’s assets and liabilities should be
included in the consolidated balance sheet.
41. Proponents of the parent company concept of consolidation believe that the market value
of the parent’s ownership percentage plus the book value of the noncontrolling interest’s
ownership percentage of the subsidiary assets and liabilities should be included in the
consolidated balance sheet.
42. Proponents of the parent company concept of consolidation would disclose the
noncontrolling interest in the liability section of the balance sheet.
43. Application of the parent company concept of consolidation would result in consolidated
net income not including the portion of the subsidiary’s net income attributable to the
noncontrolling interest.
44. The economic unit concept of consolidation is based on the premise that parent company
management controls the entire subsidiary regardless of the ownership percentage.
45. Proponents of the economic unit concept of consolidation believe that the market value
of the parent’s ownership percentage plus the book value of the noncontrolling interest’s
ownership percentage of the subsidiary assets and liabilities should be included in the
46. All supporters of the economic unit concept believe that the entire goodwill associated
with the subsidiary (regardless of the percentage ownership) should be recognized on the
47. The preacquisition earnings eliminated at the date of acquisition is the same regardless of
the parent’s ownership interest in the subsidiary.
48. The acquisition date noncontrolling interest will always be 10 percent of the subsidiary’s
market value
49. When less than 100 percent of a subsidiary’s stock is acquired, the dollar amount of
noncontrolling interest created is the noncontrolling interest’s percentage of the
subsidiary’s market value.
50. When less than 100 percent of a subsidiary’s stock is acquired, the dollar amount of
goodwill created on the consolidated balance sheet is the parent’s ownership percentage
of the goodwill.
51. When less than 100 percent of a subsidiary’s stock is acquired during the period, the
dollar amount of preacquisition earnings recognized on the acquisition date consolidated
income statement is the parent company’s ownership interest in the subsidiary’s net
income at the acquisition date.
52. When a subsidiary is acquired for an amount that results in negative goodwill, the full
negative goodwill appears on the consolidated income statement as an extraordinary gain.
53. When a subsidiary is acquired for an amount that results in negative goodwill, the full
negative goodwill is recorded on the parent company’s financial records as an
extraordinary gain.
54. The existence of negative goodwill in the acquisition of a subsidiary when there is less
than 100 percent ownership by the parent does not alter the recognition of the purchase
differentials with respect to the identifiable assets and liabilities.
55. The extraordinary gain disclosed on the consolidated income statement at the acquisition
date when there is negative goodwill is the parent’s pro rata percentage of the negative
goodwill.
56. Application of the pooling of interests method of consolidation resulted in the combining
of each entity’s book value.
57. Pooling of interests typically resulted in a greater amount of consolidated net assets than
did the purchase method.
58. The purchase method and the pooling of interests method of combining entities resulted
in the same combined retained earnings amount at the date of the business combination.
59. If, at the date a subsidiary is acquired, the consolidated balance sheet displays a separate
accumulated depreciation account, all of the subsidiary’s accumulated depreciation must
be eliminated regardless of the parent’s level of ownership interest in the subsidiary.
60. If, at the date a subsidiary is acquired, the consolidated balance sheet displays a separate
accumulated depreciation account, the adjustment to the plant asset account is the
difference between the acquisition date market value and the plant asset’s historical cost
on the subsidiary’s financial records.
61. The net acquisition date worksheet elimination amount when separate plant asset and
accumulated depreciation accounts exist will differ from the worksheet elimination that
would occur if the plant assets were disclosed net on the consolidated balance sheet.
62. Push-down accounting is required to be applied any time a subsidiary is acquired.
63. Push-down accounting is the term given to the process of pushing the market value down
to the subsidiary’s accounts.
64. When push-down accounting is applied, an adjustment to stockholders’ equity is

required.
65. After push-down accounting is applied, the subsidiary’s retained earnings will be equal to
the amount of revaluation capital created as a result of the revaluation of the subsidiary’s
assets and liabilities.
True-False Statement Solutions

1. T
2. F, The FASB concluded in SFAS No. 94 that the diverse nature of business is not a
sufficient reason to exclude a subsidiary from the consolidated financial statements.
3. T
4. T
5. F, All subsidiaries are included in the consolidated financial statements unless control is
temporary or the majority owner does not have control.
6. F, Book values are generally conservative so most acquisitions occur at an amount
greater than book value.
7. T
8. T
9. T
10. F, The Investment in Subsidiary account is eliminated when preparing the consolidation
worksheet to prevent the double counting of the subsidiary’s net assets.
11. T
12. T
13. T
14. F, The market value of the subsidiary’s assets and liabilities become the book values to
the consolidated entity
15. T
16. F, The purchase differential is assigned to assets and liabilities based on the different
between the book value and market value for that asset or liability.
17. T
18. T
19. F, Purchase differentials can be assigned to tangible and intangible assets.
20. T
21. T
22. F, Individual accounts on the consolidated balance sheet at the acquisition date always
reflects the parent’s book value and the subsidiary’s market value.
23. T
24. F, Any negative goodwill that exists after the appraised value of identifiable assets and
liabilities have been confirmed, is assigned to the income statement as an extraordinary
gain.
25. F, The parent’s portion of the extraordinary gain created as a result of acquiring a
subsidiary is recognized in the parent’s income statement at the acquisition date.
26. T
27. T
28. T
29. F, Worksheet eliminations to income statement accounts flow down the worksheet to the
statement of retained earnings and then to the retained earnings balance on the balance
sheet
30. T
31. T
32. F, Preacquisition earnings are part of stockholders’ equity
33. F, Consolidated net income at the acquisition date is the parent’s net income from the
beginning of the period to the acquisition date. Subsidiary net income is part of the
subsidiary’s stockholders’ equity at the acquisition date and is not part of consolidated net
income.
34. T
35. F, The acquisition price does not impact the creation of preacquisition earnings at the
acquisition date. Preacquisition earnings represent the change in the subsidiary’s book
value from the beginning of the period to the acquisition date, regardless of the
acquisition price paid by the parent.
36. T
37. F, The noncontrolling interest has no voting rights in the parent company.
38. F, The three concepts all result in the market value recognition of the subsidiary’s assets
and liabilities with respect to the parent’s ownership percentage.
39. T
40. F, Application of the proportionate consolidation concept results in the parent’s
ownership percentage of all accounts being included in the consolidated financial
statements while the noncontrolling interest’s ownership percentage is eliminated from
the consolidated financial statements.
41. T
42. F, Application of the parent company concept would result in the noncontrolling interest
being disclosed separately between the liability and stockholders’ equity sections of the
balance sheet.
43. T
44. T
45. F, Application of the economic unit concept results in the full market value recognition of
the subsidiary’s assets and liabilities on the consolidated balance sheet.
46. F, The economic unit concept - purchased goodwill supporters contend that the amount
of estimated goodwill associated with the noncontrolling interest is too unreliable to
measure and should not be included in the consolidated balance sheet.
47. T
48. F, The acquisition date noncontrolling interest is always created at the noncontrolling
interest’s ownership percentage of the subsidiary’s market value
49. T
50. F, When the economic unit - full goodwill concept is applied, the dollar amount of
goodwill on the consolidated date of acquisition balance sheet is the complete goodwill
associated with the subsidiary.
51. F, The preacquisition earnings eliminated on the consolidated income statement is the
complete subsidiary net income regardless of the percentage owned.
52. T
53. F, Only the parent’s ownership portion of the negative goodwill is recognized as an
extraordinary gain on the parent’s financial records. The noncontrolling interest’s portion
of the extraordinary gain is created in worksheet elimination number 1.
54. T
55. F, The extraordinary gain recognized pertains to both the parent company and the
noncontrolling interest. The parent company interest is recognized on the parent
company’s financial records while the noncontrolling interest’s portion is recognized via
worksheet elimination number 1.
56. T
57. F, Pooling of interests is basically a book value combination while the purchase method
is a market value combination. As a result, the purchase method generally results in a
greater amount of consolidated net assets.
58. F, The consolidated retained earnings under the purchase method is the parent company’s
retained earnings while the retained earnings of both entities is added together under the
pooling of interests method.
59. T
60. T
61. F, The net adjustment to plant assets will be the same regardless of whether there is a
separate accumulated depreciation account or not.
62. F, Push-down accounting is required only when separate subsidiary financial statements
are presented and only when the subsidiary is wholly or almost wholly owned. In
addition, subsidiaries with publicly traded debt or preferred stock are not required to
apply push-down accounting.
63. T
64. T
65. F, The subsidiary’s retained earnings is closed against either additional paid-in capital or
revaluation capital as part of the application of push-down accounting.
Conceptual Multiple Choice Questions

66. Consolidated financial statements normally include what company(ies)?
a. Parent company
b. Subsidiaries
c. Parent company and all controlled subsidiaries
d. Parent company and all 100 percent owned subsidiaries
67. Which of the following is not a conceptual argument for reporting separate financial
statements rather than consolidated financial statements?
a. Diverse businesses make financial statements more difficult to interpret
b. Weak performing subsidiaries are more difficult to identify when included in the
consolidated financial statements
c. Financial ratios calculated from consolidated financial statements represent
averages, not any particular part of the entity
d. All of the above are conceptual arguments for reporting separate financial
statements
68. What subsidiaries are included in the consolidated financial statements?

a. All owned subsidiaries are included
b. All subsidiaries are included except those where control is temporary
c. All subsidiaries are included except those where control does not reside with the
majority owner
d. All subsidiaries are included except those where control is temporary and those
where control does not reside with the majority owner
69. Which of the following statements is not correct with regard to a book value
consolidation at the date of acquisition with 100 percent ownership?
a. The parent’s investment account balance represents the parent’s ownership of the
subsidiary’s stock
b. The noncontrolling interest is created in the equity section of the consolidated
balance sheet
c. The parent’s investment account equals the subsidiary’s total stockholders’ equity
d. Consolidated assets and liabilities are the sum of the parent’s book values and the
subsidiary’s book values
70. Which of the following statements is correct with regard to the computation of the
amount that appears on the acquisition date consolidated balance sheet?
a. Parent’s book value plus subsidiary’s book value
b. Parent’s market value plus subsidiary’s book value
c. Parent’s book value plus subsidiary’s market value
d. Parent’s market value plus subsidiary’s market value
71. The difference that exists between market value of an asset and the asset’s book value at
acquisition date is called
a. Excess
b. Purchase differential
c. Overstatement
d. Sale differential
72. To what assets and liabilities is the acquisition date purchase differential allocated?
a. To assets that exist on the subsidiary’s financial records
b. To assets and liabilities that exist on the subsidiary’s financial records
c. To assets that have differences between market value and book value whether
they exist on the subsidiary’s financial records or not
d. To assets and liabilities that have differences between market value and book
value whether they exist on the subsidiary’s financial records or not
73. Which of the following statements is correct with regard to the recognition of goodwill at
the acquisition date?
a. Goodwill is the positive purchase differential that remains after allocating each
asset and liability the amount that market value and book value differ
b. Goodwill is the amount by which the purchase price exceeds the subsidiary’s
book value
c. Goodwill is assigned 25 percent of the total purchase differential
d. Goodwill is determined by computing the present value of the subsidiary’s free
cash flows
74. Which of the following statements with regard to worksheet elimination 1 at the date of a
100 percent acquisition with positive goodwill is not correct?
a. The worksheet elimination to the investment account will equal the subsidiary’s
total stockholders’ equity
b. The worksheet elimination will completely remove the subsidiary’s stockholders’
equity from the consolidated balance sheet
c. The worksheet elimination to the individual identifiable assets and liabilities is
based on the difference between the market value and book value of each asset or
liability
d. The worksheet elimination to the investment account will equal the amount that
was paid for the subsidiary
75. Which of the following is correct with regard to the acquisition of a subsidiary at a price
that results in negative goodwill?
a. The investment account is established at the amount paid for the subsidiary’s
stock
b. The subsidiary recognizes an extraordinary loss on sale of stock to investor that
offsets the extraordinary gain recognized on the parent’s income statement
c. An extraordinary gain is created on the consolidated balance sheet
d. Before recognizing an extraordinary gain, the parent should review the appraised
values of identifiable assets and liabilities to ensure they have not been
overvalued
76. Which of the following is not true with regard to the date of acquisition worksheet
elimination?
a. The worksheet elimination to common stock is the same regardless of the
acquisition date
b. The worksheet elimination to additional paid-in capital is the same regardless of
the acquisition date
c. The worksheet elimination to retained earnings is the same regardless of the
acquisition date
d. The worksheet elimination to preacquisition earnings only exists when the
acquisition date is other than the beginning of the year
77. Two companies maintain their financial records on a calendar year basis. One company
acquires all of the stock of the other company on May 20. Which of the following
statements is correct with regard to the worksheet elimination necessary to consolidate
the two companies on May 20?
a. All worksheet eliminations amounts are based on January 1 values
b. The preacquisition earnings amount is the parent’s May 21 - December 31 net
income
c. The purchase differential amounts for individual assets will consider the
amortization that would have occurred from January 1 - May 20
d. The preacquistion earnings amount is the subsidiary’s January 1 - May 20 net
income
78. Which of the following would not have unanimous agreement by proponents of all
consolidation concepts?
a. Parent’s ownership percentage of subsidiary’s net income should be recognized in
the consolidated financial statements
b. Consolidated net income should consist of parent company net income and
subsidiary net income
c. Parent’s ownership percentage of subsidiary’s net assets should be recognized in
d. The consolidated balance sheet should include the market value of the parent’s
ownership of the subsidiary’s assets and liabilities.
79. Which of the following statements is not true as it pertains to the proportionate
consolidation concept?
a. The noncontrolling interest is disclosed in a separate category between liabilities
and stockholders’ equity
b. Consolidated financial statements are prepared only for the parent company’s
stockholders
c. Noncontrolling interest percentage of revenues and expenses are eliminated from
the consolidated income statement
d. Noncontrolling interest in balance sheet accounts is not recognized
80. Which of the following statements is not true as it pertains to the parent company
concept of consolidation?
a. Noncontrolling interest in subsidiary assets and liabilities is recognized on the
consolidated balance sheet at the subsidiary’s book value
b. Noncontrolling interest is displayed on the consolidated balance sheet in a
separate category between liabilities and stockholders’ equity
c. Consolidated income statement includes all of the subsidiary’s revenues and
expenses
d. Noncontrolling interest in net income of subsidiary is included in consolidated net
income
81. Which of the following statements is not true as it pertains to the economic unit concept
of consolidation?
a. Market value of subsidiary’s assets and liabilities is included in consolidated
balance sheet
b. All of the subsidiary’s revenues and expenses are included in the consolidated net
income
c. The consolidated balance sheet only includes the parent’s ownership interest in
the subsidiary’s assets and liabilities
d. Noncontrolling interest in net income of subsidiary is subtracted from
consolidated net income to determine the parent’s portion of consolidated net
income
82. Which of the following does not occur when a less than 100 percent owned subsidiary
acquired during the year is consolidated at the acquisition date?
a. The investment in subsidiary account is completely removed from the
consolidated balance sheet
b. The preacquisition earnings is created at an amount equal to the subsidiary’s net
income as of the acquisition date
c. The purchase differentials recognized are based on the parent’s ownership interest
in the subsidiary
d. The noncontrolling interest is created for the noncontrolling interest’s ownership
percentage of the subsidiary’s market value of net assets
83. When less than 100 percent of a subsidiary’s stock is acquired during the period, which
of the following would appear in the consolidation worksheet elimination?
a. 100 percent of the subsidiary’s stockholders’ equity is eliminated
b. The parent’s ownership percentage of the subsidiary’s preacquisition earnings is
eliminated
c. The noncontrolling interest percentage ownership in the subsidiary’s book value
is recognized on the consolidated balance sheet
d. The parent’s ownership percentage of the subsidiary’s goodwill is recognized on
the consolidated balance sheet
84. When less than 100 percent of a subsidiary’s stock is acquired during the period for a
price that results in negative goodwill, which of the following would not appear in the
consolidation worksheet elimination?
a. 100 percent of the subsidiary’s stockholders’ equity is eliminated
b. Noncontrolling interest equal to the noncontrolling interest’s ownership
percentage of the net identifiable assets market value
c. 100 percent of the extraordinary gain from acquisition of subsidiary
d. 100 percent of the purchase differentials with respect to identifiable assets and
liabilities
85. How is the noncontrolling interests portion of the extraordinary gain from acquisition of
subsidiary recognized on the consolidated income statement?
a. As part of worksheet elimination number 1
b. As part of the parent company journal entry recognizing the subsidiary
acquisition
c. As part of a separate journal entry on the subsidiary’s financial records
d. As part of a special off financial statement journal entry
86. What is the relationship between the investment in subsidiary account and the amount
paid for the investment when less than 100 percent ownership in a subsidiary is acquired
and negative goodwill exists?
a. The investment account and the amount paid are the same dollar amount
b. The investment account is greater than the amount paid
c. The amount paid is greater than the investment account
d. The relationship between the investment account and the amount paid varies from
situation to situation
87. Which of the following is correct when comparing acquisition date worksheet
eliminations when there is a separate accumulated depreciation account and when the
plant assets are disclosed net on the consolidated balance sheet?
a. The net presentation will contain a greater amount of plant assets than the net
amount when there is a separate accumulated depreciation account
b. The presentation with a separate accumulated depreciation account will disclose a
greater amount of net assets than when the plant assets are disclosed net on the
c. The net presentation and the presentation when there is a separate accumulated
depreciation account will disclose the same amount of net plant assets on the
d. It is not possible to determine which presentation will result in the greater amount
of net assets on the consolidated balance sheet; it differs from situation to
situation
88. Which of the following is correct when comparing acquisition date worksheet
eliminations for 100 percent ownership and less than 100 percent ownership when there
is a separate accumulated depreciation account?
a. The 100 percent ownership and the less than 100 percent ownership will each
result in same adjustments to plant assets and accumulated depreciation accounts
b. The 100 percent ownership will result in the same adjustment to the plant asset
account but the accumulated depreciation adjustment for the 100 percent
ownership will be greater than the adjustment for the less than 100 percent
ownership
c. The 100 percent ownership will result in the same adjustment to the accumulated
depreciation account but the adjustment to plant assets for the 100 percent
ownership will be greater than the adjustment for the less than 100 percent
ownership
d. The 100 percent ownership will have greater adjustment amounts than the less
than 100 percent ownership for both the plant assets and the accumulated
depreciation accounts
89. Which of the following will occur as a result of applying push-down accounting?
a. The subsidiary’s assets and liabilities will retain their book value prior to
acquisition
b. The subsidiary’s retained earnings will be retained at its book value prior to
acquisition
c. A revaluation capital account will be created as a result of changing the value of
the subsidiary’s assets and liabilities from book value to market value
d. The subsidiary’s common stock is closed to revaluation capital
Conceptual Multiple Choice Question Difficulty and Solutions

66. easy c
67. easy d
68. easy d
69. easy b
70. easy c
71. easy b
72. easy d
73. easy a
74. easy a
75. easy d
76. easy c
77. moderate d
78. moderate b
79. easy a
80. moderate d
81. easy c
82. moderate c
83. easy a
84. easy c
85. easy a
86. easy b
87. moderate c
88. moderate a
89. easy c
Computational Multiple Choice Questions

90. National acquired all of the stock of Regional for Regional’s book value at the balance
sheet date. At that date, National’s inventory had a book value and market value of
$65,000 and $80,000, respectively while Regional’s inventory had a book and market
value of $25,000 and $25,000, respectively. What amount of inventory would appear on
the consolidated balance sheet?
a. $25,000
b. $80,000
c. $90,000
d. $65,000
91. Baker Enterprises acquired all of the stock of Werner Company for Werner’s book value
at the balance sheet date. At that date, Baker’s equipment had a net book value and
market value of $210,000 and $300,000, respectively while Werner’s equipment had a
net book and market value of $70,000 and $70,000, respectively. What amount of
equipment (net) would appear on the consolidated balance sheet?
a. $280,000
b. $210,000
c. $70,000
d. $300,000
92. Platek Enterprises purchases 100 percent of Smith Company for $600,000. At that date,
Smith Company had the following book values and market values:
Book Value Market Value

Cash and Receivables $25,000 $25,000
Inventory 125,000 180,000
Plant Assets (net) 300,000 475,000
Current Liabilities (60,000) (60,000)
Long-term Debt (120,000) (120,000)
Common Stock (15,000)
Retained Earnings (255,000)
What amount is included in the consolidated balance sheet with regard to inventory?
a. $125,000
b. $152,500
c. $180,000
d. $75,000

Inventory 125,000 180,000
Long-term Debt (120,000) (120,000)
What amount is included in the consolidated balance sheet with regard to plant assets?
a. $300,000
b. $475,000
c. $387,500
d. $180,000

Inventory 125,000 180,000
Long-term Debt (120,000) (120,000)
What amount is included in the consolidated balance sheet with regard to goodwill?
a. $0
b. $150,000
c. $100,000
d. $330,000

Inventory 125,000 180,000
Long-term Debt (120,000) (120,000)
What is the total purchase differential?

a. $150,000
b. $100,000
c. $420,000
d. $330,000

Inventory 125,000 180,000
Long-term Debt (120,000) (120,000)
What is the amount of the worksheet elimination to inventory on the acquisition date?
a. $55,000 debit
b. $55,000 credit
c. $180,000 debit
d. $125,000 credit

Inventory 125,000 180,000
Long-term Debt (120,000) (120,000)
What is the amount of the worksheet elimination to plant assets on the acquisition date?
a. $475,000 debit
b. $300,000 credit
c. $175,000 debit
d. $175,000 credit
98. Blais Corporation purchased 100 percent of Candle Company for $600,000. At that date,
Candle Company had the following book values and market values:

Inventory 180,000 230,000
Long-term Debt (215,000) (215,000)
What amount is included in the consolidated balance sheet with regard to inventory?
a. $180,000
b. $230,000
c. $205,000
d. $410,000

Inventory 180,000 230,000
Long-term Debt (215,000) (215,000)
What amount is included in the consolidated balance sheet with regard to plant assets?
a. $850,000
b. $425,000
c. $375,000
d. $475,000

Inventory 180,000 230,000
Long-term Debt (215,000) (215,000)
What amount is included in the consolidated balance sheet with regard to goodwill?
a. $145,000
b. $305,000
c. $295,000
d. $0

Inventory 180,000 230,000
Long-term Debt (215,000) (215,000)
What is the total purchase differential?
a. $0
b. $145,000
c. $295,000
d. $205,000

Inventory 180,000 230,000
Long-term Debt (215,000) (215,000)
What is the amount of the worksheet elimination to inventory on the acquisition date?
a. $50,000 credit
b. $50,000 debit
c. $180,000 debit
d. $230,000 debit

Inventory 180,000 230,000
Long-term Debt (215,000) (215,000)
What is the amount of the worksheet elimination to plant assets on the acquisition date?
a. $375,000 debit
b. $475,000 debit
c. $100,000 debit
d. $100,000 credit
104. Southern acquired 100 percent of Fast Transit for $275,000. At the date of acquisition,
Fast Transit had the following book and market values:

Inventory 100,000 120,000
Long-term Debt (115,000) (115,000)
What balance exists in the Investment in Fast Transit account on Southern’s financial
records at the acquisition date?
a. $275,000
b. $290,000
c. $180,000
d. $110,000

Inventory 100,000 120,000
Long-term Debt (115,000) (115,000)
What amount of extraordinary gain is recognized by Southern at the acquisition date?

a. $0
b. $165,000
c. $15,000
d. $95,000

Inventory 100,000 120,000
Long-term Debt (115,000) (115,000)
What amount of purchase differential is recognized on the consolidated balance sheet

with regard to plant assets?
a. $90,000
b. $25,000
c. $65,000
d. $0
107. Algonquin acquired 100 percent of Navajo for $300,000. At the acquisition date, Navajo
had the following book and market values:

Inventory 115,000 150,000
Long-term Debt (140,000) (140,000)
What balance exists in the Investment in Navajo account on Algonquin’s financial

records at the acquisition date?
a. $270,000
b. $300,000
c. $530,000
d. $350,000

Inventory 115,000 150,000
Long-term Debt (140,000) (140,000)
What amount of extraordinary gain is recognized by Algonquin at the acquisition date?

a. $0
b. $50,000
c. $30,000
d. $230,000

Inventory 115,000 150,000
Long-term Debt (140,000) (140,000)
What amount of purchase differential is recognized on the consolidated balance sheet

with regard to plant assets?
a. $0
b. $5,000
c. $45,000
d. $25,000
110. Georgia Corporation purchases all of Gator Company’s stock on June 1 for $1,200,000.
At that date, Gator had the following book and market values:

Inventory 230,000 270,000
Plant Assets (net) 900,000 1,230,000
Cost of Goods Sold 750,000
Operating Expenses 170,000
Dividends 20,000
Total $2,150,000
Liabilities $600,000 600,000

Common Stock 25,000
Retained Earnings 525,000
Sales 1,000,000
Total $2,150,000
What amount of preacquisition earnings is eliminated in the acquisition date worksheet

elimination?
a. $80,000
b. $60,000
c. $550,000
d. $610,000

Inventory 230,000 270,000
Plant Assets (net) 900,000 1,230,000
Dividends 20,000
Total $2,150,000
Liabilities $600,000 600,000

Common Stock 25,000
Sales 1,000,000
Total $2,150,000
What amount of retained earnings is eliminated in the acquisition date worksheet

elimination?
a. $550,000
b. $525,000
c. $605,000
d. $585,000

Inventory 230,000 270,000
Plant Assets (net) 900,000 1,230,000
Dividends 20,000
Total $2,150,000
Liabilities $600,000 600,000

Common Stock 25,000
Sales 1,000,000
Total $2,150,000
What amount of goodwill is created in the acquisition date worksheet elimination?

a. $0
b. $590,000
c. $220,000
d. $300,000
113. Santa Fe Corporation purchases all of Tucson Company’s stock on October 1 for
$500,000. At that date, Tucson had the following book and market values:

Inventory 120,000 160,000
Dividends 30,000
Total $1,170,000
Liabilities $350,000 350,000
Common Stock 20,000
Sales 600,000
Total $1,170,000
What amount of preacquisition earnings is eliminated in the acquisition date worksheet

elimination?
a. $60,000
b. $90,000
c. $600,000
d. $120,000

Inventory 120,000 160,000
Dividends 30,000
Total $1,170,000
Liabilities $350,000 350,000

Common Stock 20,000
Sales 600,000
Total $1,170,000
What amount of retained earnings is eliminated in the acquisition date worksheet

elimination?
a. $290,000
b. $260,000
c. $200,000
d. $220,000

Inventory 120,000 160,000
Dividends 30,000
Total $1,170,000
Liabilities $350,000 350,000

Common Stock 20,000
Sales 600,000
Total $1,170,000
What amount of goodwill is created in the acquisition date worksheet elimination?

a. $50,000
b. $310,000
c. $220,000
d. $0
116. Calendar Company purchases 80 percent of Daily Planner. At the date of acquisition,
Daily Planner has revenue of $250,000 and expenses of $170,000. What amount of
preacquisition earnings will be created on the consolidated income statement at the
acquisition date?
a. $64,000
b. $16,000
c. $0
d. $80,000
117. Mobile Corporation acquires 70 percent of Telephone Company’s stock. What amount of
noncontrolling interest is recognized on the acquisition date balance sheet if Telephone
has the following account balances?

Cash $10,000 $10,000
Inventory 80,000 80,000
Depreciation Expense 20,000
Liabilities (110,000) (110,000)
Sales (190,000)
a. $0
b. $99,000
c. $330,000
d. $231,000
118. What is the amount of preacquisition earnings on the acquisition date consolidated
income statement if the parent acquires 90 percent of the subsidiary’s stock and the
following income statement accounts exist at the acquisition date?
Parent Subsidiary
Sales $250,000 $60,000
Cost of Goods Sold 120,000 12,000
Depreciation Expense 10,000 5,000
Operating Expenses 40,000 8,000
Income Tax Expense 32,000 14,000
a. $18,900
b. $66,900
c. $69,000
d. $21,000
119. What is the imputed value of a subsidiary if the parent pays $56,000 for 80 percent of the
subsidiary’s stock?
a. $56,000
b. $44,800
c. $70,000
d. $280,000
120. Jasper Enterprises acquires 70 percent of Felix Corporation on May 1 for $490,000. At
the acquisition date, Felix has the following book and market values.

Cash $30,000 $30,000
Inventory 80,000 140,000
Liabilities (100,000) (110,000)
Sales (220,000)
What is the amount of preacquisition earnings recognized on the acquisition date

consolidated income statement?
a. $56,000
b. $39,200
c. $16,800
d. $80,000

Cash $30,000 $30,000
Inventory 80,000 140,000
Liabilities (100,000) (110,000)
Sales (220,000)
What is the imputed market value of Felix?

a. $490,000
b. $700,000
c. $343,000
d. $637,000

Cash $30,000 $30,000
Inventory 80,000 140,000
Liabilities (100,000) (110,000)
Sales (220,000)
What is the goodwill recognized on the acquisition date balance sheet?

a. $54,000
b. $126,000
c. $180,000
d. $234,000

Cash $30,000 $30,000
Inventory 80,000 140,000
Liabilities (100,000) (110,000)
Sales (220,000)
What amount of purchase differential is recognized on the acquisition date balance sheet
with respect to plant assets?
a. $117,000
b. $63,000
c. $27,000
d. $90,000
124. Jackson Enterprises acquires 80 percent of Riddle Corporation on August 1 for $560,000.
At the acquisition date, Riddle has the following book and market values.

Cash $50,000 $50,000
Inventory 140,000 200,000
Liabilities (230,000) (230,000)
Sales (430,000)
What is the amount of preacquisition earnings recognized on the acquisition date

consolidated income statement?
a. $128,000
b. $32,000
c. $200,000
d. $160,000

Cash $50,000 $50,000
Inventory 140,000 200,000
Liabilities (230,000) (230,000)
Sales (430,000)
What is the imputed market value of Riddle?

a. $700,000
b. $448,000
c. $560,000
d. $500,000
Cash $50,000 $50,000
Inventory 140,000 200,000
Liabilities (230,000) (230,000)
Sales (430,000)
What is the goodwill recognized on the acquisition date balance sheet?

a. $60,000
b. $64,000
c. $80,000
d. $16,000
Cash $50,000 $50,000
Inventory 140,000 200,000
Liabilities (230,000) (230,000)
Sales (430,000)
What amount of purchase differential is recognized on the acquisition date balance sheet
with respect to plant assets?
a. $14,000
b. $70,000
c. $56,000
d. $84,000
128. Lazer Corporation acquired 80 percent of High-Energy Company on August 1 for

$500,000. On that date High-Energy had the following book values and market values.

Cash $60,000 $60,000
Inventory 130,000 210,000
Liabilities (250,000) (250,000)
Sales (300,000)
What is the amount of extraordinary gain that will be recognized by Lazer at the
acquisition date?
a. $20,000
b. $25,000
c. $0
d. $16,000


Cash $60,000 $60,000
Inventory 130,000 210,000
Liabilities (250,000) (250,000)
Sales (300,000)
What is the amount recorded by Lazer in the Investment in High-Energy account at the
acquisition date?
a. $500,000
b. $516,000
c. $520,000
d. $504,000


Cash $60,000 $60,000
Inventory 130,000 210,000
Liabilities (250,000) (250,000)
Sales (300,000)
What is the amount of extraordinary gain from acquisition of High-Energy disclosed on

the acquisition date consolidated income statement?
a. $25,000
b. $20,000
c. $0
d. $16,000


Cash $60,000 $60,000
Inventory 130,000 210,000
Liabilities (250,000) (250,000)
Sales (300,000)
What is the amount of noncontrolling interest on the acquisition date consolidated

balance sheet?
a. $125,000
b. $650,000
c. $126,000
d. $130,000


Cash $60,000 $60,000
Inventory 130,000 210,000
Liabilities (250,000) (250,000)
Sales (300,000)
What is the amount of purchase differential recognized on the acquisition date

consolidated balance sheet with respect to plant assets?
a. $0
b. $50,000
c. $40,000
d. $10,000
133. Razor Corporation acquired 70 percent of Blade Company on October 1 for $420,000.
On that date Razor had the following book values and market values.
Cash $40,000 $40,000
Inventory 170,000 230,000
Liabilities (300,000) (300,000)
Sales (350,000)
What is the amount of extraordinary gain that will be recognized by Razor at the
acquisition date?
a. $0
b. $250,000
c. $49,000
d. $469,000

Cash $40,000 $40,000
Inventory 170,000 230,000
Liabilities (300,000) (300,000)
Sales (350,000)
What is the amount recorded by Razor in the Investment in Blade account at the
acquisition date?
a. $420,000
b. $469,000
c. $420,700
d. $670,000

Cash $40,000 $40,000
Inventory 170,000 230,000
Liabilities (300,000) (300,000)
Sales (350,000)
What is the amount of extraordinary gain from acquisition of Blade disclosed on the
acquisition date consolidated income statement?
a. $0
b. $70,000
c. $21,000
d. $70,000

Cash $40,000 $40,000
Inventory 170,000 230,000
Liabilities (300,000) (300,000)
Sales (350,000)
What is the amount of noncontrolling interest on the acquisition date consolidated

balance sheet?
a. $201,000
b. $469,000
c. $670,000
d. $880,000

Cash $40,000 $40,000
Inventory 170,000 230,000
Liabilities (300,000) (300,000)
Sales (350,000)
What is the amount of purchase differential recognized on the acquisition date
consolidated balance sheet with respect to plant assets?
a. $0
b. $24,000
c. $56,000
d. $80,000
138. Polygon Enterprises acquires 100 percent of Square Corporation. At the acquisition date,
Square’s plant assets have an historical cost of $350,000 and an accumulated depreciation
of $110,000. The appraised value of Square’s plant assets is $260,000. What is the
amount of the acquisition date worksheet elimination to plant assets?
a. $90,000 debit
b. $90,000 credit
c. $20,000 debit
d. $20,000 credit
139. Polygon Enterprises acquires 100 percent of Square Corporation. At the acquisition date,
Square’s plant assets have an historical cost of $350,000 and an accumulated depreciation
of $110,000. The appraised value of Square’s plant assets is $260,000. What is the
amount of the acquisition date worksheet elimination to accumulated depreciation?
a. $110,000 debit
b. $110,000 credit
c. $20,000 debit
d. $20,000 credit
140. Phillips Corporation acquires 80 percent of Baker Brothers. At the acquisition date,
Baker’s plant assets have an historical cost of $420,000 and an accumulated depreciation
of $180,000. The appraised value of Baker’s plant assets is $300,000. What is the
amount of the acquisition date worksheet elimination to plant assets?
a. $60,000 debit
b. $60,000 credit
c. $120,000 debit
d. $120,000 credit
141. Phillips Corporation acquires 80 percent of Baker Brothers. At the acquisition date,
Baker’s plant assets have an historical cost of $420,000 and an accumulated depreciation
of $180,000. The appraised value of Baker’s plant assets is $300,000. What is the
amount of the acquisition date worksheet elimination to accumulated depreciation?
a. $180,000 credit
b. $180,000 debit
c. $60,000 credit
d. $60,000 debit
142. Freight Company acquired 100 percent of Shipper Enterprises. At the acquisition date,
Shipper’s plant assets have an historical cost of $250,000 and an accumulated
depreciation of $56,000. The appraised value of Shipper’s plant assets is $300,000.
What is the amount of the acquisition date worksheet elimination to plant assets?
a. $106,000 debit
b. $106,000 credit
c. $50,000 debit
d. $50,000 credit
143. Freight Company acquired 100 percent of Shipper Enterprises. At the acquisition date,
Shipper’s plant assets have an historical cost of $250,000 and an accumulated
depreciation of $56,000. The appraised value of Shipper’s plant assets is $300,000.
What is the amount of the acquisition date worksheet elimination to accumulated
depreciation?
a. $56,000 debit
b. $56,000 credit
c. $104,000 debit
d. $104,000 credit
144. Rope Corporation purchased 70 percent of Skip Enterprises. At the acquisition date,
Skip’s plant assets have an historical cost of $450,000 and an accumulated depreciation
of $260,000. The appraised value of Skip’s plant assets is $600,000. What is the amount
of the acquisition date worksheet elimination to plant assets?
a. $150,000 credit
b. $150,000 debit
c. $410,000 credit
d. $410,000 debit
145. Rope Corporation purchased 70 percent of Skip Enterprises. At the acquisition date,
Skip’s plant assets have an historical cost of $450,000 and an accumulated depreciation
of $260,000. The appraised value of Skip’s plant assets is $600,000. What is the amount
of the acquisition date worksheet elimination to accumulated depreciation?
a. $410,000 credit
b. $410,000 debit
c. $260,000 credit
d. $260,000 debit
Computational Multiple Choice Question Difficulty and Solutions

90. easy c
$65,000 + $25,000
91. easy a
$210,000 + $70,000
92. easy c
93. easy b
94. moderate c
$600,000 - ($25,000 + $180,000 + $475,000 - $60,000 - $120,000)
95. moderate d
$600,000 - $15,000 - $255,000
96. moderate a
$180,000 - $125,000
97. moderate c
$475,000 - $300,000
98. easy b
99. easy d
100. moderate a
$600,000 - ($60,000 + $230,000 + $475,000 - $95,000 - $215,000)
101. moderate c
($600,000 - $25,000 - $280,000)
102. moderate b
$230,000 - $180,000
103. moderate c
$475,000 - $375,000
104. moderate b
$30,000 + $120,000 + $300,000 - $45,000 - $115,000
105. moderate c
$275,000 - ($30,000 + $120,000 + $300,000 - $45,000 - $115,000)
106. easy a
$300,000 - $210,000
107. moderate d
$60,000 + $150,000 + $320,000 - $40,000 - $140,000
108. moderate b
$300,000 - ($60,000 + $150,000 + $320,000 - $40,000 - $140,000)
109. easy c
$320,000 - $275,000
110. moderate a
$1,000,000 - $750,000 - $170,000
111. easy b
112. moderate c
$1,200,000 - ($80,000 + $270,000 + $1,230,000 - $600,000)
113. moderate b
$600,000 - $400,000 - $110,000
114. easy c
115. moderate a
$500,000 - ($60,000 + $160,000 + $580,000 - $350,000)
116. easy d
$250,000 - $170,000
117. moderate b
($10,000 + $80,000 + $350,000 - $110,000)(.30)
118. easy d
($60,000 - $12,000 - $5,000 - $8,000 - $14,000)
119. moderate c
$56,000/.8
120. easy a
($220,000 - $120,000 - $44,000)
121. easy b
$490,000/.70
122. moderate c
[($490,000/.70) - ($30,000 + $140,000 + $460,000 - $110,000)]
123. easy d
$460,000 - $370,000
124. easy d
($430,000 - $210,000 - $60,000)
125. easy a
$560,000/.80
126. moderate c
[($560,000/.80) - ($50,000 + $200,000 + $600,000 - $230,000)]
127. easy b
$600,000 - $530,000
128. moderate a
$500,000 - ($60,000 + $210,000 + $630,000 - $250,000)(.80)
129. moderate c
($60,000 + $210,000 + $630,000 - $250,000)(.80)
130. moderate a
(500,000/.80) - ($60,000 + $210,000 + $630,000 - $250,000)
131. easy d
($60,000 + $210,000 + $630,000 - $250,000)(.20)
132. easy b
133. moderate c
$420,000 - ($40,000 + $230,000 + $700,000 - $300,000)(.70)
134. moderate b
($40,000 + $230,000 + $700,000 - $300,000)(.70)
135. moderate d
($420,000/.70) - ($40,000 + $230,000 + $700,000 - $300,000)
136. easy a
($40,000 + $230,000 + $700,000 - $300,000)(.30)
137. easy d
($700,000 - $620,000)
138. easy b
($260,000 - $350,000)
139. easy a
140. easy d
($300,000 - $420,000)
141. easy b
142. moderate c
($300,000 - $250,000)
143. easy a
144. moderate b
($600,000 - $450,000)
145. easy d
Problems
146. (10 Points) easy
Lamberton Company purchased 100 percent of Wendell Corporation on the balance sheet
date for book value ($60,000). At that date, the following amounts exist for Lamberton
and Wendell.
Lamberton Wendell
Book Market Book Market
Cash $75,000 $75,000 $20,000 $20,000
Inventory 210,000 250,000 65,000 65,000
Land 60,000 180,000 35,000 35,000
Equipment (net) 380,000 450,000 90,000 90,000
Liabilities (370,000) (370,000) (150,000) (150,000)
Common Stock (20,000) (10,000)
Retained Earnings (335,000) (50,000)
Record the date of acquisition worksheet elimination in journal entry form.
Answer:
Worksheet Elimination #1
Common Stock 10,000
Investment in Wendell Corporation 60,000

LaGrange Enterprises purchased 100 percent of Zeller Company on the balance sheet
date for book value ($70,000). At that date, the following amounts exist for LaGrange
and Zeller.
LaGrange Zeller
Cash $90,000 $90,000 $10,000 $10,000
Inventory 240,000 290,000 30,000 30,000
Land 70,000 150,000 40,000 40,000
Equipment (net) 420,000 460,000 80,000 80,000
Liabilities (270,000) (270,000) (90,000) (90,000)
Common Stock (50,000) (15,000)
Answer:
Common Stock 15,000
Investment in Zeller Company 70,000
148. (15 Points) moderate

Lansing Corporation purchased 100 percent of Phoenix Company on the balance sheet
date for $1,200,000. At that date, the following book and market values exist for
Phoenix.
Phoenix
Book Market
Cash $160,000 $160,000
Inventory 320,000 400,000
Land 120,000 270,000
Equipment (net) 680,000 800,000
Liabilities (540,000) (540,000)
Answer:
Purchase price 1,200,000
Less: Book value acquired ($50,000 + $690,000) 740,000
Purchase Differential 460,000
Purchase differential allocation
Inventory ($400,000 - $320,000) 80,000
Land ($270,000 - $120,000) 150,000
Equipment (net) ($800,000 - $680,000) 120,000 350,000
Goodwill 110,000
Common Stock 50,000
Inventory 80,000
Land 150,000
Equipment 120,000
Goodwill 110,000
Investment in Phoenix Company 1,200,000

Liberty Corporation purchased 100 percent of Mutual Company on the balance sheet date
for $1,000,000. At that date, the following book and market values exist for Mutual.
Mutual
Book Market
Cash $130,000 $130,000
Inventory 260,000 320,000
Land 100,000 170,000
Equipment (net) 350,000 450,000
Liabilities (270,000) (270,000)
Answer:
Inventory ($320,000 - $260,000) 60,000
Land ($170,000 - $100,000) 70,000
Equipment (net) ($450,000 - $350,000) 100,000 230,000
Goodwill 200,000
Common Stock 40,000
Inventory 60,000
Land 70,000
Equipment 100,000
Goodwill 200,000
Investment in Mutual Company 1,000,000

Wilkerson Company purchased 100 percent of Razor Corporation on the balance sheet
date for $500,000. The following amounts exist for Wilkerson and Razor immediately
prior to the acquisition.
Wilkerson Razor
Cash $85,000 $85,000 $25,000 $25,000
Inventory 350,000 380,000 70,000 110,000
Land 90,000 180,000 50,000 125,000
Equipment (net) 560,000 650,000 240,000 290,000
Liabilities (400,000) (400,000) (160,000) (160,000)
Common Stock (30,000) (10,000)
Complete the following consolidation worksheet assuming that Wilkerson issued long-
term debt to finance the acquisition.
Consolidated
Separate Financial Statements Adjustments and Eliminations Financial
Wilkerson Razor Debit Credit Statements
Balance Sheet
Cash 85,000 25,000
Inventory 350,000 70,000
Total Current Assets 435,000 95,000
Land 90,000 50,000
Equipment (net) 560,000 240,000
Investment in Razor 500,000
Goodwill
Total Long-term Assets 1,150,000 290,000
Total Assets 1,585,000 385,000
Total Liabilities 900,000 160,000
Common Stock 30,000 10,000
Retained Earnings 655,000 215,000
Total Stockholders' Equity 685,000 225,000
Total Liabilities and Stockholders' Equity 1,585,000 385,000
Answer:
Consolidated
Separate Financial Adjustments and Financial
Statements Eliminations Statements
Wilkerson Razor Debit Credit
Balance Sheet
Cash 85,000 25,000 110,000
Inventory 350,000 70,000 (1) 40,000 460,000
Total Current Assets 435,000 95,000 570,000
Land 90,000 50,000 (1) 75,000 215,000
Equipment (net) 560,000 240,000 (1) 50,000 850,000
Investment in Razor 500,000 (1) 500,000 0
Goodwill (1) 110,000 110,000
Total Long-term Assets 1,150,000 290,000 1,175,000
Total Assets 1,585,000 385,000 1,745,000
Total Liabilities 900,000 160,000 1,060,000
Common Stock 30,000 10,000 (1) 10,000 30,000
Retained Earnings 655,000 215,000 (1) 215,000 655,000
Total Stockholders' Equity 685,000 225,000 685,000
Total Liabilities and Stockholders' 1,585,000 385,000 1,745,000
Equity
500,000 500,000
151. (a. 10 Points; b. 10 Points) moderate, moderate
Emerson Company purchased 100 percent of Palmer Group’s stock for $400,000. At that
date, Palmer had the following book and market values:
Book Market
Inventory 160,000 210,000
Liabilities (250,000) (250,000)
a. Prepare the journal entry on Emerson’s financial records to recognize the

acquisition of Palmer Group.
b. Prepare the worksheet elimination in journal entry form to consolidate Emerson
and Palmer Group.
Answer:
Part a.
Investment in Palmer Group ($35,000 + $210,000 + 455,000
$460,000 - $250,000)
Extraordinary gain from acquisition of Palmer Group 55,000
Cash 400,000
Part b.
Common Stock 30,000
Inventory ($210,000 - $160,000) 50,000
Plant Assets ($460,000 - $390,000) 70,000
Investment in Palmer Group 455,000

Riverview Corporation purchased 100 percent of Lakeside Company’s stock for
$600,000. At that date, Lakeside had the following book and market values:
Book Market
Inventory 240,000 300,000
Liabilities (450,000) (450,000)
a. Prepare the journal entry on Riverview’s financial records to recognize the

acquisition of Lakeside.
b. Prepare the worksheet elimination in journal entry form to consolidate Riverview
and Lakeside.
Answer:
Part a.
Investment in Lakeside ($40,000 + $300,000 + 650,000
$760,000 - $450,000)
Extraordinary gain from acquisition of Lakeside 50,000
Cash 600,000
Part b.
Common Stock 20,000
Inventory ($300,000 - $240,000) 60,000
Plant Assets ($760,000 - $680,000) 80,000
Investment in Lakeside 650,000

Foster Company purchased 100 percent of Corning’s stock for $450,000. At that date,
Corning had the following book and market values:
Book Market
Inventory 230,000 260,000
Liabilities (390,000) (400,000)
a. Prepare the journal entry on Foster’s financial records to recognize the acquisition
of Corning.
b. Prepare the worksheet elimination in journal entry form to consolidate Foster and
Corning.
Answer:
Part a.
Investment in Corning ($35,000 + $260,000 + 485,000
$590,000 - $400,000)
Extraordinary gain from acquisition of Corning 35,000
Cash 450,000
Part b.
Common Stock 20,000
Inventory ($260,000 - $230,000) 30,000
Plant Assets ($590,000 - $510,000) 80,000
Receivables ($35,000 - $40,000) 5,000
Liabilities ($400,000 - $390,000) 10,000
Investment in Corning
485,000

National Corporation purchased 100 percent of Local Company’s stock for $275,000. At
that date, Local had the following book and market values:
Book Market
Inventory 65,000 100,000
Liabilities (130,000) (123,000)
a. Prepare the journal entry on National’s financial records to recognize the

acquisition of Local.
b. Prepare the worksheet elimination in journal entry form to consolidate National
and Local.
Answer:
Part a.
Investment in Local ($20,000 + $100,000 + 287,000
$290,000 - $123,000)
Extraordinary gain from acquisition of Local
12,000
Cash 275,000
Part b.
Common Stock 30,000
Inventory ($100,000 - $65,000) 35,000
Plant Assets ($290,000 - $230,000) 60,000
Liabilities ($123,000 - $130,000) 7,000
Receivables ($20,000 - $25,000) 5,000
Investment in Local 287,000

Swizzer Company purchased 100 percent of Wentworth Corporation on May 15 for
$480,000. At that date, the following balances exist for Swizzer and Wentworth.
Swizzer Wentworth
Cash $125,000 $125,000 $30,500 $30,500
Inventory 380,000 410,000 100,000 130,000
Land 90,000 160,000 50,000 69,500
Equipment (net) 690,000 780,000 270,000 390,000
Other Expenses 170,000 80,000
Liabilities (330,000) (330,000) (140,000) (140,000)
Common Stock (40,000) (25,000)
Sales (950,000) (310,000)
Answer:
Purchase price 480,000
Less: Book value acquired ($25,000 + $175,000 + $310,000 - 310,500
$119,500 - $80,000)
Inventory ($130,000 - $100,000) 30,000
Land ($69,500 - $50,000) 19,500
Equipment (net) ($390,000 - $270,000) 120,000 169,500
Goodwill 0
Common Stock 25,000
Preacquisition Earnings ($310,000 - $119,500 - $80,000) 110,500
Inventory 30,000
Land 19,500
Equipment (net) 120,000
Investment in Wentworth Corporation 480,000

Regional Enterprises purchased 100 percent of City Company on October 1 for
$450,000. At that date, the following balances exist for Regional and City.
Regional City
Cash $170,000 $170,000 $30,500 $30,500
Inventory 480,000 560,000 90,000 120,000
Land 80,000 150,000 40,000 100,000
Equipment (net) 690,000 800,000 310,000 380,000
Other Expenses 270,000 69,500
Liabilities (500,000) (500,000) (190,000) (180,500)
Common Stock (50,000) (20,000)
Sales (1,400,000) (270,000)

Answer:
$160,000 - $69,500)
Inventory ($120,000 - $90,000) 30,000
Land ($100,000 - $40,000) 60,000
Equipment (net) ($380,000 - $310,000) 70,000
Liabilities ($180,500 - $190,000) 9,500 169,500
Goodwill 0
Common Stock 20,000
Inventory 30,000
Land 60,000
Equipment (net) 70,000
Liabilities 9,500
Investment in City Company 450,000

Lexington Corporation purchased 100 percent of Concord Company on February 3 for
$1,300,000. At that date, the following book and market values exist for Concord.
Book Market
Cash $130,000 $130,000
Inventory 350,000 440,000
Land 100,000 180,000
Equipment (net) 720,000 830,000
Other Expenses 50,000
Liabilities (360,000) (340,000)
Sales (250,000)
Answer:
$160,000 - $6,000 - $50,000)
Inventory ($440,000 - $350,000) 90,000
Land ($180,000 - $100,000) 80,000
Equipment (net) ($830,000 - $720,000) 110,000
Liabilities ($340,000 - $360,000) 20,000 300,000
Goodwill 60,000
Common Stock 30,000
Preacquisition Earnings ($250,000 - $160,000 - 34,000
$6,000 - $50,000)
Inventory 90,000
Land 80,000
Equipment 110,000
Liabilities 20,000
Goodwill 60,000
Investment in Concord Company 1,300,000

Carlos Corporation purchased 100 percent of Montez Company on November 1 for
$560,000. At that date, the following book and market values exist for Montez.
Book Market
Cash $40,000 $40,000
Inventory 150,000 215,000
Land 60,000 85,000
Equipment (net) 200,000 310,000
Dividends 20,000
Liabilities (160,000) (160,000)
Sales (450,000)
Answer:
$320,000 - $18,000 - $20,000)
Inventory ($215,000 - $150,000) 65,000
Land ($85,000 - $60,000) 25,000
Equipment (net) ($310,000 - $200,000) 110,000 200,000
Goodwill 70,000
Common Stock 10,000
Inventory 65,000
Land 25,000
Equipment 110,000
Goodwill 70,000
Investment in Montez Company 560,000
Dividends 20,000

Pearl Corporation purchased 100 percent of Sand Company on June 1 for $800,000. At
that date, the following book and market values exist for Sand.
Book Market
Cash $110,000 $110,000
Inventory 80,000 135,000
Land 100,000 175,000
Equipment (net) 370,000 440,000
Liabilities (140,000) (140,000)
Sales (230,000)

Answer:
$150,000 - $20,000)
Inventory ($135,000 - $80,000) 55,000
Land ($175,000 - $100,000) 75,000
Equipment (net) ($440,000 - $370,000) 70,000 200,000
Goodwill 80,000
Common Stock 40,000
Inventory 55,000
Land 75,000
Equipment 70,000
Goodwill 80,000
Investment in Sand Company 800,000
Eastern Company purchased 100 percent of Northern Corporation May 1 for $900,000.
The following amounts exist for Eastern and Northern immediately prior to the
acquisition.
Eastern Northern
Cash $370,000 $370,000 $150,000 $150,000
Inventory 780,000 970,000 240,000 300,000
Land 170,000 370,000 70,000 200,000
Plant Assets (net) 940,000 1,230,000 340,000 460,000
Cost of Goods Sold 1,300,000 320,000
Dividends 50,000 20,000
Liabilities (600,000) (620,000) (310,000) (301,000)
Common Stock (30,000) (10,000)
Retained Earnings (1,410,000) (420,000)
Sales (1,800,000) (500,000)
Complete the following consolidation worksheet assuming that Eastern issued long-term
debt to finance the acquisition.
Consolidated
Eastern Northern Debit Credit Statements
Income Statement
Sales 1,800,000 500,000
Cost of Goods Sold 1,300,000 320,000

Preacquisition Earnings
Net Income (to Statement of Retained 270,000 80,000
Earnings)
Retained Earnings Statement
Retained Earnings 1,410,000 420,000
Add: Net Income (from Income Statement) 270,000 80,000
Subtotal 1,680,000 500,000
Less: Dividends (50,000) (20,000)
Retained Earnings (to Balance Sheet) 1,630,000 480,000
Balance Sheet
Cash and Receivables 370,000 150,000
Inventory 780,000 240,000
Total Current Assets 1,150,000 390,000
Land 170,000 70,000
Investment in Northern 900,000
Goodwill
Total Assets 3,160,000 800,000
Total Liabilities 1,500,000 310,000
Total Stockholders’ Equity 1,660,000 490,000
Total Liabilities and Stockholders’ Equity 3,160,000 800,000
Answer:
Consolidated
Eastern Northern Debit Credit Statements
Income Statement
Sales 1,800,000 500,000 2,300,000
Cost of Goods Sold 1,300,000 320,000 1,620,000

Operating Expenses 230,000 100,000 330,000
Preacquisition Earnings (1) 80,000 80,000
Net Income (to Statement of Retained 270,000 80,000 80,000 0 270,000
Earnings)
Retained Earnings 1,410,000 420,000 (1) 420,000 1,410,000
Add: Net Income (from Income Statement) 270,000 80,000 (X) 80,000 (X) 0 270,000
Subtotal 1,680,000 500,000 1,680,000
Less: Dividends (50,000) (20,000) (1) 20,000 (50,000)
Retained Earnings (to Balance Sheet) 1,630,000 480,000 500,000 20,000 1,630,000
Balance Sheet
Cash and Receivables 370,000 150,000 520,000
Inventory 780,000 240,000 (1) 60,000 1,080,000
Total Current Assets 1,150,000 390,000 1,600,000
Land 170,000 70,000 (1) 130,000 370,000
Plant Assets (net) 940,000 340,000 (1) 120,000 1,400,000
Investment in Northern 900,000 (1) 900,000 0
Goodwill (1) 91,000 91,000
Total Assets 3,160,000 800,000 3,461,000
Total Liabilities 1,500,000 310,000 (1) 9,000 1,801,000
Common Stock 30,000 10,000 (1) 10,000 30,000
Retained Earnings 1,630,000 480,000 (X) 500,000 (X) 20,000 1,630,000
Total Stockholders’ Equity 1,660,000 490,000 1,660,000
Total Liabilities and Stockholders’ Equity 3,160,000 800,000 3,461,000
920,000 920,000
Clemens Company purchased 100 percent of Maur Group’s stock for $550,000 on
September 1. At that date, Maur had the following book and market values:
Book Market
Inventory 190,000 260,000
Liabilities (280,000) (280,000)
Sales (450,000)
a. Prepare the journal entry on Clemens’s financial records to recognize the

acquisition of Maur Group.
b. Prepare the worksheet elimination in journal entry form to consolidate Clemens
and Maur Group.
Answer:
Part a.
$350,000 - $40,000)
Inventory ($260,000 - $190,000) 70,000
Plant Assets ($590,000 - $500,000) 90,000 160,000
Negative Goodwill (110,000)
Investment in Maur Group ($90,000 + $260,000 + 660,000

$590,000 - $280,000)
Extraordinary gain from acquisition of Maur Group 110,000
Cash 550,000
Part b.
Common Stock 20,000
Inventory ($260,000 - $190,000) 70,000
Plant Assets ($590,000 - $500,000) 90,000
Investment in Maur Group 660,000

Washington Corporation purchased 100 percent of Maryland Company’s stock on March
1 for $2,450,000. At that date, Maryland had the following book and market values:
Book Market
Inventory 850,000 970,000
Plant Assets (net) 1,850,000 2,500,000
Liabilities (920,000) (950,000)
Retained Earnings (1,605,000)
Sales (1,100,000)
a. Prepare the journal entry on Washington’s financial records to recognize the

acquisition of Maryland.
b. Prepare the worksheet elimination in journal entry form to consolidate
Washington and Maryland.
Answer:
Part a.
Less: Book value acquired ($40,000 + $1,605,000 + 1,900,000
$1,100,000 - $650,000 - $35,000 - $160,000)
Inventory ($970,000 - $850,000) 120,000
Plant Assets ($2,500,000 - $1,850,000) 650,000
Liabilities ($950,000 - $920,000) (30,000) 740,000
Investment in Maryland ($120,000 + $970,000 + 2,640,000

$2,500,000 - $950,000)
Extraordinary gain from acquisition of Maryland 190,000
Cash 2,450,000
Part b.
Common Stock 40,000
Retained Earnings 1,605,000
Preacquisition Earnings ($1,100,000 - $650,000 - 255,000
$35,000 - $160,000)
Inventory ($970,000 - $850,000) 120,000
Plant Assets ($2,500,000 - $1,850,000) 650,000
Liabilities ($950,000 - $920,000) 30,000
Investment in Maryland 2,640,000

Meeting Company purchased 100 percent of Colbert’s stock on August 1 for $850,000.
At that date, Colbert had the following book and market values:
Book Market
Inventory 370,000 440,000
Dividends 40,000
Liabilities (320,000) (320,000)
Sales (510,000)
a. Prepare the journal entry on Meeting Company’s financial records to recognize

the acquisition of Colbert.
b. Prepare the worksheet elimination in journal entry form to consolidate Meeting
Company and Colbert.
Answer:
Part a.
$270,000 - $100,000 - $40,000)
Inventory ($440,000 - $370,000) 70,000
Plant Assets (net) ($710,000 - $580,000) 130,000 200,000
Investment in Colbert ($70,000 + $440,000 + 900,000

$710,000 - $320,000)
Extraordinary gain from acquisition of Colbert 50,000
Cash 850,000
Part b.
Common Stock 20,000
Inventory ($440,000 - $370,000) 70,000
Plant Assets (net) ($710,000 - $580,000) 130,000
Dividends 40,000
Investment in Colbert 900,000

Lathen Corporation purchased 100 percent of Gillette Company’s stock on April 1 for
$540,000. At that date, Gillette had the following book and market values:
Book Market
Inventory 160,000 240,000
Liabilities (210,000) (190,000)
Sales (190,000)
a. Prepare the journal entry on Lathen’s financial records to recognize the

acquisition of Gillette.
b. Prepare the worksheet elimination in journal entry form to consolidate Lathen and
Gillette
Answer:
Part a.
$95,000 - $35,000)
Inventory ($240,000 - $160,000) 80,000
Plant Assets (net) ($510,000 - $420,000) 90,000
Liabilities ($190,000 - $210,000) 20,000 190,000
Investment in Gillette ($50,000 + $240,000 + $510,000 - 610,000

$190,000)
Extraordinary gain from acquisition of Gillette 70,000
Cash 540,000
Part b.
Common Stock 40,000
Inventory ($240,000 - $160,000) 80,000
Plant Assets ($510,000 - $420,000) 90,000
Liabilities ($190,000 - $210,000) 20,000
Investment in Gillette 610,000

Craig Corporation purchased 80 percent of Miller Company on October 1 for $248,000.
At that date, the following book and market values exist for Miller.
Book Market
Cash $50,000 $50,000
Inventory 160,000 160,000
Land 70,000 70,000
Equipment (net) 220,000 220,000
Dividends 40,000
Liabilities (190,000) (190,000)
Sales (480,000)
Answer:
Analysis of Craig Noncontrolling
Market Value (80%) Interest (20%)
Miller’s imputed total market value $310,000 $248,000 $62,000
($248,000 /.80 = $310,000)
Less: Book value ($10,000 + $215,000 + 310,000
$480,000 - $330,000 - $25,000 - $40,000)
Craig ($310,000 x .80) 248,000
Noncontrolling interest ($310,000 x .20) 62,000
Purchase differential 0 0 0
Purchase differential allocated to identifiable
net assets:
Total Goodwill 0 0 0
Allocated purchase differential 0 0 0
Common Stock 10,000
Dividends 40,000
Investment in Miller Company 248,000
Noncontrolling Interest 62,000

Pumpkin Corporation purchased 70 percent of Sierra Company on June 1 for $161,000.
At that date, the following book and market values exist for Sierra.
Book Market
Cash $20,000 $20,000
Inventory 70,000 70,000
Land 90,000 90,000
Equipment (net) 180,000 180,000
Liabilities (130,000) (130,000)
Sales (240,000)
Answer:
Analysis of Pumpkin Noncontrolling
Sierra’s imputed total market value $230,000 $161,000 $69,000
($161,000 /.70 = $230,000)
Less: Book value ($10,000 + $160,000 + 230,000
$240,000 - $150,000 - $30,000)
Pumpkin ($230,000 x .70) 161,000
net assets:
Common Stock 10,000
Investment in Sierra Company 161,000

Prince Corporation acquired 70 percent of Savory Enterprises for $350,000 on June 1.
At that date Savory had the following book and market values:
Book Market
Inventory 120,000 180,000
Liabilities (160,000) (160,000)
Sales (140,000)
Prepare the worksheet elimination in journal entry form to consolidate Prince and Savory
at the acquisition date.
Answer:
Analysis of Prince Noncontrolling
Savory’s imputed total market value $500,000 $350,000 $150,000
($350,000 /.70 = $500,000)
Less: Book value ($10,000 + $270,000 + 310,000
$140,000 - $90,000 - $20,000)
Prince ($310,000 x .70) 217,000
Purchase differential 190,000 133,000 57,000
net assets:
Inventory ($180,000 - $120,000) 60,000 42,000 18,000
Plant Assets (net) 80,000 56,000 24,000
($390,000 - $310,000)
Total Goodwill 50,000
Prince ($50,000 x .70) 35,000
Allocated purchase differential 190,000 133,000 57,000
Common Stock 10,000
Inventory ($180,000 - $120,000) 60,000
Plant Assets ($390,000 - $310,000) 80,000
Goodwill 50,000
Investment in Savory Enterprises 350,000

Rich Corporation acquired 90 percent of Poor Company for $270,000 on October 1. At
that date Poor had the following book and market values:
Book Market
Inventory 40,000 60,000
Liabilities (30,000) (30,000)
Sales (130,000)
Complete the following consolidation worksheet assuming that Rich issued long-term
Consolidated
Rich Poor Debit Credit Statements
Income Statement
Sales 1,300,000 130,000

Earnings)
Subtotal 3,065,000 115,000
Less: Dividends (250,000)
Balance Sheet
Inventory 1,300,000 40,000
Plant Assets (net) 1,860,000 100,000
Investment in Poor 270,000
Goodwill
Total Assets 3,710,000 155,000
Total Liabilities 850,000 30,000
Noncontrolling Interest in Poor
Answer:
Analysis of Rich Noncontrolling
Poor’s imputed total market value $300,000 $270,000 $30,000
($270,000 /.90 = $300,000)
Less: Book value ($10,000 + $90,000 + 125,000
$130,000 - $70,000 - $35,000)
Rich ($125,000 x .90) 112,500
net assets:
Inventory ($60,000 - $40,000) 20,000 18,000 2,000
Plant Assets (net) 50,000 45,000 5,000
($150,000 - $100,000)
Rich ($105,000 x .90) 94,500
Consolidated
Rich Poor Debit Credit Statements
Income Statement
Sales 1,300,000 130,000 1,430,000
Cost of Goods Sold 470,000 70,000 540,000

Earnings)
Subtotal 3,065,000 115,000 3,065,000
Retained Earnings (to Balance Sheet) 2,815,000 115,000 115,000 0 2,815,000
Balance Sheet
Inventory 1,300,000 40,000 (1) 20,000 1,360,000
Plant Assets (net) 1,860,000 100,000 (1) 50,000 2,010,000
Investment in Poor 270,000 (1) 270,000 0
Goodwill (1) 105,000 105,000
Total Assets 3,710,000 155,000 3,770,000
Total Liabilities 850,000 30,000 880,000
Common Stock 45,000 10,000 (1) 10,000 45,000
Retained Earnings 2,815,000 115,000 (X) 115,000 0 2,815,000
Noncontrolling Interest in Poor (1) 30,000 30,000
300,000 300,000
Pelican Corporation acquired 80 percent of Shrimp Enterprises for $1,000,000 on
November 1. At that date Shrimp had the following book and market values:
Book Market
Inventory 360,000 450,000
Plant Assets (net) 980,000 1,200,000
Liabilities (700,000) (680,000)
Sales (1,350,000)
Prepare the worksheet elimination in journal entry form to consolidate Prince and Shrimp
at the acquisition date.
Answer:
Analysis of Pelican Noncontrolling
Shrimp’s imputed total market value $1,250,000 $1,000,000 $250,000
($1,000,000 /.80 = $1,250,000)
Less: Book value ($50,000 + $540,000 + 730,000
$1,350,000 - $800,000 - $410,000)
Pelican ($730,000 x .80) 584,000
net assets:
Inventory ($450,000 - $360,000) 90,000 72,000 18,000
Plant Assets (net) 220,000 176,000 44,000
($1,200,000 - $980,000)
Liabilities ($680,000 - $700,000) 20,000 16,000 4,000
Pelican ($190,000 x .80) 152,000
Common Stock 50,000
Preacquisition Earnings ($1,350,000 - $800,000 - 140,000
$410,000)
Inventory ($450,000 - $360,000) 90,000
Plant Assets ($1,200,000 - $980,000) 220,000
Liabilities ($680,000 - $700,000) 20,000
Goodwill 190,000
Investment in Shrimp Enterprises 1,000,000
170. (15 Points; 15 Points) moderate, moderate

Fantasia Corporation acquired 70 percent of Dumbo Enterprises for $210,000 on April 1.
At that date Dumbo had the following book and market values:
Book Market
Inventory 260,000 310,000
Liabilities (460,000) (460,000)
Sales (170,000)
Required:
a. Assuming that Fantasia paid cash for Dumbo, record the investment in Dumbo on
Fantasia’s financial records
b. Prepare the worksheet eliminations in journal entry form to consolidate Fantasia
and Dumbo at the acquisition date.
Answer:
Part a.
Analysis of Fantasia Noncontrolling
Dumbo’s imputed total market value $300,000 $210,000 $90,000
($210,000 /.70 = $300,000)
Less: Book value ($10,000 + $220,000 + 270,000
$170,000 - $90,000 - $40,000)
Fantasia ($270,000 x .70) 189,000
net assets:
Inventory ($310,000 - $260,000) 50,000 35,000 15,000
Plant Assets (net) 80,000 56,000 24,000
($480,000 - $400,000)
Total Negative Goodwill (100,000)
Fantasia ($100,000 x .70) (70,000)
Noncontrolling interest ($100,000 x .30) (30,000)
Investment in Dumbo 280,000

Extraordinary gain from acquisition of Dumbo 70,000
Cash 210,000
Part b.
Common Stock 10,000
Inventory ($310,000 - $260,000) 50,000
Plant Assets ($480,000 - $400,000) 80,000
Investment in Dumbo Enterprises 280,000
Extraordinary gain from acquisition of Dumbo - NCI 30,000
Worksheet Elimination #1a

Income to Noncontrolling Interest 30,000
171. (30 Points) difficult

Phoenix Corporation acquired 90 percent of El Paso Company for $810,000 on May 1.
At that date El Paso had the following book and market values:
Book Market
Inventory 340,000 420,000
Liabilities (500,000) (520,000)
Sales (410,000)
Complete the following consolidation worksheet assuming that Phoenix issued long-term
Consolidated
Phoenix El Paso Debit Credit Statements
Income Statement
Sales 1,650,000 410,000
Extraordinary gain from acquisition of El Paso 45,000

Consolidated Net Income
Income to Noncontrolling Interest
Earnings)
Subtotal 5,240,000 740,000
Balance Sheet
Inventory 1,280,000 340,000
Plant Assets (net) 3,660,000 850,000
Investment in El Paso 855,000
Total Assets 6,455,000 1,250,000
Noncontrolling Interest in El Paso

Total Liabilities and Stockholders’ Equity 6,455,000 1,250,000
Answer:
Analysis of Phoenix Noncontrolling
El Paso’s imputed total market value $900,000 $810,000 $90,000
($810,000 /.90 = $900,000)
Less: Book value ($10,000 + $680,000 + 750,000
$410,000 - $280,000 - $70,000)
Phoenix ($750,000 x .90) 675,000
net assets:
Inventory ($420,000 - $340,000) 80,000 72,000 8,000
Plant Assets(net) ($990,000 - $850,000) 140,000 126,000 14,000
Liabilities ($500,000 - $520,000) (20,000) (18,000) (2,000)
Phoenix ($50,000 x .90) (45,000)
Consolidated
Phoenix El Paso Debit Credit Statements
Income Statement
Sales 1,650,000 410,000 2,060,000
Extraordinary gain from acquisition of Dumbo 45,000 (1) 5,000 50,000
Cost of Goods Sold 710,000 280,000 990,000

Consolidated Net Income 645,000
Income to Noncontrolling Interest (1a) 5,000 5,000
Net Income (to Statement of Retained 640,000 60,000 65,000 5,000 640,000
Earnings)
Add: Net Income (from Income Statement) 640,000 60,000 (X) 65,000 (X) 5,000 640,000
Subtotal 5,240,000 740,000 5,240,000
Less: Dividends (250,000) (250,000)
Retained Earnings (to Balance Sheet) 4,990,000 740,000 745,000 5,000 4,990,000
Balance Sheet
Inventory 1,280,000 340,000 (1) 80,000 1,700,000
Plant Assets (net) 3,660,000 850,000 (1) 140,000 4,650,000
Investment in El Paso 855,000 (1) 855,000 0
Total Assets 6,455,000 1,250,000 7,070,000
Common Stock 50,000 10,000 (1) 10,000 50,000
Retained Earnings 4,990,000 740,000 (X) 745,000 (X) 5,000 4,990,000
Noncontrolling Interest in El Paso (1) 90,000 95,000
(1a) 5,000
Total Liabilities and Stockholders’ Equity 6,455,000 1,250,000 7,070,000
975,000 975,000
Peterson Corporation acquired 80 percent of Samuelson Enterprises for $480,000 on
October 1. At that date Samuelson had the following book and market values:
Book Market
Inventory 314,000 376,000
Liabilities (583,000) (583,000)
Sales (820,000)
Required:
a. Assuming that Peterson paid cash for Samuelson, record the investment in
Samuelson on Peterson’s financial records
b. Prepare the worksheet eliminations in journal entry form to consolidate Peterson
and Samuelson at the acquisition date.
Answer:
Part a.
Analysis of Peterson Noncontrolling
Samuelson’s imputed total market value $600,000 $480,000 $120,000
($480,000 /.80 = $600,000)
Less: Book value ($50,000 + $414,000 + 525,000
$820,000 - $506,000 - $253,000)
Peterson ($525,000 x .80) 420,000
net assets:
Inventory ($376,000 - $314,000) 62,000 49,600 12,400
Plant Assets (net) ($812,000 - $726,000) 86,000 68,800 17,200
Peterson ($73,000 x .80) (58,400)
Investment in Samuelson 538,400

Extraordinary gain from acquisition of Samuelson 58,400
Cash 480,000
Part b.
Common Stock 50,000
Inventory ($376,000 - $314,000) 62,000
Plant Assets ($812,000 - $726,000) 86,000
Investment in Samuelson Enterprises 538,400
Extraordinary gain from acquisition of Samuelson - NCI 14,600


Sheldon Company purchased 100 percent of Felix Corporation on the balance sheet date
for book value. At that date, the following amounts exist for Sheldon and Felix.
Sheldon Felix
Cash $60,000 $60,000 $20,000 $20,000
Inventory 150,000 150,000 100,000 100,000
Land 80,000 80,000 50,000 50,000
Equipment 300,000 210,000 230,000 160,000
Accum. Depreciation (90,000) (70,000)
Liabilities (110,000) (110,000) (140,000) (140,000)
Common Stock (10,000) (30,000)
Answer:
Common Stock 30,000
Accumulated Depreciation 70,000
Equipment ($160,000 - $230,000) 70,000
Investment in Felix Corporation 190,000

Hitex Corporation purchased 100 percent of Lotex Company on the balance sheet date
for $900,000. At that date, the following book and market values exist for Lotex.
Lotex
Book Market
Cash $100,000 $100,000
Inventory 210,000 280,000
Land 90,000 200,000
Equipment 530,000 380,000
Accumulated Depreciation (280,000)
Liabilities (140,000) (140,000)
Answer:
Inventory ($280,000 - $210,000) 70,000
Land ($200,000 - $90,000) 110,000
Equipment ($380,000 - $530,000) (150,000)
Accumulated Depreciation 280,000 310,000
Goodwill 80,000
Common Stock 20,000
Inventory 70,000
Land 110,000
Goodwill 80,000
Equipment 150,000
Investment in Lotex Company 900,000

Mega Corporation purchased 100 percent of Mini Company’s stock for $200,000. At
that date, Mini had the following book and market values:
Book Market
Inventory 60,000 90,000
Plant Assets 380,000 340,000
Liabilities (180,000) (180,000)
a. Prepare the journal entry on Mega’s financial records to recognize the acquisition
of Mini.
b. Prepare the worksheet elimination in journal entry form to consolidate Mega and
Mini.
Answer:
Part a.
Investment in Mini ($20,000 + $90,000 + $340,000 - 270,000
$180,000)
Extraordinary gain from acquisition of Mini 70,000
Cash 200,000
Part b.
Common Stock 10,000
Inventory ($90,000 - $60,000) 30,000
Plant Assets ($340,000 - $380,000) 40,000
Investment in Mini 270,000

Perfect Corporation purchased 100 percent of Second Company’s stock on April 1 for
$700,000. At that date, Second had the following book and market values:
Book Market
Inventory 240,000 470,000
Plant Assets 1,000,000 630,000
Liabilities (420,000) (420,000)
Sales (650,000)
a. Prepare the journal entry on Perfect’s financial records to recognize the

acquisition of Second.
b. Prepare the worksheet elimination in journal entry form to consolidate Perfect
and Second.
Answer:
Part a.
Less: Book value acquired ($10,000 + $280,000 + 420,000
$650,000 - $300,000 - $60,000 - $160,000)
Inventory ($470,000 - $240,000) 230,000
Plant Assets ($630,000 - $1,000,000) (370,000)
Accumulated Depreciation 450,000 310,000
Investment in Second ($50,000 + $470,000 + 730,000
$630,000 - $420,000)
Extraordinary gain from acquisition of Second 30,000
Cash 700,000
Part b.
Common Stock 10,000
Preacquisition Earnings ($650,000 - $300,000 - 130,000
$60,000 - $160,000)
Inventory ($470,000 - $240,000) 230,000
Plant Assets ($630,000 - $1,000,000) 370,000
Investment in Second 730,000

Angelon Corporation purchased 70 percent of Bristol Company on May 1 for $392,000.
At that date, the following book and market values exist for Bristol.
Book Market
Cash $65,000 $65,000
Inventory 175,000 175,000
Land 130,000 130,000
Plant Assets 750,000 430,000
Liabilities (240,000) (240,000)
Sales (320,000)
Answer:
Analysis of Angelon Noncontrolling
Bristol’s imputed total market value $560,000 $392,000 $168,000
($392,000 /.70 = $560,000)
Less: Book value ($10,000 + $490,000 + 560,000
$320,000 - $190,000 - $70,000)
Angelon ($560,000 x .70) 392,000
net assets:
Plant Assets ($430,000 - $750,000) (320,000) (224,000) (96,000)
Accumulated Depreciation 320,000 224,000 96,000
Common Stock 10,000
Plant Assets ($430,000 - $750,000) 320,000
Investment in Bristol Company 392,000

Fish Corporation acquired 90 percent of Porpoise Company for $540,000 on October 1.
At that date Porpoise had the following book and market values:
Book Market
Inventory 260,000 310,000
Plant Assets 420,000 500,000
Liabilities (300,000) (320,000)
Sales (610,000)
Complete the following consolidation worksheet assuming that Fish issued long-term
Consolidated
Fish Porpoise Debit Credit Statements
Income Statement
Sales 1,520,000 610,000

Earnings)
Subtotal 4,040,000 250,000
Balance Sheet
Inventory 1,280,000 260,000
Plant Assets (net) 4,360,000 420,000
Accumulated Depreciation ($260,000) ($150,000)
Investment in Porpoise 540,000
Goodwill
Total Assets 6,050,000 560,000
Noncontrolling Interest in Poor
Answer:
Analysis of Fish Noncontrolling
Porpoise’s imputed total market value $600,000 $540,000 $60,000
($540,000 /.90 = $600,000)
Less: Book value ($10,000 + $140,000 + 260,000
$610,000 - $380,000 - $120,000)
Fish ($260,000 x .90) 234,000
net assets:
Inventory ($310,000 - $260,000) 50,000 45,000 5,000
Plant Assets ($500,000 - $420,000) 80,000 72,000 8,000
Liabilities ($320,000 - $300,000) (20,000) (18,000) (2,000)
Fish ($80,000 x .90) 72,000
Consolidated
Fish Porpoise Debit Credit Statements
Income Statement
Sales 1,520,000 610,000 2,130,000
Cost of Goods Sold 980,000 380,000 1,360,000

Earnings)
Subtotal 4,040,000 250,000 4,040,000
Less: Dividends (100,000) (100,000)
Retained Earnings (to Balance Sheet) 3,940,000 250,000 250,000 0 3,940,000
Balance Sheet
Inventory 1,280,000 260,000 (1) 50,000 1,590,000
Plant Assets (net) 4,360,000 420,000 (1) 80,000 4,860,000
Accumulated Depreciation ($260,000) ($150,000) (1) 150,000 (260,000)
Investment in Porpoise 540,000 (1) 540,000 0
Goodwill (1) 80,000 80,000
Total Assets 6,050,000 560,000 6,430,000
Common Stock 30,000 10,000 (1) 10,000 30,000
Retained Earnings 3,940,000 250,000 (X) 250,000 (X) 0 3,940,000
Noncontrolling Interest in Poor (1) 60,000 60,000
620,000 620,000
Pepper Corporation acquired 70 percent of Spice Enterprises for $280,000 on September
1. At that date Spice had the following book and market values:
Book Market
Inventory 240,000 300,000
Plant Assets 850,000 680,000
Liabilities (560,000) (530,000)
Sales (620,000)
Required:
a. Assuming that Pepper paid cash for Spice, record the investment in Spice on
Pepper’s financial records
b. Prepare the worksheet eliminations in journal entry form to consolidate Pepper
and Spice at the acquisition date.
Answer:
Part a.
Analysis of Pepper Noncontrolling
Spice’s imputed total market value $400,000 $280,000 $120,000
($280,000 /.70 = $400,000)
Less: Book value ($10,000 + $190,000 +
$620,000 - $410,000 - $160,000) 250,000
Pepper ($250,000 x .70) 175,000
net assets:
Inventory ($300,000 - $240,000) 60,000 42,000 18,000
Plant Assets ($680,000 - $850,000) (170,000) (119,000) (51,000)
Liabilities ($530,000 - $560,000) 30,000 21,000 9,000
Pepper ($90,000 x .70) (63,000)
Investment in Spice 343,000

Extraordinary gain from acquisition of Spice
63,000
Cash 280,000
Part b.
Common Stock 10,000
Inventory ($300,000 - $240,000) 60,000
Liabilities ($530,000 - $560,000) 30,000
Plant Assets ($680,000 - $850,000) 170,000
Investment in Spice Enterprises 343,000
Extraordinary gain from acquisition of Spice - NCI
27,000

Short Answer Questions

180. Erin is the sole shareholder of a local corporation that has purchased several other small
companies in the area. She has approached one bank about a significant loan for
expansion and the loan officer told her that she has to have consolidated financial
statements prepared before the loan is evaluated. Erin is having lunch with you when she
comments that it will be difficult to understand anything about the main business because
everything is put on one set of financial statements. She asks why they don’t just require
information about the main company. After all, we use the equity method to account for
all of the companies we have purchased. How do you respond?
Answer: The equity method omits detailed reporting of significant revenue and expenses
from the income statement, significant assets and liabilities from the balance sheet, and
significant receipts and payments from the statement of cash flows. The creditor is
interested in the entire company, not just the main business, so the equity method
information is not sufficiently detailed for decision making.
181. Samantha is a currently taking her first finance course. One assignment given is to
retrieve the financial statements of a fortune 500 company, compute selected ratios, and
write up a comparison to industry averages. Samantha knows you are an accounting
major and she comes to you with a concern. She states, “I am having a lot of trouble
make a comparison with industry averages because this company does business in a
number of industries. Why do the accounting rules require all of these companies to be
combined into one set of financial statements?” How do you respond?
Answer: The information would be a lot less useful if the financial statements only
presented information about a part of the company. The investors and creditors are
interested in the entire consolidated entity, not just the parent company.
182. Sam is the owner of a local corporation that just completed buying another local
corporation. This is the company’s first acquisition and Sam does not understand the
concept of consolidated financial statements. You finish explaining how the investment
account is recorded on the parent’s financial records and then begin discussing the
consolidated financial statements. Sam comments that it does not make sense to remove
the investment that was just recorded. Furthermore, he likes disclosing the investment
account a lot better than the subsidiary’s individual assets and liabilities because he
would rather not show the liabilities of the company just purchased. Prepare a short note
explaining to Sam the reason for eliminating the investment account.
Answer: Presenting the subsidiary’s individual assets and liabilities rather than the
investment account provides more detailed and useful information regarding the total
company’s financial position. The break-down of current and long-term assets and
liabilities is more useful than simply disclosing the net adjustment (investment account)
in the long-term assets.
183. Marilyn is a new accountant in a local corporation. The controller just started preparing
the consolidation worksheet and Marilyn is allowed to view the process to help her
understand the business. She asks why the stockholders’ equity of another company is
presented in one of the columns and why it is not on the consolidated balance sheet.
How do you respond?
Answer: The stockholders’ equity of the other company pertains to a company acquired.
The stockholders’ equity is presented as part of the subsidiary’s trial balance. It is not
included in the consolidated balance sheet because the consolidated financial statements
are prepared for the parent company stockholders and the stockholders’ equity of the
subsidiary is not relevant to the parent company stockholders.
184. As the financial consultant for Maxwell Inc., a local corporation, you are the person who
takes information to the bank to attain financing when needed. Recently the company
has been discussing a business combination with another local company, Major Accent
Corporation. The transaction would result in Major Accent becoming the subsidiary.
You have presented pro-forma consolidated financial statements to the loan officer. The
loan officer studies the statements for several days and calls to get more information.
The loan officer is familiar with both companies involved in the proposed transaction
because both companies are located in the same small town and she has approved loans
for both companies for a number of years. Her concern is that the asset values on the
most recent balance sheets of both companies do not sum to the asset values in the pro-
forma consolidated financial statements and she is confused about this observed
discrepancy. Prepare an explanation to the loan officer to clarify her misunderstanding.
Answer: The consolidated financial statements include the book values of Maxwell and
the market values of Major’s assets and liabilities. The market values of Major’s assets
and liabilities are included because Maxwell is purchasing Major Accent and the
purchase price of the assets and liabilities become the historical cost to the consolidated
entity. It is also possible that there are intercompany payables and receivables.
185. Jeremy and Shawn are in a training session for controller staff at a local corporation.
They are having a difference of opinion with regard to the recognition of purchase
differentials at the date of acquisition. Jeremy says that purchase differentials can only
be assigned to assets and liabilities that already exist. Sam, on the other hand, believes
that purchase differentials can result in the creation of new accounts on the consolidated
financial statements. They have asked for you to comment on this issue. How do you
respond?
Answer: Purchase differentials are the difference between the market value and the book
value of individual assets and liabilities. The fact that an asset or liability has a $0 book
value does not mean that it cannot have a market value. As a result, it is possible for the
recognition of a purchase differential to create an account on the consolidated financial
statements that did not exist previously.
186. You are working on a project for the controller involving pro-forma financial information
based on an acquisition of a subsidiary at an amount that will result in negative goodwill.
A new staff member is helping on this project. She comments that something does not
look correct because the dollar amount of the investment account created is not the same
as the amount given up to acquire the subsidiary. She is also confused about the
existence of an extraordinary gain in the acquisition journal entry. How do you explain
the reason for these two items?
Answer: The investment account is established at the market value of the underlying
assets and liabilities because that is their fair value. Recording them at a different
amount would result in a misstatement of their value. The extraordinary gain is
recognized because the amount paid for the assets and liabilities is less than their market
value.
187. The board of directors of the company where you are assistant controller is considering
making a bid to acquire a competitor. As a result, your supervisor has prepared pro-
forma date of acquisition financial statements. The board is using this information to
help it understand how the acquisition will impact the company’s financial statements.
One board member has been listening to the controller’s presentation and discussion of
the pro-forma statements closely and asks the following question: "Why does the
consolidated net income at the date of acquisition not equal the sum of the net incomes of
the two companies?" How do you respond to this board member’s question?
Answer: The pro-forma statements are based on the assumption that the acquisition takes
place during the fiscal year. As a result, the company being acquired had income prior to
the acquisition. This income of the subsidiary is part of the subsidiary’s retained earnings
at the date of acquisition it just has not been closed to the retained earnings account. All
of the earnings of the subsidiary prior to the date of acquisition are part of the
subsidiary’s equity, not part of consolidated net income. After the date of acquisition, the
subsidiary’s net income will be part of consolidated net income.
188. Explain preacquisition earnings.

Answer: Preacquisition earnings is the net income of the subsidiary from the beginning
of the reporting period to the acquisition date. It represents equity of the subsidiary that
has not yet been closed to retained earnings.
189. You are presenting at a seminar for a group of individual investors. Some of these
investors would like to acquire stock in companies located outside of the U.S. One
investor asks a question, “I have been investigating several companies. One thing each
mentions is particularly confusing. Management states that the company is using a
particular consolidation concept to combine the various companies. Can you tell me in a
simple statement, how the consolidation concepts differ?”
Answer: The differences that exist among the consolidation concepts pertain to the
recognition of the noncontrolling interest.
190. What is the view of the consolidated financial statements by supporters of the
proportionate consolidation concept and how does this view impact the preparation of the
consolidated financial statements?
Answer: The proponents of the proportionate consolidation concept view the

consolidated financial statements as being prepared for the stockholders of the parent
company only. As a result, the noncontrolling interest portion of the subsidiary should
not be recognized because it is not owned by the parent company. Thus the
noncontrolling interest ownership percentage of the assets, liabilities, revenues, and
expenses are eliminated when preparing the consolidated financial statements.
191. What is the theoretical basis underlying the parent company concept of consolidation for
recognizing the noncontrolling interest’s ownership percentage of subsidiary assets and
liabilities at book value while the parent’s ownership percentage is recognized at market
value?
Answer: The revaluation of the parent’s ownership percentage is based on the purchase
transaction that resulted in the parent-subsidiary relationship. With regard to the
noncontrolling interest’s ownership percentage, there is no verifiable transaction so the
assets and liabilities with regard to the noncontrolling interest should not be revalued.
192. Why do the proponents of the economic unit concept of consolidation believe that the
entire market value of a subsidiary’s assets and liabilities should be included in the
consolidated financial statements?
Answer: Proponents of the economic unit concept would contend that the parent
company management controls the entire entity regardless of the percentage owned. As a
result, the full market value of the subsidiary’s assets and liabilities should be included in
193. Jerry and you are board members for a local corporation. This company is in the process
of acquiring an 80 percent ownership in its first subsidiary. The corporation’s controller
has just presented the pro-forma financial statements assuming a mid-year acquisition.
Jerry has noticed that the income statement includes an item that he has not seen before,
preacquisition earnings. Jerry asks you if you know why this new item is on the income
statement. How do you respond?
Answer: The preacquisition earnings represent the income of the subsidiary before it was
acquired. The earnings of the company are completely eliminated, regardless of the
ownership percentage, because it is part of stockholders’ equity. As a result, it must be
eliminated in the same manner as common stock and retained earnings.
194. Scott Harrison is the CEO of a local corporation. The company is planning to acquire
control of another local corporation although it will not have 100 percent ownership.
Scott is discussing the acquisition with the CFO. Scott is concerned that the corporation
will be required to recognize 100 percent of the acquired company’s goodwill on the
consolidated balance sheet. Scott does not understand how all of the goodwill can be
recognized when less than 100 percent of the subsidiary’s stock is being acquired.
Prepare a short note to Scott commenting on how the full goodwill can be determined.
Answer: The full goodwill of the subsidiary can be estimated from the amount paid for
the ownership acquired. The purchase price provides the market value measure of the
parent’s ownership in the company. This can be extrapolated to the 100 imputed market
value of the company by dividing the parent’s investment by the parent’s ownership
interest in the subsidiary. The imputed value can be compared to the market value of the
identifiable net assets to determine the subsidiary’s full goodwill.
195. Sylvia is a new accountant in the controller’s office. Part of her responsibilities is to
assist with the preparation of the consolidated financial statements. The company
recently acquired less than 100 percent ownership in a new subsidiary and Sylvia is
reviewing acquisition date information pertaining to this acquisition. She comes to you
with a question regarding the investment account. Sylvia indicates that the investment
account initially recorded was for an amount different than the purchase price. Prepare a
short note to Sylvia commenting on the reason the investment account might be recorded
at an amount different that the amount paid for the investment.
Answer: If negative goodwill exists as a result of the acquisition, an extraordinary gain

must be recorded at the acquisition date. The result of recording the extraordinary gain is
that the investment account will be created at an amount greater than the price paid for
the subsidiary’s stock. The investment account is recorded at the market value of the
parent’s ownership interest in the subsidiary’s net assets.
196. Fred is a new staff accountant in the accounting firm. He is involved in his first audit of
a corporation that must prepare consolidated financial statements. Fred is reviewing
information pertaining to a recent 80 percent acquisition. He notices that the parent
recorded an extraordinary gain from the acquisition of the subsidiary at the acquisition
date. He also notices that the amount of the extraordinary gain on the consolidated
income statement is not the same dollar amount as in the journal entry on the parent’s
financial records. Fred brings this information to you and asks why the amount of the
extraordinary gain would differ between the journal entry and the consolidated income
statement. How do you respond?
Answer: The journal entry recognizes the extraordinary gain with respect to the parent’s
ownership interest in the negative goodwill. Under the economic unit concept with full
goodwill, the entire amount of the negative goodwill must be recognized so the
noncontrolling interest’s portion of the extraordinary gain must also be placed on the
consolidated income statement. The extraordinary gain with respect to the
noncontrolling interest is recognized via the consolidation worksheet eliminations.

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CHAPTER 2

CONSOLIDATION AT DATE OF ACQUISITION

21. Goodwill is only separately recognized on the consolidated financial statements.

62. Push-down accounting is required to be applied any time a subsidiary is acquired.

64. When push-down accounting is applied, an adjustment to stockholders’ equity is

True-False Statement Solutions

Conceptual Multiple Choice Questions

68. What subsidiaries are included in the consolidated financial statements?

Conceptual Multiple Choice Question Difficulty and Solutions

Computational Multiple Choice Questions

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

What is the total purchase differential?

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

Book Value Market Value

What amount of extraordinary gain is recognized by Southern at the acquisition date?

Book Value Market Value

What amount of purchase differential is recognized on the consolidated balance sheet

Book Value Market Value

What balance exists in the Investment in Navajo account on Algonquin’s financial

Book Value Market Value

What amount of extraordinary gain is recognized by Algonquin at the acquisition date?

Book Value Market Value

What amount of purchase differential is recognized on the consolidated balance sheet

Book Value Market Value

Liabilities $600,000 600,000

What amount of preacquisition earnings is eliminated in the acquisition date worksheet

Book Value Market Value

Liabilities $600,000 600,000

What amount of retained earnings is eliminated in the acquisition date worksheet

Book Value Market Value

Liabilities $600,000 600,000

What amount of goodwill is created in the acquisition date worksheet elimination?

Book Value Market Value

What amount of preacquisition earnings is eliminated in the acquisition date worksheet

Book Value Market Value

Liabilities $350,000 350,000

What amount of retained earnings is eliminated in the acquisition date worksheet

Book Value Market Value

Liabilities $350,000 350,000

What amount of goodwill is created in the acquisition date worksheet elimination?

Book Value Market Value

Book Value Market Value

What is the amount of preacquisition earnings recognized on the acquisition date

Book Value Market Value

What is the imputed market value of Felix?

Book Value Market Value