ACCT 450 MC Test 2 TEST BANK Practice
Questions with correct answers Chamberlain
College of Nursing
A parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in
the
next year. In a step acquisition of this type, the original 32 percent acquisition should be
a. Maintained at its initial value.
b. Adjusted to its equity method balance at the date of the second acquisition.
c. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss
recorded.
d. Adjusted to fair value at the date of the second acquisition with a resulting adjustment to
additional
,paid-in capital.
Ans c. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss
recorded.
QUIZ In computing the noncontrolling interest's share of consolidated net income, how should
the subsidiary's
net income be adjusted for intra-entity transfers?
a. The subsidiary's reported net income is adjusted for the impact of upstream transfers prior to
computing the noncontrolling interest's allocation.
b. The subsidiary's reported net income is adjusted for the impact of all transfers prior to
computing
the noncontrolling interest's allocation.
c. The subsidiary's reported net income is not adjusted for the impact of transfers prior to
computing
the noncontrolling interest's allocation.
d. The subsidiary's reported net income is adjusted for the impact of downstream transfers prior
to
, computing the noncontrolling interest's allocation.
Ans a. The subsidiary's reported net income is adjusted for the impact of upstream transfers
prior to
computing the noncontrolling interest's allocation.
QUIZ Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago.
During 2017,
Skybox sold inventory costing $160,000 to Parkette for $200,000. A total of 18 percent of this
inventory
was not sold to outsiders until 2018. During 2018, Skybox sold inventory costing $297,500 to
Parkette for $350,000. A total of 30 percent of this inventory was not sold to outsiders until
2019. In
2018, Parkette reported cost of goods sold of $607,500 while Skybox reported $450,000. What
is the
consolidated cost of goods sold in 2018?
a. $698,950
b. $720,000
c. $1,066,050
Questions with correct answers Chamberlain
College of Nursing
A parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in
the
next year. In a step acquisition of this type, the original 32 percent acquisition should be
a. Maintained at its initial value.
b. Adjusted to its equity method balance at the date of the second acquisition.
c. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss
recorded.
d. Adjusted to fair value at the date of the second acquisition with a resulting adjustment to
additional
,paid-in capital.
Ans c. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss
recorded.
QUIZ In computing the noncontrolling interest's share of consolidated net income, how should
the subsidiary's
net income be adjusted for intra-entity transfers?
a. The subsidiary's reported net income is adjusted for the impact of upstream transfers prior to
computing the noncontrolling interest's allocation.
b. The subsidiary's reported net income is adjusted for the impact of all transfers prior to
computing
the noncontrolling interest's allocation.
c. The subsidiary's reported net income is not adjusted for the impact of transfers prior to
computing
the noncontrolling interest's allocation.
d. The subsidiary's reported net income is adjusted for the impact of downstream transfers prior
to
, computing the noncontrolling interest's allocation.
Ans a. The subsidiary's reported net income is adjusted for the impact of upstream transfers
prior to
computing the noncontrolling interest's allocation.
QUIZ Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago.
During 2017,
Skybox sold inventory costing $160,000 to Parkette for $200,000. A total of 18 percent of this
inventory
was not sold to outsiders until 2018. During 2018, Skybox sold inventory costing $297,500 to
Parkette for $350,000. A total of 30 percent of this inventory was not sold to outsiders until
2019. In
2018, Parkette reported cost of goods sold of $607,500 while Skybox reported $450,000. What
is the
consolidated cost of goods sold in 2018?
a. $698,950
b. $720,000
c. $1,066,050
