Advanced Accounting Chapter 7 exam 100% solved

Advanced Accounting Chapter 7 exam 100% solved 1. Buckette Co. owned 60% of Shuvelle Corp. and 40% of Tayle Corp., and Shuvelle owned 35% of Tayle. When Buckette prepared consolidated financial statements, it should include A. Shuvelle but not Tayle. B. Tayle but not Shuvelle. C. either Shuvelle or Tayle. D. Shuvelle and Tayle. E. neither Shuvelle nor Tayle. - ANSWERD 2. Buckette Co. owned 60% of Shuvelle Corp. and 40% of Tayle Corp., and Shuvelle owned 35% of Tayle. What is this pattern of ownership called? A. pyramid ownership. B. a connecting affiliation. C. mutual ownership. D. an indirect affiliation. E. an affiliated group. - ANSWERB 3. Buckette Co. owned 60% of Shuvelle Corp. and 40% of Tayle Corp., and Shuvelle owned 35% of Tayle. What percentage of Tayle's income is attributed to Buckette's ownership interest? A. 100%. B. 75%. C. 61%. D. 40%. E. 74%. - ANSWERC 40% + 21% [60% × 35%] = 61% 4. D Corp. had investments, direct and indirect, in several subsidiaries: • E Co. is a domestic firm in which D Corp. owned a 90% interest • F Co. is a domestic firm in which D Corp. owned 60% and E Co. owned 30% • G Co. is a domestic firm wholly owned by E Co. • H Co. is a foreign subsidiary in which D Corp. owned a 90% interest • I Co. is a domestic firm in which D Corp. owned 50% and G Co. owned 25% Which of these subsidiaries may be included in a consolidated income tax return? A. E, F, G, H, and I. B. E, G, H, and I. C. E and F. D. E, F, G, and H. E. E, F, and G. - ANSWERE 5. Evanston Co. owned 60% of Montgomery Corp. Montgomery owned 75% of Noir Inc., and Noir owned 15% of Montgomery. This pattern of ownership would be called A. mutual ownership. B. direct control. C. indirect control. D. an affiliated group. E. a connecting affiliation. - ANSWERA 6. In a tax-free business combination, A. the income tax basis for acquired assets and liabilities is adjusted to current fair value. B. any goodwill created by the combination may be amortized in calculating taxable income. C. the subsidiary's assets and liabilities are assigned an income tax basis of zero dollars, so that they will have no future income tax consequences. D. any goodwill created by the combination must be deducted in total in calculating taxable income. E. the subsidiary's cost basis for assets are retained for income tax calculations. - ANSWERE