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Question 1 .0 out of 2 points On January 1 2010, Paulson Company purchased 75% of Shields Corporation for $50 0,000.

Shields stockholders equity on that date was equal to $600,000 and Shields had 60,000 shares issued and outstanding on that date. Shields Corporation sold an additional 15,000 shares of previously unissued stock on December 31, 2010. Assume that Paulson Company purchased the additional shares what would be their current percentage ownership on December 31, 2010? Answer Selected Answer: 92% Correct Answer: 80% . Question 2 .2 out of 2 points On January 1, 2006, Perk Company purchased 16,000 of the 20,000 outstanding com mon shares of Self Company for $760,000. On January 1, 2010, Perk Company sold 2 ,000 of its shares of Self Company on the open market for $90 per share. Self Co mpanys stockholders equity on January 1, 2006, and January 1, 2010, was as follows : 1/1/06 1/1/10 Common stock, $10 par value $200,000 $ 200,000 Other contributed capital 200,000 200,000 Retained earnings 400,000 700,000 $800,000 $1,100,000

The difference between implied and book value is assigned to Self Companys land. Assuming no other equity transactions, the amount of the difference between impl ied and book value that would be added to land on a work paper for the preparati on of consolidated statements on December 31, 2010 would be Answer Selected Answer: $105,000. Correct Answer: $105,000. . Question 3 .2 out of 2 points P Corporation purchased an 80% interest in S Corporation on January 1, 2010, at book value for $300,000. Ss net income for 2010 was $90,000 and no dividends wer e declared. On May 1, 2010, P reduced its interest in S by selling a 20% interes t, or one-fourth of its investment for $90,000. What will be the Consolidated Ga in on Sale and Subsidiary Income Sold for 2010? Consolidated Gain on Sale Subsidiary Income Sold

a. $9,000 $6,000 b. $9,000 $15,000 c. $15,000 $6,000 d. $15,000 $15,000 Answer Selected Answer: Correct Answer:

a a

. Question 4 .2 out of 2 points On January 1, 2006, Parent Company purchased 32,000 of the 40,000 outstanding c ommon shares of Sims Company for $1,520,000. On January 1, 2010, Parent Company sold 4,000 of its shares of Sims Company on the open market for $90 per share. S ims Companys stockholders equity on January 1, 2006, and January 1, 2010, was as f ollows: 1/1/06 1/1/10 Common stock, $10 par value $ 400,000 $ 400,000 Other contributed capital 400,000 400,000 Retained earnings 800,000 1,400,000 $1,600,000 $2,200,000

The difference between implied and book value is assigned to Sims Companys land. The amount of the gain on sale of the 4,000 shares that should be recorded on th e books of Parent Company is Answer Selected Answer: $170,000. Correct Answer: $170,000. . Question 5 .2 out of 2 points The purchase by a subsidiary of some of its shares from the noncontrolling stoc kholders results in an increase in the parents percentage interest in the subsidi

ary. The parent companys share of the subsidiarys net assets will increase if the shares are purchased: Answer Selected Answer: at a price below book value. Correct Answer: at a price below book value. . Question 6 .0 out of 2 points The purchase by a subsidiary of some of its shares from noncontrolling stockhol ders results in the parent companys share of the subsidiarys net assets Answer Selected Answer: decreasing. Correct Answer: increasing, decreasing, or remaining unchanged. . Question 7 .0 out of 2 points On January 1, 2010, P Corporation purchased 75% of S Corporation for $500,000. Ss stockholders equity on that date was equal to $600,000 and S had 40,000 shares issued and outstanding on that date. S Corporation sold an additional 8,000 shar es of previously unissued stock on December 31, 2010. Assume S sold the 8,000 shares to outside interests, Ps percent ownership would b e: Answer Selected Answer: 75% Correct Answer: 62 1/2% . Question 8 .0 out of 2 points P Corporation purchased an 80% interest in S Corporation on January 1, 2010, at book value for $300,000. Ss net income for 2010 was $90,000 and no dividends wer e declared. On May 1, 2010, P reduced its interest in S by selling a 20% interes t, or one-fourth of its investment for $90,000. What would be the balance in the Investment of S Corporation account on December 31, 2010? Answer Selected Answer: $300,000. Correct Answer: $279,000. . Question 9 .2 out of 2 points The computation of noncontrolling interest in net assets is made by multiplying the noncontrolling interest percentage at the Answer Selected Answer: end of the year times subsidiary stockholders equity amounts. Correct Answer: end of the year times subsidiary stockholders equity amounts.

. Question 10 .2 out of 2 points When the parent company sells a portion of its investment in a subsidiary, the workpaper entry to adjust for the current years income sold to noncontrolling sto ckholders includes a Answer Selected Answer: credit to Subsidiary Income Sold. Correct Answer: credit to Subsidiary Income Sold. . Question 11 .0 out of 2 points Polk Company owned 24,000 of the 30,000 outstanding common shares of Sloan Comp any on January 1, 2010. Polks shares were purchased at book value when the fair v

alues of Sloans assets and liabilities were equal to their book values. The stock holders equity of Sloan Company on January 1, 2010, consisted of the following:Co mmon stock, $15 par value $ 450,000 Other contributed capital 337,500 Retained earnings 712,500 Total $1,500,000

Sloan Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2010. If all 7,500 shares were sold to noncontrolling stockholders, t he workpaper adjustment needed each time a workpaper is prepared should increase (decrease) the Investment in Sloan Company by Answer Selected Answer: ($112,500). Correct Answer: $192,000. . Question 12 .2 out of 2 points Polk Company owned 24,000 of the 30,000 outstanding common shares of Sloan Comp any on January 1, 2010. Polks shares were purchased at book value when the fair v alues of Sloans assets and liabilities were equal to their book values. The stock holders equity of Sloan Company on January 1, 2010, consisted of the following: Common stock, $15 par value $ 450,000 Other contributed capital 337,500 Retained earnings 712,500 Total $1,500,000 Sloan Company sold 7,500 additional shares of common stock for $90 per share on January 2, 2010. If Polk Company purchased all 7,500 shares, the book entry to r ecord the purchase should increase the Investment in Sloan Company account by Answer Selected Answer: $675,000. Correct Answer: $675,000. . Question 13 .0 out of 2 points If a subsidiary issues new shares of its stock to noncontrolling stockholders, the book value of the parents interest in the subsidiary may Answer Selected Answer: decrease. Correct Answer: increase, decrease, or remain the same. . Question 14 .0 out of 2 points On January 1, 2010, P Corporation purchased 75% of S Corporation for $500,000. Ss stockholders equity on that date was equal to $600,000 and S had 40,000 shares issued and outstanding on that date. S Corporation sold an additional 8,000 shar es of previously unissued stock on December 31, 2010. Assume that P Corporation purchased the additional shares what would be their cu rrent percentage ownership on December 31, 2010?

Answer Selected Answer: Correct Answer:

100% 79 1/6%

. Question 15 .2 out of 2 points On January 1, 2006, Perk Company purchased 16,000 of the 20,000 outstanding com mon shares of Self Company for $760,000. On January 1, 2010, Perk Company sold 2 ,000 of its shares of Self Company on the open market for $90 per share. Self Co mpanys stockholders equity on January 1, 2006, and January 1, 2010, was as follows : 1/1/06 1/1/10 Common stock, $10 par value $200,000 $ 200,000 Other contributed capital 200,000 200,000 Retained earnings 400,000 700,000 $800,000 $1,100,000

The difference between implied and book value is assigned to Self Companys land. As a result of the sale, Perk Companys Investment in Self account should be credi ted for Answer Selected Answer: $95,000. Correct Answer: $95,000. . Question 16 .0 out of 2 points Which of the following items is not a specified priority for unsecured creditor s in a bankruptcy petition? Answer Selected Answer: Unsecured claims of governmental units for unpaid taxes. Correct Answer: Unsecured claims on credit card charges that do not exceed $3 ,000. . Question 17 .2 out of 2 points The following information pertains to the transfer of real estate in regards to a troubled debt restructuring by Drier Co. to Cole Co. in full settlement of Driers liability to Cole: Carrying amount of liability settled $375,000 Carrying amount of real estate transferred $250,000

Fair value of real estate transferred $275,000

What amount should Drier report as ordinary gain (loss) on transfer of real esta te? Answer Selected Answer: $25,000. Correct Answer: $25,000. . Question 18 .2 out of 2 points The following information pertains to the transfer of real estate in regards to a troubled debt restructuring by Nen Co. to Baker Co. in full settlement of Nens liability to Baker: Carrying amount of liability settled $450,000 Carrying amount of real estate transferred $300,000 Fair value of real estate transferred $330,000

What amount should Nen report as ordinary gain (loss) on transfer of real estate ? Answer Selected Answer: $30,000. Correct Answer: $30,000. . Question 19 .2 out of 2 points When a secured claim is not fully settled by the selling of the underlying coll ateral, the remaining portion: Answer Selected Answer: is classified as an unsecured nonpriority claim. Correct Answer: is classified as an unsecured nonpriority claim. . Question 20 .0 out of 2 points Dooley Corporation was forced into bankruptcy and is in the process of liquidat ing assets and paying claims. Unsecured claims will be paid at the rate of thirt y cents on the dollar. Cerner holds a note receivable from Dooley for $90,000 co llateralized by an asset with a book value of $60,000 and a liquidation value of $30,000. The amount to be realized by Cerner on this note is: Answer Selected Answer: $60,000. Correct Answer: $48,000. . Question 21 .2 out of 2 points When fresh-start reporting is used according to Statement of Position (SOP) 907, the implication is that a new firm exists. Which of the following statements is not correct about fresh-start accounting? Answer Selected Answer: The fair value of the assets must be less than the post liab ilities and allowed claims.

Correct Answer: The fair value of the assets must be less than the post liabi lities and allowed claims. . Question 22 .2 out of 2 points Layne Corporation entered into a troubled debt restructuring agreement with the ir local bank. The bank agreed to accept land with a carrying amount of $360,000 and a fair value of $540,000 in exchange for a note with a carrying amount of $ 765,000. Ignoring income taxes, what amount should Layne report as a gain on its income statement? Answer Selected Answer: $225,000. Correct Answer: $225,000. . Question 23 .2 out of 2 points The duties of the trustee include: Answer Selected Answer: examining claims and disallowing any that are improper. Correct Answer: examining claims and disallowing any that are improper. . Question 24 .2 out of 2 points When a bankruptcy court enters an order for relief it has: Answer Selected Answer: accepted the petition. Correct Answer: accepted the petition. . Question 25 .2 out of 2 points Dobler Corporation was forced into bankruptcy and is in the process of liquidat ing assets and paying claims. Unsecured claims will be paid at the rate of thirt y cents on the dollar. Carson holds a note receivable from Dobler for $75,000 co llateralized by an asset with a book value of $50,000 and a liquidation value of $25,000. The amount to be realized by Carson on this note is: Answer Selected Answer: $40,000. Correct Answer: $40,000. . Question 26 .2 out of 2 points A corporation that is unable to pay its debts as they become due is: Answer Selected Answer: insolvent. Correct Answer: insolvent. . Question 27 .2 out of 2 points In a troubled debt restructuring involving a modification of terms, the debtors gain on restructuring: Answer Selected Answer: may not equal the creditors loss on restructuring. Correct Answer: may not equal the creditors loss on restructuring. . Question 28 .2 out of 2 points Dodge Corporation entered into a troubled debt restructuring agreement with the ir local bank. The bank agreed to accept land with a carrying value of $200,000 and a fair value of $300,000 in exchange for a note with a carrying amount of $4 25,000. Ignoring income taxes, what amount should Dodge report as a gain on its

income statement? Answer Selected Answer: $125,000. Correct Answer: $125,000. . Question 29 .2 out of 2 points A Statement of Affairs is a report designed to show: Answer Selected Answer: an estimated amount that would be received by each class of creditors claims in the event of liquidation. Correct Answer: an estimated amount that would be received by each class of c reditors claims in the event of liquidation. . Question 30 .2 out of 2 points Assets transferred by the debtor to a creditor to settle a debt are transferred at: Answer Selected Answer: fair market value of the transferred assets. Correct Answer: fair market value of the transferred assets. .Sunday, November 25, 2012 11:58:18 AM EST OK .