Questions from Financial Accounting

Q: Fineline Pencil Company acquired 80 percent of Smudge Eraser Corporation’s stock on

Fineline Pencil Company acquired 80 percent of Smudge Eraser Corporation’s stock on January 2, 20X3, for $72,000 cash. Summarized balance sheet data for the companies on December 31,...

Q: Byte Computer Corporation acquired 75 percent of Nofail Software Company’s stock on

Byte Computer Corporation acquired 75 percent of Nofail Software Company’s stock on January 2, 20X3, by issuing bonds with a par value of $50,000 and a fair value of $67,500 in excha...

Q: Byte Computer Corporation acquired 90 percent of Nofail Software Company’s common stock

Byte Computer Corporation acquired 90 percent of Nofail Software Company’s common stock on January 2, 20X3, by issuing preferred stock with a par value of $6 per share and a market v...

Q: Gamble Company convinced Conservative Corporation that the two companies should establish Simpletown

Gamble Company convinced Conservative Corporation that the two companies should establish Simpletown Corporation to build a new gambling casino in Simpletown Corner. Although chances for the casino’s...

Q: Teal Corporation is the primary beneficiary of a variable interest entity with

Teal Corporation is the primary beneficiary of a variable interest entity with total assets of $500,000, liabilities of $470,000, and owners’ equity of $30,000. Because Teal owns 25 percent of the VIE...

Q: Frazer Corporation owns 70 percent of Messer Company’s stock. In the

Frazer Corporation owns 70 percent of Messer Company’s stock. In the 20X9 consolidated income statement, the noncontrolling interest was assigned $18,000 of income. There was no differential in the ac...

Q: One company may acquire another for a number of different reasons.

One company may acquire another for a number of different reasons. The acquisition often has a significant impact on the financial statements. In 2005, 3M Corporation acquired CUNO Incorporated. Obtai...

Q: When a company assigns goodwill to a reporting unit acquired in a

When a company assigns goodwill to a reporting unit acquired in a business combination, it must record an impairment loss if’ a. The fair value of the net identifiable assets held by a reporting unit...

Q: Belchfire Motors’ accountant was called away after completing only half of the

Belchfire Motors’ accountant was called away after completing only half of the consolidated statements at the end of 20X4. The data left behind included the following: Required a....

Q: Sanderson Corporation acquired 70 percent of Kline Corporation’s common stock on January

Sanderson Corporation acquired 70 percent of Kline Corporation’s common stock on January 1, 20X7, for $294,000 in cash. At the acquisition date, the book values and fair values of Kl...