Questions from Financial Accounting

Q: Home Products Corporation, which sells a broad line of home detergent

Home Products Corporation, which sells a broad line of home detergent products, owns 75 percent of the stock of Level Brothers Soap Company. During 20X8, Level Brothers sold soap products to Home Prod...

Q: Brown Corporation holds 70 percent of Transom Company’s voting common stock.

Brown Corporation holds 70 percent of Transom Company’s voting common stock. On January 1, 20X2, Transom paid $300,000 to acquire a building with a 15-year expected economic life. Transom uses straigh...

Q: Swanson Corporation purchased land from Clayton Corporation for $240,000

Swanson Corporation purchased land from Clayton Corporation for $240,000 on December 20, 20X3. This purchase followed a series of transactions between Swanson-controlled subsidiaries. On February 7, 2...

Q: On January 1, 20X7, Wainwrite Corporation sold to Lance Corporation

On January 1, 20X7, Wainwrite Corporation sold to Lance Corporation equipment it had purchased for $150,000 and used for eight years. Wainwrite recorded a gain of $14,000 on the sale. The equipment ha...

Q: Blank Corporation owns 60 percent of Grand Corporation’s voting common stock.

Blank Corporation owns 60 percent of Grand Corporation’s voting common stock. On December 31, 20X4, Blank paid Grand $276,000 for dump trucks Grand had purchased on January 1, 20X2....

Q: Baywatch Industries has owned 80 percent of Tubberware Corporation for many years

Baywatch Industries has owned 80 percent of Tubberware Corporation for many years. On January 1, 20X6, Baywatch paid Tubberware $270,000 to acquire equipment that Tubberware had purchased on January 1...

Q: Stern Manufacturing purchased an ultrasound drilling machine with a remaining 10-

Stern Manufacturing purchased an ultrasound drilling machine with a remaining 10-year economic life from a 70 percent-owned subsidiary for $360,000 on January 1, 20X6. Both companies use straightline...

Q: Kline Corporation holds 90 percent ownership of Andrews Company. On July

Kline Corporation holds 90 percent ownership of Andrews Company. On July 1, 20X3, Kline sold equipment that it had purchased for $30,000 on January 1, 20X1, to Andrews for $28,000. The equipment’s ori...

Q: Pastel Corporation acquired a controlling interest in Somber Corporation in 20X5 for

Pastel Corporation acquired a controlling interest in Somber Corporation in 20X5 for an amount equal to its underlying book value. At the date of acquisition, the fair value of the noncontrolling inte...

Q: Verry Corporation owns 75 percent of Spawn Corporation’s voting common stock.

Verry Corporation owns 75 percent of Spawn Corporation’s voting common stock. Verry reported income from its separate operations of $90,000 and $110,000 in 20X4 and 20X5, respectively. Spawn reported...