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Test bank For Advanced Accounting Exam 2 review 15th Edition by Joe Ben Hoyle
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Test bank For Advanced Accounting Exam 2 review 15th Edition by Joe Ben Hoyle
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Advanced Accounting Exam 2 reviewTrue or False: When two businesses combine and the parent establishes control without 100%
ownership, a noncontrolling interest must be accounted for.
True
True or False: A noncontrolling interest should not be reported on the parents consolidated
financial statements.
False
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True or False: On the date of acquisition, the fair value of the controlling interest will always be
the basis for calculating the fair value of the noncontrolling interest.
False
True or False: In a business combination, any goodwill established on the date of acquisition will
always be allocated proportionately to the parent (controlling) and subsidiary (noncontrolling)
interests
False
True of False: Additional accounts will be needed on consolidation worksheet entry S when a
mid-year acquisition occurs versus an acquisition occurring on the first or last day of the year.
True
, Which of the following results in an adjustment to the noncontrolling interest balance.
All of the Above
3 multiple choice options
The DeBlois Family Co. acquired 40% of Orange Beach Co. with a $500,000 payment on
January 1, 2023. The equivalent net book value (40% share) of Orange Beach on the date of
acquisition was $425,000. $50,000 of the excess payment was attributable to equipment with a
10-year remaining life. The remainder of the excess payment was not attributable to any
identifiable item. Orange Beach Co. Reported net income of $40,000 in 2023. No dividends
were paid out. On January 1, 2024, DeBlois Family Co. Acquired an additional 50% ownership
share in Orange Beach Co. With a cash payment of $700,000. The fair value of the
noncontrolling interest was determined to be $140,000 (based on FMV of controlling interest) on
the date of acquisition. The total fair value of Orange Beach's identifiable assets and liabilities
on January 1, 2024, was $1,000,000. The trading value of stock shares remained the same as
acquisition date prices for several months after January 1, 2024.
What is the total fair value of Orange Beach Co. established by market prices on January 1,
2024
$1,400,000
3 multiple choice options
The DeBlois Family Co. acquired 40% of Orange Beach Co. with a $500,000 payment on
January 1, 2023. The equivalent net book value (40% share) of Orange Beach on the date of
acquisition was $425,000. $50,000 of the excess payment was attributable to equipment with a
10-year remaining life. The remainder of the excess payment was not attributable to any
identifiable item. Orange Beach Co. Reported net income of $40,000 in 2023. No dividends
were paid out. On January 1, 2024, DeBlois Family Co. Acquired an additional 50% ownership
share in Orange Beach Co. With a cash payment of $700,000. The fair value of the
noncontrolling interest was determined to be $140,000 (based on FMV of controlling interest) on
the date of acquisition. The total fair value of Orange Beach's identifiable assets and liabilities
on January 1, 2024, was $1,000,000. The trading value of stock shares remained the same as
acquisition date prices for several months after January 1, 2024.
What should be reported as a gain to the DeBlois Family Co. On January 1, 2024?
$49,000
3 multiple choice options
The DeBlois Family Co. acquired 40% of Orange Beach Co. with a $500,000 payment on
January 1, 2023. The equivalent net book value (40% share) of Orange Beach on the date of
acquisition was $425,000. $50,000 of the excess payment was attributable to equipment with a
10-year remaining life. The remainder of the excess payment was not attributable to any
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