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Test bank For Advanced Accounting Chapter 5 (15th Edition by Joe Ben Hoyle)
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Test bank For Advanced Accounting Chapter 5 (15th Edition by Joe Ben Hoyle)
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Test bank For Advanced AccountingChapter 5 (15th Edition by Joe Ben
Hoyle)
1. Which of the following should appear in consolidated financial statements?
A. All intercompany transactions properly recorded on each affiliate's books.
B. Transactions between the consolidated company and outside parties.
C. Transactions not accounted for by the simple equity method.
D. Lease transactions between a parent and subsidiary. - ANSB
2. Which of the following intercompany transactions would not require a worksheet elimination in
the consolidation process?
A. The subsidiary's payment of rent to its parent.
B. The sale of merchandise by a parent to its subsidiary.
C. The amount of a loan to the subsidiary made by its parent.
D. None of the above. - ANSD
3. Schiff Company owns 100% of the outstanding common stock of the Viel Company. During
20X1, Schiff sold merchandise to Viel that Viel, in turn, sold to unrelated firms. There were no
such goods in Viel's ending inventory. However, some of the intercompany purchases from
Schiff had not yet been paid. Which of the following amounts will be incorrect in the consolidated
statements if no adjustments are made?
A. inventory, accounts payable, net income
B. inventory, sales, cost of goods sold, accounts receivable C. sales, cost of goods sold,
accounts receivable, accounts payable.
D. accounts receivable, accounts payable - ANSC
4. The sale of inventory items by a parent company to an affiliated company
A. enters the consolidated revenue computation only if the transfer was the result of arm's
length bargaining.
B. affects consolidated net income under a periodic inventory system but not under a perpetual
inventory system.
C. does not result in consolidated income until the merchandise is sold to outside entities.
D. does not require a working paper adjustment if the merchandise was transferred at cost. -
ANSC
, 5. This year, Rose Company acquired all of the common stock of Hayley Company. At the end
of the current year, balances of selected accounts and other information for each of the
companies were as follows;At the end of the year, 50% of the inventory that Rose sold to Hayley
remained in Hayley's inventory, and $30,000 of the amount of the sales was unpaid. Rose still
owes half of the amount of its purchases to Hayley, but had sold all of the inventory it had
acquired from Hayley by the end of the year. What is the amount of consolidated sales at the
end of the year?
A. $4,216,000
B. $4,316,000
C. $4,276,000
D. $4,246,000 - ANSA
6. This year, Rose Company acquired all of the common stock of Hayley Company. At the end
of the current year, balances of selected accounts and other information for each of the
companies were as follows;At the end of the year, 50% of the inventory that Rose sold to Hayley
remained in Hayley's inventory, and $30,000 of the amount of the sales was unpaid. Rose still
owes half of the amount of its purchases to Hayley, but had sold all of the inventory it had
acquired from Hayley by the end of the year. What is the consolidated Accounts receivable
balance at the end of the year?
A. $815,000
B. $795,000
C. $789,000
D. $775,000 - ANSD
7. Diller owns 80% of Lake Company common stock. During October 20X7, Lake sold
merchandise to Diller for $300,000. On December 31, 20X7, one-half of this merchandise
remained in Diller's inventory. For 20X7, gross profit percentages were 30% for Diller and 40%
for Lake. The amount of unrealized profit in the ending inventory on December 31, 20X7 that
should be eliminated in consolidation is ____.
A. $80,000
B. $60,000
C. $32,000
D. $30,000 - ANSB
8. Cattle Company sold inventory with a cost of $40,000 to its 90%-owned subsidiary, Range
Corp., for $100,000 in 20X1. Range resold $75,000 of this inventory for $100,000 in 20X1.
Based on this information, the amount of inventory reported on the consolidated financial
statements at the end of 20X1 is:
A. $10,000.
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