1. Goodwill represents the excess of the implied value of an… 1. Goodwill represents the

1. Goodwill represents the excess of the implied value of an… 1. Goodwill represents the excess of the implied value of an acquired company over thea. aggregate fair values of identifiable assets less liabilities assumed.b. aggregate fair values of tangible assets less liabilities assumed.c. aggregate fair values of intangible assets less liabilities assumed.d. book value of an acquired company.2. Any intercompany gain or loss on a downstream sale of land should be recognized in consolidated net incomea. in the year of sale of the downstream sale.b. over the period of time the subsidiary uses the land.c. in the year the subsidiary sells the land to an unrelated party.d. All of the above. 3. Which of the following is true concerning an intercompany transfer of a depreciable asset?a. Non-controlling interest in subsidiary’s net income is always affected by a gain on the transfer.b. Non-controlling interest in subsidiary’s net income is never affected by a gain on the transfer.c. Non-controlling interest in subsidiary’s net income is affected only when the transfer is upstream.d. Non-controlling interest in subsidiary’s net income is increased by an upstream gain in the year of transfer.e. Non-controlling interest in subsidiary’s net income is affected by a downstream gain only. 4. What is the effect if an unconsolidated subsidiary is accounted for by the equity method consolidated statements are being prepared for the parent company and other subsidiaries?a. Dividend revenue from the unconsolidated subsidiary will be reflected in consolidated net income.b. All of the unconsolidated subsidiary’s accounts will be included individually in the consolidated statements.c. The consolidated retained earnings will be the same as if the subsidiary had been included in the consolidation.d. The consolidated retained earnings will not reflect the earnings of the unconsolidated subsidiary. 5. Percy’s beginning inventory containing merchandise purchased above cost from its 80 percent owned subsidiary, was sold during 2019.  The elimination entry in the working papers recognizing this intercompany profit includes a debit to Stepney’s beginning accumulated profits of:  a. 100% of the intercompany profitb. Stepney’s beginning accumulated profit is not affected in this casec. 80% of the intercompany profitd. 20% of the intercompany profit 6.  A parent sold land to its partially owned subsidiary during the year at a loss. The subsidiary continues to hold the land at the end of the year. The amount to be reported as consolidated net income for the year should equala. the parent’s separate operating income, plus the intercompany loss.b. the parent’s separate operating income, plus the intercompany loss, plus the subsidiary’s net income.c. the parent’s separate operating income, minus the intercompany loss.d. the parent’s separate operating income, minus the intercompany loss, plus the subsidiary’s net income. 7. The entry to eliminate the intercompany shipments will involve a debit to what account?a. Shipments from Home Officeb. Allowance for overvaluation of branch inventoryc. Shipments to Home Officed. Shipments to Branch 8. Statement I: Business combination is a transaction or event in which an acquirer obtains control of one or more businesses; Statement II: Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.a. Both statements are trueb. Statement I is false, Statement II is truec. Both statements are false.d. Statement I is true, Statement II is false 9. S1:  Intercompany profits from sales of inventories are computed by multiplying the inventory acquired from the selling company by the selling company’s gross profit rate.  S2:  Unrealized gross profits in intercompany inventory sales increase the consolidated net income.  a. Statement I is false, Statement II is trueb. Statement I is true, Statement II is falsec. Both statements are false.d. Both statements are true 10. S1:  Elimination entries for intercompany profit in the consolidation working paper are prepared in order to reduce consolidated net income.  S2:  The unrealized profit in intercompany sales above cost is eliminated in the consolidated statement in financial position from the buyer’s ending inventory.  a. Both statements are false.b. Statement I is false, Statement II is truec. Statement I is true, Statement II is falsed. Both statements are true Accounting Business Managerial Accounting Share QuestionEmailCopy link