11 parrot company owns all the outstanding voting stock of southern manufacturing on 4307621

11 parrot company owns all the outstanding voting stock of southern manufacturing on 4307621

11) Parrot Company owns all the outstanding voting stock of Southern Manufacturing.  On January 1, 2012, Parrot sold machinery to Southern at its book value of $24,000.  Parrot had the machinery three years before selling it and used an eight-year straight-line depreciation method, with zero salvage value.  Southern will use the straight-line depreciation method, and assumes the machine has five years remaining and no salvage value. In the 2012 consolidating working papers, the depreciation expense

A) required no adjustment.

B) decreased by $4,800.

C) increased by $4,800

D) increased by $8,000.

12) Assume an upstream sale of machinery occurs on January 1, 2011. The parent owns 70% of the subsidiary. There is a gain on the intercompany transfer and the machine has five remaining years of useful life and no salvage value. Straight-line depreciation is used. Which of the following statements is correct?

A) Noncontrolling interest share for 2011 is equal to: subsidiary income for 2011 multiplied by 30%.

B) Noncontrolling interest share for 2011 is equal to: (subsidiary income for 2011 minus the gain on sale plus the excess depreciation expense) multiplied by 30%.

C) Noncontrolling interest share for 2011 is equal to: (subsidiary income for 2011 minus the gain on sale) multiplied by 30%.

D) Noncontrolling interest share for 2011 is equal to: (subsidiary income for 2011 plus the excess depreciation expense) multiplied by 30%.

13) Plenny Corporation sold equipment to its 90%-owned subsidiary, Sourdough Corp., on January 1, 2012.  Plenny sold the equipment for $100,000 when its book value was $75,000 and it had a 5-year remaining useful life with no expected salvage value. Straight-line depreciation is used by both companies. Separate balance sheets for Plenny and Sourdough included the following equipment and accumulated depreciation amounts on December 31, 2012:

Plenny Sourdough

Equipment$850,000 $300,000

Less: Accumulated depreciation(200,000)(60,000)

Equipment-net$650,000 $240,000

Consolidated amounts for equipment and accumulated depreciation at December 31, 2012 were respectively

A) $1,125,000 and $255,000.

B) $1,125,000 and $260,000.

C) $1,150,000 and $255,000.

D) $1,150,000 and $260,000.

14) Peregrine Corporation acquired an 80% interest in Serine Corporation in 2009 at a time when Serine's book values and fair values were equal to one another.  On January 1, 2012, Serine sold a truck with a $55,000 book value to Peregrine for $100,000. Peregrine is depreciating the truck over 10 years using the straight-line method.  The truck has no salvage value. Separate incomes for Peregrine and Serine for 2012 were as follows:

Peregrine   Serine 

Sales$1,800,000 $1,050,000

Gain on sale of truck45,000

Cost of Goods Sold(750,000)(285,000)

Depreciation expense(450,000)(135,000)

Other expenses(180,000)(450,000)

Separate incomes$ 420,000 $ 225,000

Peregrine's investment income from Serine for 2012 was

A) $108,000.

B) $144,000.

C) $147,600.

D) $180,000.

15) Petrol Company acquired an 90% interest in Seadig Corporation on January 1, 2010. On January 1, 2011, Seadig sold a building with a book value of $120,000 to Petrol for $150,000. The building had a remaining useful life of ten years and no salvage value. Straight-line depreciation is used. The separate balance sheets of Petrol and Seadig on December 31, 2011 included the following balances:

Petrol Seadig

Buildings$500,000$230,000

Accumulated Depr. – Buildings180,00079,000

The consolidated amounts for Buildings and Accumulated Depreciation – Buildings that appeared, respectively, on the balance sheet at December 31, 2011, were

A) $700,000 and $256,000.

B) $700,000 and $259,000.

C) $730,000 and $256,000.

D) $730,000 and $259,000.

16) Pigeon Corporation purchased land from its 60%-owned subsidiary, Seed Inc., in 2010 at a cost $50,000 greater than Seed's book value. In 2012, Pigeon sold the land to an outside entity for $20,000 more than Pigeon's book value. The 2012 consolidated income statement should report a gain on the sale of land of

A) $12,000.

B) $20,000.

C) $42,000.

D) $70,000.

17) Pied Imperial Corporation acquired a 90% interest in Somest Corporation in 2009 when Somest's book values were equivalent to fair values. Somest sold equipment with a book value of $80,000 to Pied for $130,000 on January 1, 2011. Pied is fully depreciating the equipment over a 4-year period by using the straight-line method. Somest reported net income for 2011 was $320,000. Pied's 2011 income from Somest was

A) $249,250.

B) $250,500.

C) $254,250.

D) $288,000.

18) Pogo Corporation acquired a 75% interest in Sperry Corporation on January 1, 2009 at a cost equal to book value and fair value.  In the same year Sperry sold land costing $25,000 to Pogo for $50,000. On July 1, 2012, Pogo sold the land to an unrelated party for $85,000.  What was the gain on the sale of the land on the consolidated income statement for 2012?

A) $25,000

B) $35,000

C) $45,000

D) $60,000

19) On January 1, 2012 Saffron Co. recorded a $40,000 profit on the upstream sale of some equipment that had a remaining four-year life under the straight-line depreciation method.  The equipment has no salvage value. Saffron had separate income of $100,000 in 2012. The parent company, Pommel Incorporated, owns 90% of Saffron. Pommel would report investment income from Saffron in 2012 of

A) $54,000.

B) $63,000.

C) $90,000.

D) $126,000.

20) Parrot Corporation acquired a 70% interest in Swifti Corp. on January 1, 2010, when Swifti's book values and fair values were equivalent. On January 1, 2011, Swifti sold a building with a book value of $60,000 to Parrot for $80,000. The building had a remaining life of five years, no salvage value, and was depreciated by the straight-line method. Swifti reported net income of $200,000 for 2011. What was the noncontrolling interest share for 2011?

A) $54,000

B) $55,200

C) $60,000

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