17 2 questions 1 an investor that has effective control over an investee usually own 4307849

17 2 questions 1 an investor that has effective control over an investee usually own 4307849

17.2   Questions

1) An investor that has effective control over an investee usually owns ________ of the investee's stock.

A) less than 20 percent

B) more than 20 percent

C) more than 40 percent

D) more than 50 percent

2) The company that owns 100 percent of another company's stock is called the ________.  The company that is controlled by another company is called the ________.

A) majority interest; minority interest

B) controlling interest; noncontrolling interest

C) parent; subsidiary

D) subsidiary; segment

3) Company A acquired 100 percent of the outstanding common stock of Company B.  At the date of acquisition, no goodwill was involved and the book value of the assets and liabilities of Company B equal their fair values.  Immediately after the acquisition, an elimination entry is prepared in order to prepare consolidated financial statements.  What accounts are affected by the elimination entry?

A) Investment in Company B only

B) Stockholders' Equity of Company B only

C) Fixed Assets of Company B only

D) Investment in Company B and Stockholders' Equity of Company B

4) A parent company purchases 100 percent of the outstanding common stock in a subsidiary.  What happens to the subsidiary the day after the purchase?  Which of the following statements is FALSE?

A) The purchase by the parent company does not affect the subsidiary's books.

B) The subsidiary ceases to exist.

C) The subsidiary continues as a separate legal entity.

D) The subsidiary has its own set of books.

5) When preparing consolidated financial statements, eliminating entries are made to avoid double-counting ________.

A) assets only

B) liabilities only

C) assets, liabilities and stockholders' equity

D) none of the above

6) Presented below is the balance sheet of Hal Company at January 1, 2015:

Cash$100

Net Fixed Assets400

Total Assets$500

Accounts Payable$20

Long-term Bonds Payable220

Stockholders' Equity260

Total Liabilities and Stockholders' Equity$500

The balance sheet of Monty Company at January 1, 2015 is below:

Cash$400

Net Fixed Assets380

Total Assets$780

Accounts Payable$120

Long-term Bonds Payable280

Stockholders' Equity380

Total Liabilities and Stockholders' Equity$780

On January 1, 2015, Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.  What is the balance in the Investment in Hal Company account on the consolidated balance sheet immediately after the acquisition of Hal Company's stock?  (Assume elimination entries are completed.)

A) $0

B) $260

C) $380

D) $500

7) Presented below is the balance sheet of Hal Company at January 1, 2015:

Cash$100

Net Fixed Assets400

Total Assets$500

Accounts Payable$20

Long-term Bonds Payable220

Stockholders' Equity260

Total Liabilities and Stockholders' Equity$500

The balance sheet of Monty Company at January 1, 2015 is below:

Cash$400

Net Fixed Assets380

Total Assets$780

Accounts Payable$120

Long-term Bonds Payable280

Stockholders' Equity380

Total Liabilities and Stockholders' Equity$780

On January 1, 2015, Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.  What is the amount of Total Assets on the consolidated balance sheet immediately after the acquisition of Hal Company's stock?  (Assume elimination entries are completed.)

A) $0

B) $780

C) $1,020

D) $1,280

8) Presented below is the balance sheet of Hal Company at January 1, 2015:

Cash$100

Net Fixed Assets400

Total Assets$500

Accounts Payable$20

Long-term Bonds Payable220

Stockholders' Equity260

Total Liabilities and Stockholders' Equity$500

The balance sheet of Monty Company at January 1, 2015 is below:

Cash$400

Net Fixed Assets380

Total Assets$780

Accounts Payable$120

Long-term Bonds Payable280

Stockholders' Equity380

Total Liabilities and Stockholders' Equity$780

On January 1, 2015, Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.  What is the amount of Total Liabilities on the consolidated balance sheet immediately after the acquisition of Hal Company's stock?  (Assume elimination entries are completed.)

A) $0

B) $380

C) $400

D) $640

9) Presented below is the balance sheet of Hal Company at January 1, 2015:

Cash$100

Net Fixed Assets400

Total Assets$500

Accounts Payable$20

Long-term Bonds Payable220

Stockholders' Equity260

Total Liabilities and Stockholders' Equity$500

The balance sheet of Monty Company at January 1, 2015 is below:

Cash$400

Net Fixed Assets380

Total Assets$780

Accounts Payable$120

Long-term Bonds Payable280

Stockholders' Equity380

Total Liabilities and Stockholders' Equity$780

On January 1, 2015, Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.  What is the amount of Total Stockholders' Equity on the consolidated balance sheet immediately after the acquisition of Hal Company's stock?  (Assume elimination entries are completed.)

A) $0

B) $260

C) $380

D) $640

10) Presented below is the balance sheet of Hal Company at January 1, 2015:

Cash$100

Net Fixed Assets400

Total Assets$500

Accounts Payable$20

Long-term Bonds Payable220

Stockholders' Equity260

Total Liabilities and Stockholders' Equity$500

The balance sheet of Monty Company at January 1, 2015 is below:

Cash$400

Net Fixed Assets380

Total Assets$780

Accounts Payable$120

Long-term Bonds Payable280

Stockholders' Equity380

Total Liabilities and Stockholders' Equity$780

On January 1, 2015, Monty Company acquired 100 percent of the outstanding common stock of Hal Company for $260 cash.  Hal Company generated net income of $30 during the year ended December 31, 2015.  There were no intercompany sales.  What is the balance in the Investment in Hal Company account on December 31, 2015 before elimination entries are prepared?

A) $0

B) $30

C) $230

D) $290

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