ACCT 405 Chapter 3 Problems: 4, 6, 9, 17
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ACCT 405 Chapter 3 Problems: 4, 6, 9, 17
Chapter 3 Problems: 4, 6, 9, 17
4. Willkom Corporation bought 100 percent of
Szabo, Inc., on January 1, 2011. On that date, Willkom’s equipment (10-year
life) has a book value of $300,000 but a fair value of $400,000. Szabo has
equipment (10-year life) with a book value of $200,000 but a fair value of
$300,000. Willkom uses the equity method to record its investment in Szabo. On
December 31, 2013, Willkom has equipment with a book value of $210,000 but a
fair value of $330,000. Szabo has equipment with a book value of $140,000 but a
fair value of $270,000. What is the consolidated balance for the Equipment
account as of December 31, 2013?
5. $600,000.
6. $490,000.
7. $480,000.
8. $420,000.
6. Goodwill recognized in a business combination
must be allocated among a firm’s identified reporting units. If the fair value
of a particular reporting unit with recognized goodwill falls below its
carrying amount, which of the following is true?
1. No goodwill impairment loss is recognized unless
the implied value for goodwill exceeds its carrying amount.
2. A goodwill impairment loss is recognized if
the carrying amount for goodwill exceeds its implied value.
3. A goodwill impairment loss is recognized for
the difference between the reporting unit’s fair value and carrying amount.
4. The reporting unit reduces the values assigned
to its long-term assets (including any unrecognized intangibles) to reflect its
fair value.
9. What is consolidated net income for Phoenix
and Sedona for 2013?
1. $148,000
2. $203,000
3. $228,000
4. $238,000
Phoenix
Revenue
$498,000
Phoenix
Expense
350,000
Net
income
148,000
Sedona equity
income
55,000
17. Francisco Inc. acquired 100 percent of the
voting shares of Beltran Company on January 1, 2012. In exchange, Francisco
paid $450,000 in cash and issued 104,000 shares of its own $1 par value common
stock. On this date, Francisco’s stock had a fair value of $12 per share. The
combination is a statutory merger with Beltran subsequently dissolved as a
legal corporation. Beltran’s assets and liabilities are assigned to a new
reporting unit.
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