University of Illinois, Urbana Champaign BADM MISC mgmt 411 mgmt 411 .

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Chapter 4-Consolidation of Wholly Owned Subsidiaries Acquired at More than Book Value Chapter 4 Consolidation of Wholly Owned Subsidiaries Acquired at More than Book Value Multiple Choice Question... s The following data applies to Questions 1-2: On July 1, 20X9, Link Corporation paid $340,000 for all of Tinsel Company's outstanding common stock. On that date, the costs and fair values of Tinsel's recorded assets and liabilities were as follows: 1. Based on the preceding information, the differential reflected in a consolidation worksheet to prepare a consolidated balance sheet immediately after the business combination is: A. $0. B. $25,000. C. $70,000. D. $45,000. Answer: C Learning Objective: 04-01 Topic: Journal Entries related to Differential (beginning, amort.) Blooms: Understand AACSB: Analytic AICPA: FN Measurement Difficulty: 1 Easy 4-1 Chapter 4-Consolidation of Wholly Owned Subsidiaries Acquired at More than Book Value 2. Based on the preceding information, what amount should be allocated to goodwill in the consolidated balance sheet, prepared after this business combination? A. $0 B. $25,000 C. $70,000 D. $45,000 Answer: B Learning Objective: 04-03 Topic: Calculations/Consolidation Entries for Complex Differential Blooms: Understand AACSB: Analytic AICPA: FN Measurement Difficulty: 2 Medium The following data applies to Questions 3 – 4: On October 1, 20X3, Green Corporation paid $450,000 for all of Yellow Company’s outstanding common stock. On that date, the book values and fair values of Yellow’s recorded assets and liabilities were as follows: Book Value Fair Value Cash and Receivables $75,000 $75,000 Inventory 155,000 160,000 Buildings and Equipment (net) 260,000 320,000 Liabilities (150,000) (150,000) Net Assets $340,000 $405,000 [Show More]

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