Question: Hollow Corporation acquired 70 percent of Surg

> Provide two measures for each perspective of a balanced scorecard.

> What is empire building in a managerial context?

> In the fourth quarter of 2017, Casey Wholesalers had the following net income: Sales $650,000 Less cost of sales 300,000 Gross margin 350,000 Selling and administration 250,000 Income before taxes 100,000 Income taxes 35,000 Net income $ 65,000 Purchases

> The results of operations for the Preston Manufacturing Company for the fourth quarter of 2017 were as follows: Note: Preston Manufacturing uses the variable costing method. Thus, only variable production costs are included in inventory and cost of good

> What portion of consolidated retained earnings is assigned to the noncontrolling interest in the consolidated balance sheet?

> Select the correct answer for each of the following questions. Amber Corporation holds 80 percent of the stock of Movie Productions Inc. During 20X4, Amber purchased an inventory of snack bar items for $40,000 and resold $30,000 to Movie Productions for

> How is the amount assigned to the noncontrolling interest normally determined when a consolidated balance sheet is prepared immediately after a business combination?

> Why must inventory transfers to related companies be eliminated in preparing consolidated financial statements?

> Why must a noncontrolling interest be reported in the consolidated balance sheet?

> Where is the balance assigned to the noncontrolling interest reported in the consolidated balance sheet?

> Companies have many different practices for pricing transfers of goods and services from one affiliate to another. Regardless of the approaches used for internal decision making and performance evaluation or for tax purposes, all intercompany profits, un

> Diamond Manufacturing Company regularly purchases janitorial and maintenance services from its wholly owned subsidiary, Schwartz Maintenance Services Inc. Schwartz bills Diamond monthly at its regular rates for the services provided, with the services co

> Current reporting standards require the consolidated entity to include all the revenues, expenses, assets, and liabilities of the parent and its subsidiaries in the consolidated financial statements. When the parent does not own all of a subsidiary’s sha

> Dream Corporation owns 90 percent of Classic Company’s common stock and 70 percent of Plain Company’s stock. Dream provides legal services to each subsidiary and bills it for 150 percent of the cost of the services provided. During 20X3, Classic recorded

> Plug Corporation purchased 60 percent of Coy Company’s common stock approximately 10 years ago. On January 1, 20X2, Coy sold equipment to Plug for $850,000 and recorded a $150,000 loss on the sale. Coy had purchased the equipment for $1,200,000 on Januar

> Many companies transfer inventories from one affiliate to another. Often the companies have integrated operations in which one affiliate provides the raw materials, another manufactures finished products, another distributes the products, and perhaps ano

> Ready Building Products has six subsidiaries that sell building materials and supplies to the public and to the parent and other subsidiaries. Because of the invoicing system Ready uses, it is not possible to keep track of which items have been purchased

> Morrison Company owns 80 percent of Bloom Corporation’s stock, acquired when Bloom’s fair value as a whole was equal to its book value. The companies frequently engage in intercompany inventory transactions. Required: Name the conditions that woul

> Water Products Corporation has been supplying high-quality bathroom fixtures to its customers for several decades and uses a LIFO inventory system. Rapid increases in the cost of fixtures have resulted in inventory values substantially below current repl

> Shortcut Charlie usually manages to develop some simple rule to handle even the most complex situations. In providing for the elimination of the effects of inventory transfers between the parent company and a subsidiary or between subsidiaries, Shortcut

> Monsanto Company, a St. Louis–based company, is a leading provider of agricultural products for farmers. It sells seeds, biotechnology trait products, and herbicides worldwide. Required How did Monsanto Company report its income to noncontrolling (min

> A new employee has been given responsibility for preparing the consolidated financial statements of Sample Company. After attempting to work alone for some time, the employee seeks assistance in gaining a better overall understanding of the way in which

> Rose Corporation and Krome Company established a joint venture to manufacture components for both companies’ use on January 1, 20X1, and have operated it quite successfully for the past four years. Rose and Krome both contributed 50 percent of the equity

> Standard Company has a relatively high profit margin on its sales, and Jewel Company has a substantially lower profit margin. Standard holds 55 percent of Jewel’s common stock and includes Jewel in its consolidated statements. Standard and Jewel reported

> Frazer Corporation purchased 60 percent of Minnow Corporation’s voting common stock on January 1, 20X1. On January 1, 20X5, Frazer received $245,000 from Minnow for a truck Frazer had purchased on January 1, 20X2, for $300,000. The truck is expected to h

> Frazer Corporation purchased 60 percent of Minnow Corporation’s voting common stock on January 1, 20X1. On December 31, 20X5, Frazer received $210,000 from Minnow for a truck Frazer had purchased on January 1, 20X2, for $300,000. The truck is expected to

> Bowen Corporation owns 70 percent of Roan Corporation’s voting common stock. On March 12, 20X2, Roan sold land it had purchased for $140,000 to Bowen for $185,000. Bowen plans to build a new warehouse on the property in 20X3. Required: Give th

> Pam Corporation holds 70 percent ownership of Northern Enterprises. On December 31, 20X6, Northern paid Pam $40,000 for a truck that Pam had purchased for $45,000 on January 1, 20X2. The truck was considered to have a 15-year life from January 1, 20X2, a

> Power Corporation owns 75 percent of Swift Company’s stock. Swift provides health care services to its employees and those of Power. During 20X2, Power recorded $45,000 as health care expense for medical care given to its employees by Swift. Swift’s cost

> Huckster Corporation purchased land on January 1, 20X1, for $20,000. On June 10, 20X4, it sold the land to its subsidiary, Lowly Corporation, for $30,000. Huckster owns 60 percent of Lowly’s voting shares. Required: Give the worksheet consolidation

> Select the correct answer for each of the following questions. Upper Company holds 60 percent of Lower Company’s voting shares. During the preparation of consolidated financial statements for 20X5, the following consolidation entry wa

> Parent Company holds 90 percent of Sunway Company’s voting common shares. On December 31, 20X8, Parent recorded a loss of $16,000 on the sale of equipment to Sunway. At the time of the sale, the equipment’s estimated remaining economic life was eight yea

> Turner Company purchased 70 percent of Split Company’s stock approximately 20 years ago. On December 31, 20X8, Turner purchased a building from Split for $300,000. Split had purchased the building on January 1, 20X1, at a cost of $400,000 and used straig

> Newtime Products purchased 65 percent of TV Sales Company’s stock at underlying book value on January 1, 20X3. At that date, the fair value of the noncontrolling interest was equal to 35 percent of the book value of TV Sales. TV Sales reported shares out

> Grand Delivery Service acquired at book value 80 percent of the voting shares of Acme Real Estate Company. On that date, the fair value of the noncontrolling interest was equal to 20 percent of Acme’s book value. Acme Real Estate reported common stock of

> Norgaard Corporation purchased management consulting services from its 75 percent-owned subsidiary, Bline Inc. During 20X3, Norgaard paid Bline $123,200 for its services. For the year 20X4, Bline billed Norgaard $138,700 for such services and collected a

> Verry Corporation owns 75 percent of Spawn Corporation’s voting common stock. Verry reported income from its separate operations of $90,000 and $110,000 in 20X4 and 20X5, respectively. Spawn reported net income of $60,000 and $40,000 in 20X4 and 20X5, re

> Pastel Corporation acquired a controlling interest in Somber Corporation in 20X5 for an amount equal to its underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to its proportionate share of the book

> Kline Corporation holds 90 percent ownership of Andrews Company. On July 1, 20X3, Kline sold equipment that it had purchased for $30,000 on January 1, 20X1, to Andrews for $28,000. The equipment’s original six-year estimated total economic life remains u

> Stern Manufacturing purchased an ultrasound drilling machine with a remaining 10-year economic life from a 70 percent-owned subsidiary for $360,000 on January 1, 20X6. Both companies use straightline depreciation. The subsidiary recorded the following en

> Baywatch Industries has owned 80 percent of Tubberware Corporation for many years. On January 1, 20X6, Baywatch paid Tubberware $270,000 to acquire equipment that Tubberware had purchased on January 1, 20X3, for $300,000. The equipment is expected to hav

> Blank Corporation owns 60 percent of Grand Corporation’s voting common stock. On December 31, 20X4, Blank paid Grand $276,000 for dump trucks Grand had purchased on January 1, 20X2. Both companies use straight-line depreciation. The con

> On January 1, 20X7, Wainwrite Corporation sold to Lance Corporation equipment it had purchased for $150,000 and used for eight years. Wainwrite recorded a gain of $14,000 on the sale. The equipment has a total useful life of 15 years and is depreciated o

> Swanson Corporation purchased land from Clayton Corporation for $240,000 on December 20, 20X3. This purchase followed a series of transactions between Swanson-controlled subsidiaries. On February 7, 20X3, Sullivan Corporation purchased the land from a no

> Brown Corporation holds 70 percent of Transom Company’s voting common stock. On January 1, 20X2, Transom paid $300,000 to acquire a building with a 15-year expected economic life. Transom uses straight-line depreciation for all depreciable assets. On Dec

> Home Products Corporation, which sells a broad line of home detergent products, owns 75 percent of the stock of Level Brothers Soap Company. During 20X8, Level Brothers sold soap products to Home Products for $180,000, which it had produced for $120,000.

> Herb Corporation holds 60 percent ownership of Spice Company. Each year, Spice purchases large quantities of a gnarl root used in producing health drinks. Spice purchased $150,000 of roots in 20X7 and sold $40,000 of these purchases to Herb for $60,000.

> Klon Corporation owns 70 percent of Brant Company’s stock and 60 percent of Torkel Company’s stock. During 20X8, Klon sold inventory purchased in 20X7 for $100,000 to Brant for $150,000. Brant then sold the inventory at its cost of $150,000 to Torkel. Pr

> The December 31, 20X8, balance sheets for Doorst Corporation and its 70 percent-owned subsidiary Hingle Company contained the following summarized amounts: Boorst acquired the shares of Hingle Company on January 1, 20X7. On December 31, 20X8, assume Do

> Prem Company acquired 60 percent ownership of Cooper Company’s voting shares on January 1, 20X2. During 20X5, Prem purchased inventory for $20,000 and sold the full amount to Cooper Company for $30,000. On December 31, 20X5, Cooper&aci

> Holiday Bakery owns 60 percent of Farmco Products Company’s stock. On January 1, 20X9, inventory reported by Holiday included 20,000 bags of flour purchased from Farmco at $9 per bag. By December 31, 20X9, all the beginning inventory purchased from Farmc

> Holiday Bakery owns 60 percent of Farmco Products Company’s stock. During 20X8, Farmco produced 100,000 bags of flour, which it sold to Holiday Bakery for $900,000. On December 31, 20X8, Holiday had 20,000 bags of flour purchased from Farmco Products on

> Karlow Corporation owns 60 percent of Draw Company’s voting shares. During 20X3, Karlow produced 25,000 computer desks at a cost of $82 each and sold 10,000 of them to Draw for $94 each. Draw sold 7,000 of the desks to unaffiliated companies for $130 eac

> Nordway Corporation acquired 90 percent of Olman Company’s voting shares of stock in 20X1. During 20X4, Nordway purchased 40,000 Playday doghouses for $24 each and sold 25,000 of them to Olman for $30 each. Olman sold 18,000 of the doghouses to retail es

> Nordway Corporation acquired 90 percent of Olman Company’s voting shares of stock in 20X1. During 20X4, Nordway purchased 40,000 Playday doghouses for $24 each and sold 25,000 of them to Olman for $30 each. Olman sold all of the doghouses to retail estab

> For each question, select the single best answer. Water Company owns 80 percent of Fire Company’s outstanding common stock. On December 31, 20X9, Fire sold equipment to Water at a price in excess of Fire’s carryi

> Select the correct answer for each of the following questions. Lorn Corporation purchased inventory from Dresser Corporation for $120,000 on September 20, 20X1, and resold 80 percent of the inventory to unaffiliated companies prior to December 31, 20X1,

> Select the correct answer for each of the following questions. Blue Company purchased 60 percent ownership of Kelly Corporation in 20X1. On May 10, 20X2, Kelly purchased inventory from Blue for $60,000. Kelly sold all of the inventory to an unaffiliated

> Select the correct answer for each of the following questions. During 20X3, Park Corporation recorded sales of inventory for $500,000 to Small Company, its wholly owned subsidiary, on the same terms as sales made to third parties. At December 31, 20X3,

> Select the correct answer for each of the following questions: Perez Inc. owns 80 percent of Senior Inc. During 20X2, Perez sold goods with a 40 percent gross profit to Senior. Senior sold all of these goods in 20X2. For 20X2 consolidated financial st

> Topp Corporation acquired 70 percent of Morris Company’s voting common stock on January 1, 20X3, for $158,900. Morris reported common stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling i

> On January 1, 20X5, Pond Corporation acquired 80 percent of Skate Company’s stock by issuing common stock with a fair value of $180,000. At that date, Skate reported net assets of $150,000. The fair value of the noncontrolling interest

> Prime Company holds 80 percent of Lane Company’s stock, acquired on January 1, 20X2, for $160,000. On the acquisition date, the fair value of the noncontrolling interest was $40,000. Lane reported retained earnings of $50,000 and had $1

> Lofton Company owns 60 percent of Temple Corporation’s voting shares, purchased on May 17, 20X1, at book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Temple

> In its 20X7 consolidated income statement, Bower Development Company reported consolidated net income of $961,000 and $39,000 of income assigned to the 30 percent noncontrolling interest in its only subsidiary, Subsidence Mining Inc. During the year, Su

> Select the correct answer for each of the following questions. In the preparation of a consolidated income statement: Income assigned to noncontrolling shareholders always is computed as a pro rata portion of the reported net income of the cons

> In preparing its consolidated financial statements at December 31, 20X7, the following consolidation entries were included in the consolidation worksheet of Master Corporation: Master owns 60 percent of Rakel Corporation’s voting comm

> Pelts Company holds a total of 70 percent of Bugle Corporation and 80 percent of Cook Products Corporation stock. Bugle purchased a warehouse with an expected life of 20 years on January 1, 20X1, for $40,000. On January 1, 20X6, it sold the warehouse to

> Bold Corporation acquired 75 percent of Toll Corporation’s voting common stock on January 1, 20X4, for $348,000, when the fair value of its net identifiable assets was $464,000 and the fair value of the noncontrolling interest was $116,000. Toll reported

> Petime Corporation acquired 90 percent ownership of United Grain Company on January 1, 20X4, for $108,000 when the fair value of United’s net assets was $10,000 higher than its $110,000 book value. The increase in value was attributed to amortizable asse

> The trial balance data presented in Problem P6-34 can be converted to reflect use of the cost method by inserting the following amounts in place of those presented for Randall Corporation: Required: Prepare the journal entries that would have been rec

> On December 31, 20X7, Randall Corporation recorded the following entry on its books to adjust from the fully adjusted equity method to the modified equity method for its investment in Sharp Company stock: Required: Adjust the data reported by Randall

> Randall Corporation acquired 80 percent of Sharp Company’s voting shares on January 1, 20X4, for $280,000 in cash and marketable securities. At that date, the noncontrolling interest had a fair value of $70,000 and Sharp reported net as

> Fran Corporation acquired all outstanding $10 par value voting common stock of Brey Inc. on January 1, 20X9, in exchange for 25,000 shares of its $20 par value voting common stock. On December 31, 20X8, Fran’s common stock had a closing

> The December 31, 20X6, condensed balance sheets of Pine Corporation and its 90 percent–owned subsidiary, Slim Corporation, are presented in the accompanying worksheet. Additional Information: Pine’s investment in

> Block Corporation was created on January 1, 20X0, to develop computer software. On January 1, 20X5, Foster Company purchased 90 percent of Block’s common stock at underlying book value. At that date, the fair value of the noncontrolling

> ower Corporation acquired 60 percent of Concerto Company’s stock on January 1, 20X3, for $24,000 in excess of book value. On that date, the book values and fair values of Concerto’s assets and liabilities were equal an

> Pine Corporation acquired 70 percent of Bock Company’s voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Bock reported $70,000 of common stock outstanding an

> Bunker Corporation owns 80 percent of Harrison Company’s stock. At the end of 20X8, Bunker and Harrison reported the following partial operating results and inventory balances: Bunker regularly prices its products at cost plus a 40 p

> Crow Corporation purchased 70 percent of West Company’s voting common stock on January 1, 20X5, for $291,200. On that date, the noncontrolling interest had a fair value of $124,800 and the book value of West’s net asse

> Bell Company purchased 60 percent ownership of Troll Corporation on January 1, 20X1, for $82,800. On that date, the noncontrolling interest had a fair value of $55,200 and Troll reported common stock outstanding of $100,000 and retained earnings of $20,0

> Proud Company and Slinky Company both produce and purchase equipment for resale each period and frequently sell to each other. Since Proud Company holds 60 percent ownership of Slinky Company, Proud’s controller compiled the following i

> On January 1, 20X1, Priority Corporation purchased 90 percent of Tall Corporation’s common stock at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of Tall Corporationâ&#1

> Ajax Corporation purchased at book value 70 percent of Beta Corporation’s ownership and 90 percent of Cole Corporation’s ownership in 20X5. At the dates the ownership was acquired, the fair value of the noncontrolling

> Clean Air Products owns 80 percent of the stock of Superior Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Superior

> Lever Corporation acquired 75 percent of the ownership of Tropic Company on January 1, 20X1. The fair value of the noncontrolling interest at acquisition was equal to its proportionate share of the fair value of the net assets of Tropic. The full amount

> Master Corporation acquired 80 percent ownership of Stanley Wood Products Company on January 1, 20X1, for $160,000. On that date, the fair value of the noncontrolling interest was $40,000, and Stanley reported retained earnings of $50,000 and had $100,00

> Amber Corporation acquired 60 percent ownership of Sparta Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Sparta Company. Accumulated depreciat

> Amber Corporation acquired 60 percent ownership of Sparta Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Sparta Company. Accumulated depreciat

> This problem is a continuation of P5-35. Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two compani

> Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the fol

> This problem is a continuation of P5-33. Power Corporation acquired 75 percent of Best Company’s ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of Best&

> Power Corporation acquired 75 percent of Best Company’s ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of Best’s net assets at acquisi

> Quill Corporation acquired 70 percent of North Company’s stock on January 1, 20X9, for $105,000. At that date, the fair value of the noncontrolling interest was equal to 30 percent of the book value of North Company. The companies repor

> Blue Corporation acquired controlling ownership of Skyler Corporation on December 31, 20X3, and a consolidated balance sheet was prepared immediately. Partial balance sheet data for the two companies and the consolidated entity at that date follow: Du

> On January 2, 20X8, Total Corporation acquired 75 percent of Ticken Tie Company’s outstanding common stock. In exchange for Ticken Tie’s stock, Total issued bonds payable with a par value of $500,000 and fair value of

> Porter Corporation acquired 70 percent of Darla Corporation’s common stock on December 31, 20X4, for $102,200. At that date, the fair value of the noncontrolling interest was $43,800. Data from the balance sheets of the two companies in

> Hill Company paid $164,000 to acquire 40 percent ownership of Dale Company on January 1, 20X2. Net book value of Dale’s assets on that date was $300,000. Book values and fair values of net assets held by Dale were the same except for eq

> Balance sheet, income, and dividend data for Amber Corporation, Blair Corporation, and Carmen Corporation at January 1, 20X3, were as follows: On January 1, 20X3, Amber Corporation purchased 40 percent of the voting common stock of Blair Corporation by

> Ennis Corporation acquired 35 percent of Jackson Corporation’s stock on January 1, 20X8, by issuing 25,000 shares of its $2 par value common stock. Jackson Corporation’s balance sheet immediately before the acquisition