. Orchard Corporation issued 100,000 shares of its $10 par value common stock (current
fair value $50 per share) on December 31 to the holders of all 10,000 common shares ($1
par value) of Morgan Company’s common stock in exchange for Morgan’s common
stock. Morgan will continue as a wholly-owned subsidiary of Orchard. Orchard’s out-
of-pocket costs related to the combination are $150,000, comprised of $100,000 of legal
fees directly related to the combination and $50,000 in costs related to the registration
statement filed with the Securities and Exchange Commission to issue the 100,000
shares. At December 31, the fair value of Morgan’s identified net assets exceeded the
carrying amount by $250,000. The balance in the Investment in Morgan Company
Common Stock account on Orchard’s Statement of Financial Position as of December 31
should be
a. $1,100,000.
b. $1,150,000.
c. $5,000,000.
d. $5,100,000.
答案
367. On January 1, Jennie Corporation purchased 30% of the common stock of Katlee
Company for $500,000. The following information relates to Katlee at the date of
acquisition.
Cash $ 50,000
Accounts receivable (net) 250,000
Building (net) 700,000
Land 100,000
Liabilities 100,000
Additional information relating to the purchase is shown below.
1. Jennie has the ability to exercise significant influence over Katlee.
2. Both the book value and the fair value are the same for the receivables, land,
and liabilities.
3. The fair market value of the building is $900,000.
4. Jennie depreciates its assets on a straight-line basis. Both tangible and
intangible assets are amortized over 10 years.
5. For the current year, Katlee had net income of $400,000 and declared and paid
dividends of $100,000.
What amount should Jennie report for its investment in Katlee at the end of the current
year?
a. $500,000.
b. $570,000.
c. $600,000.
d. $620,000.
答案:B
. The Board of Directors of Ingold Industries Inc. authorized Don Burger, president of
Ingold, to pay as much as $90,000 to purchase a tract of land adjacent to the main factory.
Burger negotiated a price of $75,800 for the land, and legal fees for closing costs
amounted to $820. A contractor cleared, filled, and graded the land for $6,800, and dug
the foundation for a new building for $4,300. A prefabricated building was erected at a
cost of $181,000. The building has an estimated useful life of 20 years with no residual
value. The contractor’s bill indicated that the cost of the parking lot and driveways was
$7,060. The parking lot and the driveways will need to be replaced in 15 years. The
proper amount to be recorded in Ingold’s land account is
a. $76,620.
b. $83,420.
c. $87,720.
d. $90,480.
答案B
. Patricia Company purchased all of the outstanding common stock of Echo Company
three years ago by issuing 200,000 shares of $1.00 par value stock which at the time had
a market value of $9.00. Because of uncertainties as to the value of Echo, it was agreed
that 10,000 additional shares would be issued if Echo’s earnings averaged more than
$180,000 during the next three years. Echo has met the $180,000 earnings contingency
at the end of three years, and the 10,000 additional shares were issued when the market
value was $10.00 per share. As a result of this transaction, Patricia’s consolidated
Statement of Financial Position should include
a. a $100,000 increase in goodwill.
b. a $100,000 decrease in retained earnings.
c. $100,000 additional paid-in-capital in excess of par.
d. the same total assets, total liabilities, and total shareholders’ equity as before the
transaction.
答案a
On July 1, Broadstreet Corporation acquired a patent on its new manufacturing process
which streamlines its production operation. The cost of the patent was $17,000, and
Broadstreet expects that the useful life of the new process will be 10 years, although the
legal life of the patent is 17 years. Broadstreet is a calendar year corporation and is
preparing its December 31 Statement of Financial Position. At which amount should the
patent be reported at December 31 of the year of acquisition?
a. $15,300.
b. $16,000.
c. $16,150.
d. $16,500.
答案c
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