上海对外经贸大学 高级财务会计学笔记-高级财务会计学（英）chapter 10.pdfVIP

AdvancedAccounting,12e(Beamsetal.)

Chapter10SubsidiaryPreferredStock,ConsolidatedEarningsPerShare,and

ConsolidatedIncomeTaxation

10.1MultipleChoiceQuestions

Usethefollowinginformationtoanswerthequestion(s)below.

OnDecember31,2013,ParminterCorporationownsan80%interestinthecommonstockofSanchez

Corporationandan80%interestinSanchezspreferredstock.OnDecember31,2013,Sanchezs

stockholdersequitywasasfollows:

10%preferredstock,cumulative,$10parvalue$50,000

Commonstock350,000

Retainedearnings100,000

Totalstockholdersequity$500,000

OnDecember31,2013,preferreddividendsarenotinarrears.Sanchezhad2014netincomeof$30,000

andonlypreferreddividendsaredeclaredandpaidin2014.Therearenobookvalue/fairvalue

differentialsassociatedwithParmintersinvestments.

1)HowmuchshouldtheParmintersInvestmentinSanchez—CommonStock,changeduring2014?

A)$5,000

B)$20,000

C)$25,000

D)$30,000

Answer:B

Explanation:B)($30,000-$5,000)×80%

Objective:LO1

Difficulty:Moderate

2)Whatshouldbethenoncontrollinginterestshare,commonintheconsolidatedfinancialstatementsof

ParminterfortheyearendingDecember31,2014?

A)$5,000

B)$20,000

C)$25,000

D)$30,000

Answer:A

Explanation:A)($25,000×20%)

Objective:LO1

Difficulty:Moderate

1

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3)Whatshouldbethenoncontrollinginterestshare,preferredintheconsolidatedfinancialstatementsof

ParminterfortheyearendingDecember31,2014?

A)$1,000

B)$2,000

C)$4,000

D)$5,000

Answer:A

Explanation:A)($5,000×20%)

Objective:LO1

D