1, 4, 8, 11, & 381. Bailey, Inc., buys 60 percent of the outstanding stock of Luebs, Inc., in an acquisition that resulted in the recognition of goodwill. Luebs owns a piece of land that cost $200,000 but was worth $500,000 at the acquisition date. What value should be attributed to this land in a consolidated balance sheet at the date of takeover? a. $120,000. b. $300,000. c. $380,000. d. $500,000. 4. On January 1, 2009, Turner, Inc., reports net assets of $480,000 although a building (with a 10year life) having a book value of $260,000 is now worth $300,000. Plaster Corporation pays $540,000 on that date for a 90 percent ownership in Turner. On December 31, 2011, Turner reports a Building account of $182,000 and Plaster reports a Building account of $510,000. What is the consolidated balance of the Building account? a. $720,000. b. $724,000. c. $780,000. d. $810,000. $510,000 300,000 - 90,000 $720,000 (300,000/10) Payment for 90% ownership Building worth (fair value) Amortization of 3 years Consolidated Buildings 8. James Company acquired 85 percent of Mark-Right Company on April 1. On its December 31, consolidated income statement, how should James account for Mark-Right's revenues and expenses that occurred before April 1. a. Include 100 percent of Mark-Right's revenues and expenses and deduct the preacquisition portion as noncontrolling interest in net income. b. Exclude 100 percent of the preacquisition revenues and 100 percent of the preacquisition expenses from their respective consolidated totals. c. Exclude 15 percent of the preacquisition revenues and 15 percent of the preacquisition expenses from consolidated expenses. d. Deduct 15 percent of the net combined revenues and expenses relating to the preacquisition period from consolidated net income. Bon Air. Pujols. b.000. Ramirez' identifiable assets and liabilities each had book values that equaled their fair values on April 1 for a net total of $500.000 Fair Value of 30% non-controlling interest on April 1 Revenue – Expenses 600. acquired 70 percent (2. what amount should be reported as noncontrolling interest? a.11. $237. During the remainder of the year.500. but this balance included three accounts having fair values that differed from their book values: As of December 31.30 = 72.000. the two companies report the following balances: . $234. Inc. exchanges $430. c.000 x . On a December 31 consolidated balance sheet. On April 1.000.000 Non-controlling December 31 237.000 38.000.000 and expenses of $360... Ramirez generates revenues of $600.000 – 360.000 cash. Creedmoor's net assets on that date totaled $230. 2006.000.800 shares) of the outstanding voting stock of Creedmoor Corporation on January 1.000. 2009. The remaining 30 percent of the outstanding shares continued to trade at a collective fair value of $165. d. $250. $219. for $250. Inc.000 and paid no dividends. 165.000 fair-value consideration for 70 percent of the outstanding stock of Ramirez Corporation. 000 Because Bon As of December 31. Because Bon Air acquired Creedmoor before the effective date of SFAS 141R.000 × 70%) ($68. appropriate. the purchase method is Book value acquired Price in excess of book value Allocation based on fair value Land Equipment ($10.600 14. Purchase Price Allocation and Excess Amortizations Purchase price ($230.600 Liabilities ($20.000 × 70%) $250.400 10 yrs. the purchase method is appropriate.000 (FV) 40.000 Liabilities (10 year life) – (BV) -70. the two companies reported the following balance: Prepare a worksheet to consolidate these two companies as of December 31.000 × 70%) 68.000 $89. 1) 2) 3) Land (BV) 30. 2009.000 47. 2009.000 Equipment (14 year life) – (BV) 50.Prepare a worksheet to consolidate these two companies as of December 31.000 × 70%) .000 (FV) -50.000 14 yrs.000 $7. $3.400 1.000 161.000 (FV) 118. Annual Excess Life Amortizations Air acquired Creedmoor before the effective date of SFAS 141R. 200 (21.000) (109.000) .800) 630.000 68.000 -0(760.000 NCI Consolidated (944.600 9.Goodwill Total $20.800 -021.000 40.600) (50.000) less $4.000) 241.000) 68.000 (40.000 814.600 430.000 165.800 (250.000 (70% × $70.000 (801.238.800 indefinite -0- The parent uses the equity method: Investment income of $44.000) 430.000 (320.000) Noncontrolling int(E)erest in Creedmoor income (70.000) (760.200 289.000) (50.200 (A)74. 1/1/09 Net income Dividends paid Retained earnings.400 Total assets Liabilities (221.000 (109.000) (D) 7.200) (109.000) (A) 1.000) (109.800 (E) 1.800 amortization expense.089. 12/31/09 Current assets Investment in Creedmoor (I) 44.000) (108.000) 72. Bon Air Revenues Operating expenses Investment income Net income Retained earnings.000 108.600 Land Buildings (net) Equipment (net) Goodwill -0-0(A)20.000) (801.400 200.000 (D) 7.000 (58.000 (A)37.400 239.000 (A) 7.400 1.000 50.400 (801.600) Common stock Additional paid-in capital Noncontrolling interest 1/1/09 Noncontrolling interest 12/31/09 Retained earnings.400 $4.000 3.000) (58.200 = $49.200 20.000) (410.600 (S) 40.000) 180.000 (70.000 3.000) -0(90.000 (44.000 -0- (I) 44.000) (S)90.000) 410.000) (S)260.000 321.000) Creedmoor Adjustments & Eliminations (694.000 (180. 12/31/09 Total liabilities and equities (1.800 -0- 120.238.000) (320.000 (S)210.000) (801.000 (50.089.000) 192.000) 10.000 489.000) (1.800) (E) 4.000) (260.000 298.