Multiple-Choice Questions on Consolidated Balances [AICPA Adapted] Select the cor...

Multiple-Choice Questions on Consolidated Balances [AICPA Adapted]

Select the correct answer for each of the following questions.

Items 1 and 2 are based on the following:

On January 2, 20X8, Pare Company acquired 75 percent of Kidd Company’s outstanding common stock at an amount equal to its underlying book value. Selected balance sheet data at December 31, 20X8, are as follows:

1. In Pare’s December 31, 20X8, consolidated balance sheet, what amount should be reported as minority interest in net assets?

a. $0.

b. $30,000.

c. $45,000.

d. $105,000.

2. In its consolidated balance sheet at December 31, 20X8, what amount should Pare report as common stock outstanding?

a. $50,000.

b. $100,000.

c. $137,500.

d. $150,000.

3. Consolidated statements are proper for Neely Inc., Randle Inc., and Walker Inc., if

a. Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Randle owns 30 percent of Walker.

b. Neely owns 100 percent of the outstanding common stock of Randle and 90 percent of Walker; Neely bought the Walker stock one month before the foreign country in which Walker is based imposed restrictions preventing Walker from remitting profits to Neely.

c. Neely owns 100 percent of the outstanding common stock of Randle and Walker; Walker is in legal reorganization.

d. Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Reeves Inc. owns 55 percent of Walker.