13 40. Which of the following accounts consolidated financial ements related to

Question

13 40. Which of the following accounts consolidated financial ements related to intercompany leases should NOr be eliminated from the intercompany a. The unearned interest revenue on the lease b. The lease obligation C. The minimum lease payments receivable d. The asset (e.g, equipment) sume that Partners A, B, and C agreed to award each partner a bonus of S percent of net income after the Was 57,000, $5,000, and $4,000 respectively. What is the amount of bonus awarded to each partner? 41. A ntereston capital. Net income amounted to $85,000, interest on capital for partners A, B, and C a. $10,350 b. $3,45o c. $9,000 d. $3,000 42. Which of the following financial statement amounts is NOT eliminated in the consolidation process? a. b. c. d. Parent's Additional Paid-In Capital Parent's investment in subsidiary Subsidiary's Retained Earnings Sales of Merchandise to Parent 43. The determination and distribution schedule Calculates the difference between the book values of the subsidiary's assets and liabilities and their current fair values on the date of preparing the financial statements Is not prepared if the parent acquires 100 percent of the subsidiary's common stock Helps in determining the amount of goodwill or gain on acquisition of a subsidiary All of these statements are correct. a. b. c. d. 44. Which of the following is true about the schedule of safe payments prepared in installment liquidations? The schedule assumes that remaining non-cash assets will be worthless. The schedule assumes that when partners have deficit capital balances, their personal assets will be allocated between the partnership deficit and personal debts. The schedule determines how available cash balances should be allocated between creditors (to settle partnership liabilities) and partners (to settle partners' capital). Only one schedule needs to be prepared throughout the liquidation process. a. b. c. d. Blank Page

Explanation / Answer

ans 40 d) The asset It is not eliminated Ans 41 Net Income $85,000 Less: interest 16000 Income after allocation of interest $69,000 5% bonus to each (69000*5%) $3,450 option b $3450 to each partner ans 42 a) parent's Additonal paid in capital The additional p[aidin capital of the parent company is presented on the Balance sheet of the consolidated financial statement hence not eliminated ans 43 c) Help in determining the amount iof goodwill or gain on acquisition of subsidiary. An determination and distribution schedule is prepared at the time of acquisition by parent of an subsidiary. It helps in calculation of goodwill in case acquisition price is more than book value of net assets, so some amount is allocated to goodwill ans 44 a) is correct

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