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The preparation of consolidated statements likely will require the
following information about the subsidiary's assets and liabilities at the
date of acquisition:
Question 7
Which one of the following levels of voting ownership is normally
assumed to convey significant influence over an investee?
Question 8
In recording its acquisition of Lambda, Inc., Omega, Inc. properly
recognized a contingent consideration liability of $28,000 associated
with a possible payment based on a target amount of post-combination
cash flow from operations. Shortly after the combination, but during the
measurement period, the national economy experienced a significant
downturn which made it unlikely that the target amount would be
reached. As a consequence, at the end of Omega's fiscal period, the
liability was properly revalued to a fair value of $9,000. Which one of
the following is the amount of gain or loss that will be recognized in
income as a result of the reevaluation of the contingent liability?
Question 9
Beni Corp. purchased 100% of Carr Corp.'s outstanding capital stock for
$430,000 cash. Immediately before the purchase, the balance sheets of
both corporations reported the following: On the date of purchase, the
fair value of Carr's assets was $50,000 more than the aggregate carrying
amounts. In the consolidated balance sheet prepared immediately after
the purchase, the consolidated stockholders' equity should amount to:
Question 10