1. Jeep Co acquired 60% interest in Taxi Co. on January 1, 2021.
Information on the combining
entities’ accounts right after the business combination follows:
Jeep Co Taxi Co.
Carrying Amount Carrying Amount
Other assets 1,296,000 444,000
Investment in subsidiary 360,000
Liabilities (240,000) (96,000)
Net assets 1,416,000 348,000
-Taxi’s net assets have a fair value of 310,000
-The NCI is measured at a fair value of 240,000
How much is the consolidated total assets?
a. 1,954,000
b. 1,992,000
c. 1,965,000
d. 1,972,000
Use the following information for the next two questions:
Strings Corp. acquired 80% of Wind Corp’s voting rights. The statements of financial position of
both entities immediately after the acquisitions are shown below:
Strings Co. Wind Co.
Investment in subsidiary at cost 430,000
Other assets 1,570,000 750,000
Assets 2,000,000 750,000
Liabilities 750,000 400,000
Ordinary shares capital 1,000,000 310,000
Retained earnings 250,000 40,000
Liabilities and stockholders’ equity 2,000,000 750,000
The fair value of Wind’s assets is 50,000 more than the aggregate carrying amounts. Non-
controlling interest is measured under the proportionate share method.
2. How much is the consolidated total assets?
a. 2,910,000
b. 2,480,000
c. 2,430,000
d. 2,370,000
3. What is the breakdown of the consolidated total equity?
Owners of the parent NCI
a. 1,310,000 40,000
b. 1,250,000 80,000
c. 1,250,000 350,000
d. 1,250,000 40,000
Use the following information for the next nine questions:
On January 1, 2021, Square Co Acquired 80% interest in Circle Co. On acquisition date, Circle’s net
identifiable assets have a carrying amount of 296,000. Circle’s identifiable assets approximated their fair
values except for inventory with carrying amount of 92,000 and fair value of 124,000 and equipment
with carrying amount of 160,000 and fair value of 192,000. The remaining useful life of the equipment is
4 years. Non-controlling interest was measured using the proportionate share method. Information on
December 31, 2021 is as follows:
Square Co. Circle Co.
Assets
Cash 392,000 316,000
Inventory 420,000 60,000
Investment in subsidiary (at cost) 300,000
Equipment net 560,000 120,000
Total Assets 1,672,000 496,000
Liabilities and Equity
Trade and other payables 292,000 120,000
Share capital 940,000 200,000
Retained earnings 440,000 176,000
Total equity 1,380,000 376,000
Total Liabilities and Equity 1,672,000 496,000
Income 1,000,000 200,000
Expenses (400,000) (120,000)
Profit for the year 600,000 80,000
No dividends were declared by either entity during 2021. There were also no intercompany transactions
and no impairment of goodwill.
4. How much is the net change in the fair value of the subsidiary’s net assets since the acquisition
date?
a. 100,000 increase
b. 60,000 increase
c. 100,000 increase
d. 40,000 increase
5. What amount of goodwill is reported in the December 31, 2021 consolidated financial
statements?
a. 12,000
b. 42,000
c. 48,000
d. 84,000
6. What amount of goodwill is attributed to non-controlling interests on December 31, 2021
a. 12,000
b. 2,400
c. 2,000
d. 0
7. How much is the consolidated total assets on December 31, 2021?
a. 1,867,000
b. 1,894,000
c. 1,904,000
d. 1,907,000
8. How much is the non-controlling interest in the net assets of the subsidiary on December 31,
2021?
a. 40,000
b. 80,000
c. 120,000
d. 160,000
9. How much is the consolidated retained earnings on December 31, 2021?
a. 378,000
b. 392,000
c. 472,000
d. 522,000
10. How is the consolidated total equity on December 31, 2021 attributed to the following?
Owners of the parent NCI
a. 1,417,000 80,000
b. 1,328,000 72,000
c. 1,412,000 80,000
d. 1,492,000 80,000
11. How much is the consolidated profit in 2021?
a. 720,000
b. 680,000
c. 640,000
d. 568,000
12. How is the consolidated profit attributed to the following?
Owners of the parent NCI
a. 544,000 136,000
b. 632,000 8,000
c. 454,400 113,600
d. 600,000 80,000
