In Preparing the Consolidation Worksheet as of December 31, 2018

question 113

Multiple Choice

In preparing the consolidation worksheet as of December 31, 2018 for AHI and RMC, which of the following worksheet entry descriptions reflects what AHI should do to consolidate the financial statements?

• A) Consolidation Entry A is recorded to allocate the excess fair value to the noncontrolling interest and record a credit to the Asset in connection with a fair valuation on the date AHI obtains control of RMC as follows: Noncontrolling interest $96,000
• Asset $96,000
• B) Consolidation Entry P is recorded to eliminate the long-term receivable and debt representing AHI's initial investment in RMC as follows: Loan receivable from RMC $3,000,000
• Long-term debt $3,000,000
• C) Consolidation Entry S is recorded to eliminate the interest payment on the loan from RMC to AHI as follows: Interest expense $180,000
• Interest income $180,000
• D) Consolidation Entry E is recorded to amortize the excess fair value allocation to the Asset over its remaining useful life as follows: Other operating expenses $32,000
• Asset $32,000
• E) Consolidation Entry P is recorded to eliminate the beginning stockholders' equity of the VIE and recognize the 100% equity ownership of the noncontrolling interest as follows: Retained earnings - RMC 1/1/18 $ 6,000
• Common stock - RMC $34,000
• Retained Earnings-AHI $40,000

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Definitions:

Color Vision Deficiency

A condition impacting the ability to perceive colors accurately, commonly referred to as color blindness.

X Chromosome

One of the two sex chromosomes, present in both males (XY) and females (XX), involved in determining sex and other genetic traits.

Basilar Membrane

A key structure within the cochlea of the inner ear, playing a critical role in the perception of sound by vibrating in response to frequencies.

Rods

Specialized cells in the retina that are sensitive to low light levels and are responsible for peripheral and night vision.