REFERENCE: 03-06
Kaye Company Acquired 100% of Fiore Company on January

question 81

Multiple Choice

REFERENCE: 03-06
Kaye Company acquired 100% of Fiore Company on January 1,2018.Kaye paid $1,000 excess consideration over book value,which is being amortized at $20 per year.There was no goodwill in the combination.Fiore reported net income of $400 in 2018 and paid dividends of $100.
-Assume the partial equity method is used.In the years following acquisition,what additional worksheet entry must be made for consolidation purposes,but is not required for the equity method?
A.
$\begin{array}{llr} \text { Retanned earnungs } &20\\ \text { Investment in Fiore } &&20\\\end{array}$


B.
$\begin{array}{llr} \text {Investment in Fiore } &20\\ \text {Retanned earnungs } &&20\\\end{array}$


C.
$\begin{array}{llr} \text { Expenses} &20\\ \text { Investment in Fiore } &&20\\\end{array}$

D.
$\begin{array}{llr} \text { Expenses } &20\\ \text { Retanned earnungs } &&20\\\end{array}$

E.
$\begin{array}{llr} \text { Retanned earnungs } &20\\ \text { Additional paid-in capital } &&20\\\end{array}$

• A)Entry A.
• B)Entry B.
• C)Entry C.
• D)Entry D.
• E)Entry E.

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Definitions:

Brand Bundling

The marketing strategy of selling several products or services together as a single combined unit, often at a reduced price.

Joint Product

A product that is produced simultaneously with another product in the same process, often unable to be separated until after the manufacturing process.

Private Branding

A strategy where products manufactured by one company are sold under another company's brand or label.

Private Labeling

A retail strategy where products are manufactured by one company but sold under another company's brand, often to offer exclusive branded products without the cost of manufacturing.