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

question 53

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 initial value method is used.In the year subsequent to acquisition,what additional worksheet entry must be made for consolidation purposes that is not required for the equity method?
A.
$\begin{array}{ll}\text { Investment in Fiore } & 380 \\\quad \text { Retained earnings } &&380 \\\end{array}$

B.
$\begin{array}{ll}\text { Retained earnings } & 380 \\\quad \text { Investment in Fiore } & &380\\\end{array}$

C.
$\begin{array}{ll}\text { Investment in Fiore } &280 \\\quad \text { Retained earnings } &&280\\\end{array}$

D.
$\begin{array}{ll}\text { Retained earnings } &280 \\\quad \text { Investment in Fiore } && 280 \\\end{array}$

E.
$\begin{array}{ll}\text { Additional paid-in capital } &280 \\\quad \text { Retained earnings }&&280\end{array}$

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

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Definitions:

Ventricles

The two lower chambers of the heart that receive blood from the atria and pump it into the arteries.

Fluid Retention

The accumulation of excess fluid in the body's tissues, causing swelling commonly known as edema.

Swelling

The enlargement of a body part due to the accumulation of fluid in tissues, often as a response to injury or inflammation.

Aorta

The largest artery in the body, transporting oxygen-rich blood from the left ventricle of the heart to various parts of the body.