REFERENCE: Ref.06_05 The Following Information Has Been Taken from the Consolidation Worksheet

question 34

Multiple Choice

REFERENCE: Ref.06_05
The following information has been taken from the consolidation worksheet of Graham Company and its 80% owned subsidiary,Stage Company.
(1. ) Graham reports a loss on sale of land of $5,000.The land cost Graham $20,000.
(2. ) Noncontrolling interest in Stage's net income was $30,000.
(3. ) Graham paid dividends of $15,000.
(4. ) Stage paid dividends of $10,000.
(5. ) Excess acquisition-date fair value over book value was expensed by $6,000.
(6. ) Consolidated accounts receivable decreased by $8,000.
(7. ) Consolidated accounts payable decreased by $7,000.
-How is the amount of excess acquisition-date fair value over book value recognized on a consolidated statement of cash flows assuming the indirect method is used?

• A)It is ignored.
• B)$6,000 subtracted from net income.
• C)$4,800 subtracted from net income.
• D)$6,000 added to net income.
• E)$4,800 added to net income.

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Definitions:

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A sequence of payments or deliveries spread over a period of time as part of a larger agreement.

Cure

The remediation of a breach or defect in a contract, allowing for the restoration of the terms without penalty.

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An individual or entity given temporary possession but not ownership of personal property by another (the bailor) for a specific purpose.

Document of Title

A legal document or electronic record evidencing the right to control the disposition of goods, such as a bill of lading or warehouse receipt.