Multiple choice

Subject:Business, Accounting/Business Analysis/Financial Reporting - Year 3 Description: CONSOLIDATED BALANCE SHEET

QUESTIONS

Problem:Deer Company acquired 70 percent of Elk Corporation's outstanding stock. Deer's separate balance sheet immediately after the acquisition and the consolidated balance sheet are as follows:
Deer C ...there is more show problem
Deer Company acquired 70 percent of Elk Corporation's outstanding stock. Deer's separate balance sheet immediately after the acquisition and the consolidated balance sheet are as follows:

Deer Consolidated

Current Assets $106,000 $146,000
Investment in Elk (cost) 100,000
Goodwill 8,100
Fixed Assets (net) 270,000 370,000
$476,000 $524,100
Current Liabilities $ 15,000 $ 28,000
Capital Stock 350,000 350,000
Noncontrolling Interest 35,100
Retained Earnings 111,000 111,000
$476,000 $524,100

Ten thousand dollars of the excess payment for the investment in Elk was ascribed to undervaluation of its fixed assets; the balance of the excess payment was ascribed to goodwill. Elk's current assets included a $2,000 receivable from Deer that arose before they became related on an ownership basis. The following two items relate to Elk's separate balance sheet prepared at the time Deer acquired its 70 percent interest in Elk.

33. What was the total of the current assets on Elk's separate balance sheet at the time Deer acquired its 70 percent interest?
a. $38,000.
b. $40,000.
c. $42,000.
d. $104,000.

What was the total stockholders' equity on Elk's separate balance sheet at the time Deer acquired its 70 percent interest?
a. $64,900.
b. $70,000.
c. $100,000.
d. $117,000..

A 70 percent owned subsidiary company declares and pays a cash dividend. What effect does the dividend have on the retained earnings and minority interest balances in the parent company's consolidated balance sheet?
a. No effect on either retained earnings or minority interest.
b. No effect on retained earnings and a decrease in minority interest.
c. Decreases in both retained earnings and minority interest.
d. A decrease in retained earnings and no effect on minority interest.