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8) On July 1, 2014, when Salaby Company's total stockholders' equity was $360,000, Pogana Corporation purchased 14,000 shares of Salaby's common stock at $30 per share. Salaby had 20,000 shares of common stock outstanding both before and after the purchase by Pogana, and the book value of Salaby's net assets on July 1, 2014 was equal to the fair value. On a consolidated balance sheet prepared at July 1, 2014, goodwill would be A) $85,714 B) $100,000. C) S240,000. D) $60,000. 9) In the preparation of consolidated financial statements, which of the following intercompany transactions must be eliminated as part of the preparation of the consolidation working papers? A) Only sales revenue and cost of goods sold B) All revenues, expenses, gains, losses, receivables, and payables C) Receivables and payables but not revenues, expenses, gains, and losses D) All revenues, expenses, gains, and losses but not receivables and payables 10) On consolidated working papers, a subsidiary's net income is A) deducted from ending consolidated retained earnings. B) deducted from beginning consolidated retained earnings. C) only an entry in the parent company's general ledger. D) allocated between the noncontrolling interest share and the parent's share. 11) On January 1, 20X1, Prim, Inc. acquired all the outstanding common shares of Scarp, Inc. for cash equal to the book value of the stock. The carrying amount of Scarp's assets and liabilities approximated their fair values, except that the carrying amount of its building was more than fair value. In preparing Prim's 20XI consolidated income statement, which of the following adjustments would be made? A) Depreciation expense would be decreased, and goodwill would be recognized. B) Depreciation expense would be increased, and goodwill would be recognized. C) Depreciation expense would be decreased, and no goodwill would be recognized. D) Depreciation expense would be increased, and no goodwill would be recognized. 12) Which of the following financial statements, if any, prepared by a parent immediately after a business combination is likely to be different from financial statements it prepares immediately before the business combination? Balance Sheet A) B) C) D) es Yes No No Income Statement Yes No Yes No

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