MULTIPLE$-$CHOICE $(2$ POINTS EACH$)-$ Clearly circle$/$mark the correct answer.

Patrick Incorporated owns $70$ percent of the voting common stock of Swayze Company. Swayze owns $60$ percent of the voting common stock of Ghost Incorporated. Patrick's consolidated financial statements should include the financial information for:

a$.$ Patrick only.

$\mathrm{.}70\mathrm{.}60=\mathrm{.}42,\mathrm{.}701$

$($b$)$ Patrick, Swayze, and Ghost

$5$

c$.$ Patrick and Swayze.

$\mathrm{.}601$

d$.$ Swayze and Ghost.

G

When are consolidated financial statements for $2$ or more legal entities required?

a$.$ The companies are one economic entity in both legal form and substance.

b$.$ The companies are separate entities in both legal form and substance.

c$.$ In form, the companies are one economic entity; in substance, they are legally separate.

d$.$ In form, the companies are legally separate; in substance, they are one economic entity.

If in substance, two legal entities are also one economic entity,

a$.$ Only separate financial statements should be prepared.

b$.$ Combined financial statements must be prepared

c$.$ Consolidated financial statements must be prepared.

d$.$ Consolidated financial statements may be prepared; it is up to management discretion.

On April $5,2023,$ Pod Company purchased a $60$ percent interest in Seed Company for $$540,000.$

Seed reported net income of $$168,000$ for $2023$ and declared and paid a dividend of $$30,000.$

Pod accounts for this investment by recording journal entries using the equity method.

In its December $31,2023,$ balance sheet, what amount should Pod report as its investment in Seed?

a$.$ $$678,000$

b$.$ $$622,800$

c$.$ $$406,800$

d$.$ $$462,000$

DRT PROBLEM I $(10$ POINTS$)$

On June $28,2023,$ Poison Company issued $72,000$ shares of its $$1$ common stock for all $61,000$ of Slash Incorporat $$1$ par common shares.

Poison's stock was selling for $$31$ per share immediately prior to the combination, and Slash's stock was selling fo share.

Prior to June $28,$ Poison incurred merger costs of $$54,000$ and $$86,000$ of costs to register and issue the new sha stock.

Following the combination, Slash operated as a subsidiary of Poison.

Required:

Prepare the required journal entry that Poison would make to record the business combination with Slash. Acquisition Expense $54000,$ Investmentin Slash Deferred Stock issue Costs $86000$