On january 1, 2016, pride corporation purchased 90 percent of the outstanding voting shares of star, inc.,
for $540,000 cash. the acquisition-date fair value of the noncontrolling interest was $60,000. at january
1, 2016, star’s net assets had a total carrying amount of $420,000. equipment (eight-year remaining life)
was undervalued on star’s financial records by $80,000. any remaining excess fair value over book value
was attributed to a customer list developed by star (four-year remaining life), but not recorded on its books.
star recorded net income of $70,000 in 2016 and $80,000 in 2017. each year since the acquisition, star
has declared a $20,000 dividend. at january 1, 2018, pride’s retained earnings show a $250,000 balance.
selected account balances for the two companies from their separate operations were as follows:
pride star
2018 revenues. . . . . . . . . . . $498,000 $285,000
2018 expenses. . . . . . . . . . . ? 350,000 195,000
7. what is consolidated net income for 2018?
a. $194,000
b. $197,500
c. $203,000
d. $238,000

Each of the following scenarios is based on facts in anactual fraud. categorize each scenario as primarily indicating (1) anincentive to commit fraud, (2) an opportunity to commit fraud, or(3) a rationalization for committing fraud. also state your reasoningfor each scenario.a. there was intense pressure to keep the corporation ' stock from declining further. this pressure came from investors, analysts,and the ceo, whose financial well-being was significantly dependent on the corporation ' s stock price.b. a group of top-level management was compensated (mostly in the form of stock-options) well in excess of what would be considered normal for their positions in this industry.c. top management of the company closely guards internal financial information, to the extent that even some employees on a “need-to-know basis” are denied full access.d. managing specific financial ratios is very important to the company, and both management and analysts are keenly observant of variability in key ratios. key ratios for the company changed very little even though the ratios for the overall industry were quite volatile during the time period.e. in an effort to reduce certain accrued expenses to meet budget targets, the cfo directs the general accounting department to reallocate a division’s expenses by a significant amount. the general accounting department refuses to acquiesce to the request, but the journal entry is made trough the corporate office. an accountant in the general accounting department is uncomfortable with the journal entries required to reallocate divisional expenses. he brings his concerns to the cfo, who assures him that everything will be fine and that the entries are necessary. the accountant considers resigning, but he does not have another job lined up and is worried about supporting his family. therefore, he never voices his concerns to either the internal or external auditors.f. accounting records were either nonexistent or in a state of such disorganization that significant effort was required to locate or compile them.

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How did the contribution of the goods producing sector to gdp growth change between 2010 and 2011 a. it fell by 0.3%. b. it fell by 2.3%. c. it rose by 2.3%. d. it rose by 0.6%. the answer is b