Assume that on January 1, 2012, a parent company acquired a 70% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values except for machinery and equipment, which had a fair value of $460,000 and a reported. book value of $250,000. The machinery and equipment had a 5 year remaining useful life and no salvage value. The following are the highly summarized pre-consolidation income statements of the parent and subsidiary for the year ended December 31, 2013:
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- Assume a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2018. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approximated their recorded book values except for a patent, which had a fair value of $200,000 and no recorded book value. On the date of acquisition, the patent had five years of remaining useful life and the parent company amortizes its intangible assets using straight line amortization. During the year ended December 31, 2019, the subsidiary recorded sales to the parent in the amount of $240,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent’s inventory at December 31, 2019. The following summarized pre-consolidation financial statements are for the parent and the subsidiary for the year ended December 31, 2019: Investor Investee Income statement: Revenues $4,800,000…Equity method and consolidations Assume that a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2018. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approximated their recorded book values except for a patent, which had a fair value of $200,000 and no recorded book value. On the date of acquisition, the patent had five years of remaining useful life and the parent company amortizes its intangible assets using straight line amortization. During the year ended December 31, 2019, the subsidiary recorded sales to the parent in the amount of $240,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent’s inventory at December 31, 2019. The following summarized pre-consolidation financial statements are for the parent and the subsidiary for the year ended December 31, 2019: Investor Investee Income…Consolidated net income and net income attributable to the noncontrolling interest Assume that on January 1, 2021, a parent company acquired an 85% interest in a subsidiary's voting common stock. On the date of acquisition, the fair-value of the subsidiary's net assets equaled their reported book values except for machinery and equipment, which had a fair value of $720,000 and a reported book value of $300,000. the machinery and equipment had a 5-year remaining useful life and no salvage value. The following are the highly summarized pre-consolidation income statements of the parent and subsidiary for the year ended December 31, 2022: Income Statement Parent Subsidiary Revenues $2,592,000 $345,600 75,480 (1,728,000) (172,800) $939,480 $172,800 Equity income Expenses Net income For the year ended December 31, 2022, what amounts will be reported for (1) consolidated net income and (2) net income attributable to the noncontrolling interest, respectively, in the parent's consolidated…
- (i) On 01 January 2013, Gordon Plc acquired 75% of Brown Ltd for $300,000 when Brown`s share capital and reserves were $252,000. Prior to the acquisition, the net book value of Brown`s non-current assets was $90,000. Brown revalued its non-current assets immediately prior to the acquisition to fair value and included the revaluation in its statement of financial position. (ii) On 01 January 2015, Gordon acquired 20% of Boris Ltd for $72,000 when the fair value of Boris`s net assets were $42,000. (iii) Goodwill has been impaired in Brown by $77,700 and in Boris by $31,800 (iv) At the year end, Gordon Plc has inventory acquired from Brown and Boris. Brown had invoiced the inventory to Garden for $6,000 – the cost to Brown had been $1,200 and Boris had invoiced Gordon for $3,000 – the cost to Boris had been $1,800. REQUIRED (a) Prepare Gordon Plc`s Consolidated Statement of Financial Position as at 31 December 2019.Assume that on January 1, 2009, a parent company acquired a 90% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2011, the subsidiary purchased a building for $484,000. The building has a useful life of 10 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2013, the subsidiary sold the building to the parent for $420,000. The parent estimated that the building had an 8 year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. The parent's "stand-alone" income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $500,000. The subsidiary's recorded net income is $110,000. Intercompany sale of depreciable assets Consolidated building (net of accumulated depreciation): $484,000 $420,000 $367,500 $338,800Part A) Assume that a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2012. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approximated their recorded book values except for a patent, which had a fair value of $100,000 and no recorded book value. On the date of acquisition, the patent had 5 years of remaining useful life and the parent company amortizes its intangible assets using straight line amortization. During the year ended December 31, 2013, the subsidiary recorded sales to the parent in the amount of $100,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent’s inventory at December 31, 2013. The following summarized pre-consolidation financial statements are for the parent and the subsidiary for the year ended December 31, 2013: Investor Investee Income statement: Revenues…
- Assume that on January 1, 2009, a parent company acquired a 90% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2011, the subsidiary purchased a building for $480,000. The building has a useful life of 10 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2013, the subsidiary sold the building to the parent for $420,000. The parent estimated that the building had an 8 year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. The parent’s “stand-alone” income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $500,000. The subsidiary’s recorded net income is $100,000. Noncontrolling interest and intercompany sale of depreciable assets Consolidated income attributable to noncontrolling interest: $6,400 $6,850 $10,000…LGM Motors acquired 80% of NS Service Center outstanding shares on January 1, 2022 by payingcash. The consolidated statement of financial position showed the following balances at thedate of acquisition.Consolidated Balances AmountTotal Assets 15,670,000Total Liabilities 4,575,000Total Shareholder’s Equity ?The book value of the net assets of NS Services Center is P4,500,000. The assets of NS ServiceCenter are fairly valued except for the following:• Patent on the product that is deemed worthless, P50,000.• Goodwill of P150,000.• Unrecognized identifiable R&D of P75,000.The fair value of the non-controlling interest is 705,000 and the book value of LGM’s equitybalance is P9,500,000.On December 31, 2022 the following information were provided by NS Services Center:• Net income of 400,000 was recognized.• Patents remaining useful life is 4 years.• Pre-existing goodwill presented above was impaired with a current value of 120,000.• Dividends were declared amounting to P100,000.LGM…On January 1, 2018, Parent Co. acquired 80% of the ordinary shares of Subsidiary Co. for P1,000,000. At the time of acquisition, Subsidiary's Ordinary shares, share premium and retained earnings were P100,000, P400,000 and P500,000 respectively. The identifiable assets and liabilities of the Subsidiary were fairly valued. The assets of the Subsidiary included goodwill of P50,000. The following income statement data were prepared by Parent and Subsidiary on December 31, 2019: Parent Subsidiary 400,000 750,000 50,000 15,000 150,000 300,000 150,000 50,000 Sales Other income Cost of goods sold Operating expenses During 2019, the Subsidiary declared dividends of P50,000. The dividend received by the parent was recorded as part of dividend income (included in other income). On January 1, 2019, Parent purchaseda machine from the subsidiary for P40,000. This was carried at Subsidiary's books at P25,000. The remaining life of the machine was 5 years. Since the purchase date, Subsidiary Co.…
- Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $432,000 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $360,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent’s “stand-alone” income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $450,000 . The subsidiary’s recorded net income is $90,000 Based on this information, determine the balance for Income from Equity investment (on parent’s pre-consolidations books…Assume on January 1, 2015, a parent company a 75% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2017, the subsidiary purchased a building for $576,000. The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2019, the subsidiary sold the building to the parent for $504,000. The parent estimated that the building has a six year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2019, the parent's "stand-alone" income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $600,000. The subsidiary's recorded net income is $120,000. Income from Equity investment (on parent's pre-consolidations books preceding consolidation): $45,000 $102,000 $90,000 $30,000On January 1, 2022, Pacer Corporation (Pacer) acquired 80% of Sprint Ltd. (Sprint) Corp. for $500,000. Please uses the cost method to account for its investment. On January 1, 2022, Sprint's retained earnings and common shares were $350,000 and $110,000, respectively. Sprint's book values did not differ materially from its fair values on the date of acquisition with the following exceptions: • Inventory had a fair value that was $20,000 higher than its book value. This inventory was sold to outsiders during 2022. • A patent (which had not previously been accounted for) was identified on the acquisition date with an estimated fair value of $15,000. The patent had an estimated useful life of 3 years. The financial statements of Pacer and Sprint for the year ended December 31, 2023 are shown below: Income Statements Pacer Corporation Sprint Ltd. Sales $500,000 $300,000 Other revenues 300,000 120,000 Less: expenses Cost of goods sold 400,000 240,000 Depreciation/amortization…