P Incorporated purchased 80% of The S Company on January 2, 2014, when S's book value was $800,000. P paid $700,000 for their acquisition, and the fair value of noncontrolling interest was $175,000. At the date of acquisition, the fair value and book value of S's identifiable assets and liabilities were equal. At the end of the year, the separate companies reported the following balances. Assuming that S has paid no dividends during the year, what is the ending balance of the noncontrolling interest in the subsidiary? Current assets 5,700,000 1,250,000 Plant & equipment 15,200,000 3,400,000 Investment in Solar 780,000 0 Goodwill 0 0 Current liabilities 3,600,000 950,000 Long-term debt 11,680,000 2,800,000 Stockholder's Equity 6,400,000 900,000 Your answer

P Incorporated purchased 80% of The S Company on January 2, 2014, when S's book value was $800,000. P paid $700,000 for their acquisition, and the fair value of noncontrolling interest was $175,000. At the date of acquisition, the fair value and book value of S's identifiable assets and liabilities were equal. At the end of the year, the separate companies reported the following balances. Assuming that S has paid no dividends during the year, what is the ending balance of the noncontrolling interest in the subsidiary? Current assets 5,700,000 1,250,000 Plant & equipment 15,200,000 3,400,000 Investment in Solar 780,000 0 Goodwill 0 0 Current liabilities 3,600,000 950,000 Long-term debt 11,680,000 2,800,000 Stockholder's Equity 6,400,000 900,000 Your answer

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 35P

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P Incorporated purchased 80% of The S Company on January 2, 2014, when S's book value was $800,000. P paid $700,000 for their acquisition, and the fair value of noncontrolling interest was $175,000. At the date of acquisition, the fair value and book value of S's identifiable assets and liabilities were equal. At the end of the year, the separate companies reported the following balances. Assuming that S has paid no dividends during the year, what is the ending balance of the noncontrolling interest in the subsidiary? Current assets 5,700,000 1,250,000 3,400,000 Plant & equipment Investment in Solar 15,200,000 780,000 0 Goodwill 0 0 Current liabilities 3,600,000 950,000 11,680,000 2,800,000 Long-term debt Stockholder's Equity 6,400,000 900,000
P Incorporated purchased 80% of The S Company on January 2, 2014, when S's book value was $800,000. P paid $700,000 for their acquisition, and the fair value of noncontrolling interest was $175,000. At the date of acquisition, the fair value and book value of S's identifiable assets and liabilities were equal. At the end of the year, the separate companies reported the following balances. Assuming that S has paid no dividends during the year, what is the ending balance of the noncontrolling interest in the subsidiary?
On July 1, 2016, Roland Company exchanged 18,000 of its $45 fair value ($1 par value) shares for all the outstanding shares of Downes Company. Roland paid acquisition costs of $40,000. The two companies had the following balance sheets on July 1, 2016: (see attachment)The following fair values applied to Downes’s assets:Other current assets . . . . . . . . . . . $ 70,000Inventory . . . . . . . . . . . . . . . . . . . 80,000Land. . . . . . . . . . . . . . . . . . . . . . . 90,000Building . . . . . . . . . . . . . . . . . . . . 150,000Equipment . . . . . . . . . . . . . . . . . . 100,0001. Record the investment in Downes Company and any other entry necessitated by the purchase.2. Prepare the value analysis and the determination and distribution of excess schedule.3. Prepare a consolidated balance sheet for July 1, 2016, immediately subsequent to the purchase.
On June 30, 2016, Gab Company purchased 25% of the outstanding ordinary shares of IB Co. at a total cost of P2,100,000. The book value of IB Co.’s net assets on acquisition date was P7,200,000. For the following reasons, Gab was willing to pay more than book value for the IB Co. shares: IB Co. has depreciable assets with a current fair value of P180,000 more than their book value. These assets have a remaining useful life of 10 years. IB Co. owns a tract of land with a current fair value of P900,000 more than its carrying amount. All other identifiable tangible and intangible assets of IB Co. have current fair values that are equal to their carrying amounts. IB Co. reported net income of P1,620,000, earned evenly during the current year ended December 31, 2016. Also in the current year, it declared and paid cash dividends of P315,000 to its ordinary shareholders. Market value of IB Co.’s ordinary shares at December 31, 2016 is P9 million. Cabbage Company’s financial year-end is…
On June 30, 2016, Gab Company purchased 25% of the outstanding ordinary shares of IB Co. at a total cost of P2,100,000. The book value of IB Co.’s net assets on acquisition date was P7,200,000. For the following reasons, Gab was willing to pay more than book value for the IB Co. shares: IB Co. has depreciable assets with a current fair value of P180,000 more than their book value. These assets have a remaining useful life of 10 years. IB Co. owns a tract of land with a current fair value of P900,000 more than its carrying amount. All other identifiable tangible and intangible assets of IB Co. have current fair values that are equal to their carrying amounts. IB Co. reported net income of P1,620,000, earned evenly during the current year ended December 31, 2016. Also in the current year, it declared and paid cash dividends of P315,000 to its ordinary shareholders. Market value of IB Co.’s ordinary shares at December 31, 2016 is P9 million. Cabbage Company’s financial year-end is…
On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,666,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,070,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $300,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $656,250 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2017 2018 $525,000 $701,000 Net…
On January 1, 2018, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zee’s acquisition-date fair values, Jay concluded that the carrying value of Zee’s long-term debt (8-year remaining life) was less than its fair value by $20,000. At December 31, 2018, Zee Company’s accounts show interest expense of $12,000 and long-term debt of $250,000. What amounts of interest expense and long-term debt should appear on the December 31, 2018, consolidated financial statements of Jay and its subsidiary Zee?
On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,141,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,380,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $240,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $415,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.During the two years following the acquisition, Sellinger reported the following net income and dividends:Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.Prepare a schedule showing Palka’s December 31, 2018, equity…
P Company acquired 90% of S Corporation on January 1, 2014 for $2,250,000. S had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between S's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from S, P reported net income in 2014 and 2015 of $550,000 and $575,000, respectively. Calculate the Investment in S shown on P's ledger at December 31, 2014. Calculate the Investment in S shown on P's ledger at December 31, 2015. S reported the following net income and dividend payments: (refer to attached picture)
On January 1, 2017, Harrison, Inc., acquired 90 percent of Starr Company in exchange for $1,125,000 fair-value consideration. The total fair value of Starr Company was assessed at $1,200,000. Harrison computed annual excess fair-value amortization of $8,000 based on the difference between Starr’s total fair value and its underlying book value. The subsidiary reported net page 194income of $70,000 in 2017 and $90,000 in 2018 with dividend declarations of $30,000 each year. Apart from its investment in Starr, Harrison had net income of $220,000 in 2017 and $260,000 in 2018. What is the consolidated net income in each of these two years? What is the balance of the noncontrolling interest in Starr at December 31, 2018?
P Company acquired 90% of S Corporation on January 1, 2014 for $2,250,000. S had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between S's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from S, P reported net income in 2014 and 2015 of $550,000 and $575,000, respectively. Calculate the Investment in S shown on P's ledger at December 31, 2015. S reported the following net income and dividend payments: 2014 $150,000 2015 $180,000 Net Income Dividends $30,000 $30,000 Your answer
On March 1, 2017, Mindoro Company purchased 40% of the outstanding ordinary shares of Garapal Company for P3,500,000 when the net assets of Garapal amounted to P7,000,000. At acquisition date, the carrying amounts of the identifiable assets and liabilities of Garapal were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than its carrying amount and inventory whose fair value was P500,000 greater than its cost. The equipment has a remaining life of4 years and the inventory was all sold during 2017. Garapal Company reported net income of P5,000,000 for 2017 add paid P3,000,000 dividends during 2017. REQUIRED: Journal entries (no compounding of entries) Investment income Carrying amount of investment Under Equity Method Under Fair Value