Concept explainers
Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total
The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.
The consolidation entries needed to prepare consolidated
Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.
The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.
The preparation of consolidated balance sheet work sheet as on January 1, 20X3.
Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.
The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.
The preparation of consolidated balance sheet January 1 20X3.
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Advanced Financial Accounting
- Peanut Company acquired 75 percent of Snoopy Company's stock at underlying book value on January 1, 20X8. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Snoopy Company. Snoopy Company reported shares outstanding of $350,000 and retained earnings of $100,000. During 20X8, Snoopy Company reported net income of $60,000 and paid dividends of $3,000. In 20X9, Snoopy Company reported net income of $90,000 and paid dividends of $15,000. The following transactions occurred between Peanut Company and Snoopy Company in 20X8 and 20X9:Snoopy Co. sold equipment to Peanut Co. for a $42,000 gain on December 31, 20X8. Snoopy Co. had originally purchased the equipment for $140,000 and it had a carrying value of $28,000 on December 31, 20X8. At the time of the purchase, Peanut Co. estimated that the equipment still had a seven-year remaining useful life.Peanut sold land costing $90,000 to Snoopy Company on June 28, 20X9, for…arrow_forwardOn 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co's retained earnings amounted to $90,000 and the fair values of Beta Co's assets at acquisition were equal to their book values. Three years later, on 31 December 20X2, the statements of financial position of the two companies were: Alpha Co Beta Co $ $ Sundry net assets 230,000 260,000 Shares in Beto 180,000 - Share capital Ordinary shares of $1 each 200,000…arrow_forward1. Matray acquired 16,000 ordinary shares of Petros on 1 April 20X9. On 31 December 20X8Petros’s accounts showed a share premium of $4,000 and retained earnings of $15,000. The fairmarket value of non-controlling interest at acquisition was $7,000.Below are the statements of financial position for the two companies as at 31 December 20X9:Matray PetrosNon-current assets:Property, plant and equipment 39,000 33,000Investment in Petros 50,000Current assets 78,000 40,000Total assets 167,000 73,000Equity and liabilitiesEquityOrdinary shares of: $1 each 100,000: 50c each 10,000Share premium 7,000 4,000Retained earnings 40,000 39,000Current liabilities 20,000 20,000Total equity and liabilities 167,000 73,000Required:Prepare the consolidated statement of financial position of Matray as at 31 December 20X9. Assumeprofits have accrued evenly throughout the yeararrow_forward
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- Peace Company issued common shares with a par value of $58,000 and a market value of $165,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable SYMBOL CORPORATION Balance Sheet January 1, 20X2 Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities Book Value Fair Value $ 57,000 $ 57,000 97,000 97,000 133,000 163,000 55,000 70,000 505,000 326,000 (245,000) Investment income (loss) Balance in the investment account $ 602,000 $ 22,000 172,000 148,000 12,000 248,000 $ 602,000 32,000 $ 745,000 $ 22,000 172,000 The estimated economic life of the patents held by Symbol is 10 years. The buildings and equipment are expected to last 12 more years on average. Symbol paid dividends of $18,000 during…arrow_forwardEntity A acquired sixty per cent of the issued equity shares of entity B by exchanging three shares in entity A for every two shares acquired in entity B. At that date, entity B had issued equity capital of one hundred thousand shares. At the date of acquisition, the fair value of an equity share in entity A was $3.50 and the fair value of an equity share in entity B was $2.00. The nominal value per share of both entities was $1.00 per share. What was the fair value of consideration paid by entity A to gain control of entity B?arrow_forwardNorth Ltd acquired $100,000 of shares in South Ltd for trading purposes on 1 January 20X3. Transaction costs of $2,000 were incurred. The fair value of the shares at 31 December 20X3 was $120, 500. Choose the account names and calculate the amount that correctly account for this investment on 31 December 20X3 (amount for the credit entry is not required).arrow_forward
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