When a parent company uses the equity method to account for investment in a subsidiary, the...
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Answer-When a parent company uses the equity method to account for investment in a subsidiary, the amortization expense entry recorded during the year is eliminated on a consolidation worksheet as a component of Entry I. What is the necessity of removing this amortization because In the consolidation process, excess amortizations must be recorded annually for any portion of the purchase price that is allocated to specific accounts.Although this expense can be simulated in total on the parent's books by an equity method entry, the actual amortization of each allocated fair value adjustment is appropriate for consolidation. Hence, the effect of the parent's equity equity method amortization entry is removed as part of Entry I so that the amortization of specific accounts can be recorded in consolidation Entry E.
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When a parent company uses the equity method to account for
investment in a subsidiary, the...
looking for help on question 2 a-h. Questions 1. CCES Corporation acquires a controlling interest in...
looking for help on question 2 a-h.
Questions 1. CCES Corporation acquires a controlling interest in Schmaling, Inc. CCES may utilize any one of three methods to internally account for this investment. Deseribe ench of these methods, and indicate their advantages and disadvantages. 2. Maguire Company obtains 100 percent control over Williams Company. Several years after the takeover, consolidated financial statements are being produced. For each of the following accounts, briefly describe the values that should be included in consolidated...
Parent purchased Subsidiary on January 1, 2015. The parent uses the equity method to account for...
Parent purchased Subsidiary on January 1, 2015. The parent uses the equity method to account for its investment in its subsidiary. The excess of investment cost over book value was allocated as follows: Equipment (20-yr life) $ 130,000 Customer list (10-yr life) 184,000 Patent (10-yr life) 147,000 Goodwill 139,000 Total $ 600,000 Parent regularly sells merchandise to Subsidiary. In 2017, inter-company sales amounted to $50,100, with $16,300 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $18,900....
7-Parent purchased Subsidiary on January 1, 2019. The parent uses the equity method to account for...
7-Parent purchased Subsidiary on January 1, 2019. The parent uses the equity method to account for its investment in its subsidiary. The excess of investment cost over book value was allocated as follows: Equipment (20-year life) $400,000 Customer list (10-year life) 90,000 Patent (5-year life) 125,000 Goodwill 165,000 Total $780,000 Parent regularly sells merchandise to Subsidiary. In 2021, inter-company sales amounted to $60,100, with $18,000 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $24,000. In 2022,...
Intercompany Transactions – Equity Method 60 points Parent purchased 100% of a Subsidiary on January 1,...
Intercompany Transactions – Equity Method 60 points Parent purchased 100% of a Subsidiary on January 1, 2020. The excess of investment cost over book value of $350,000 was allocated entirely to a 7-year royalty agreement. The parent uses the equity method to account for its investment in its subsidiary. In 2021, Subsidiary sold to Parent land having a book value of $90,000 for a total price of $244,000. On January 2, 2022, Parent sold equipment to Subsidiary for $120,000. The...
If a company sells a depreciable asset to its subsidiary at a profit on December 31,...
If a company sells a depreciable asset to its subsidiary at a profit on December 31, 20X3, what account balances must be eliminated or adjusted in preparing the consolidated income statement for 20X3? If the sale instead occurred on January 1, 20X3, what additional account(s) will require adjustment in preparing the consolidated income statement? When a parent company sells land to a subsidiary at more than book value, the consolidation entries at the end of the period include a debit...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Subsidiary...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Subsidiary Parent Accounts Payable 1,083 890 Long-term Debt 2,013 1,262 Common Stock 3,356 1,759 Retained Earnings 5,467 4,677 Here is the separate income and dividends paid during the year Separate Net Income Dividends Declared Parent 9,434 2,201 Subsidiary 2,520 850 After the consolidation entry is prepared the consolidated net income will be $
Below is the equity section of the consolidated worksheet between a parent...
Question text Preparing the [I] consolidation journal entries for sale of depreciable assets - Equity method...
Question text
Preparing the
[I] consolidation journal entries for sale of depreciable
assets - Equity method
Assume that on January 1, 2011, a wholly owned subsidiary sells to
its parent, for a sale price of $132,000, equipment that originally
cost $156,000. The subsidiary originally purchased the equipment on
January 1, 2007, and depreciated the equipment assuming a 10-year
useful life (straight-line with no salvage value). The parent has
adopted the subsidiary's depreciation policy and depreciates the
equipment over the remaining...
Subsidiary 46. Prepare consolidation spreadsheet for intercompany sale of land-Equity method LOS Assume a parent company...
Subsidiary 46. Prepare consolidation spreadsheet for intercompany sale of land-Equity method LOS Assume a parent company acquired its subsidiary on January 1, 2017, at a purchase price that was $270,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acquisition date. X of that excess, $180,000 was assigned to an unrecorded Patent owned by the subsidiary that is being amortized over a 10-year period. The [A] Patent asset has been amortized as part of the parent's...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Parent...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Parent Subsidiary Accounts Payable 1,584 668 Long-term Debt 3,264 1,314 Common Stock 4,285 1,695 Retained Earnings 6,621 4,619 Here is the separate income and dividends paid during the year Separate Net Income Dividends Declared Parent 7,836 2,467 Subsidiary 2,118 881 When the consolidation entry is prepared the debit to Retained Earnings will be $____
Questions: 1. Prepare entry S to eliminate stockholders' equity accounts of subsidiary. 2. Prepare entry A...
Questions:
1. Prepare entry S to eliminate stockholders' equity accounts of
subsidiary.
2. Prepare entry A to recognize allocations attributed to fair
value of specific accounts at acquisition date with residual fair
value recognized as goodwill.
3. Prepare entry I to eliminate $122,500 income accrual for 2017
less $11,000 amortization recorded by parent using equity
method.
4. Prepare entry D to eliminate intra-entity dividend
transfers.
5. Prepare entry E to recognize current year amortization
expense.
6. Prepare entry S to...
looking for help on question 2 a-h.
Questions 1. CCES Corporation acquires a controlling interest in Schmaling, Inc. CCES may utilize any one of three methods to internally account for this investment. Deseribe ench of these methods, and indicate their advantages and disadvantages. 2. Maguire Company obtains 100 percent control over Williams Company. Several years after the takeover, consolidated financial statements are being produced. For each of the following accounts, briefly describe the values that should be included in consolidated...
7-Parent purchased Subsidiary on January 1, 2019. The parent uses the equity method to account for its investment in its subsidiary. The excess of investment cost over book value was allocated as follows: Equipment (20-year life) $400,000 Customer list (10-year life) 90,000 Patent (5-year life) 125,000 Goodwill 165,000 Total $780,000 Parent regularly sells merchandise to Subsidiary. In 2021, inter-company sales amounted to $60,100, with $18,000 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $24,000. In 2022,...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Subsidiary Parent Accounts Payable 1,083 890 Long-term Debt 2,013 1,262 Common Stock 3,356 1,759 Retained Earnings 5,467 4,677 Here is the separate income and dividends paid during the year Separate Net Income Dividends Declared Parent 9,434 2,201 Subsidiary 2,520 850 After the consolidation entry is prepared the consolidated net income will be $
Below is the equity section of the consolidated worksheet between a parent...
Question text
Preparing the
[I] consolidation journal entries for sale of depreciable
assets - Equity method
Assume that on January 1, 2011, a wholly owned subsidiary sells to
its parent, for a sale price of $132,000, equipment that originally
cost $156,000. The subsidiary originally purchased the equipment on
January 1, 2007, and depreciated the equipment assuming a 10-year
useful life (straight-line with no salvage value). The parent has
adopted the subsidiary's depreciation policy and depreciates the
equipment over the remaining...
Subsidiary 46. Prepare consolidation spreadsheet for intercompany sale of land-Equity method LOS Assume a parent company acquired its subsidiary on January 1, 2017, at a purchase price that was $270,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acquisition date. X of that excess, $180,000 was assigned to an unrecorded Patent owned by the subsidiary that is being amortized over a 10-year period. The [A] Patent asset has been amortized as part of the parent's...
Questions:
1. Prepare entry S to eliminate stockholders' equity accounts of
subsidiary.
2. Prepare entry A to recognize allocations attributed to fair
value of specific accounts at acquisition date with residual fair
value recognized as goodwill.
3. Prepare entry I to eliminate $122,500 income accrual for 2017
less $11,000 amortization recorded by parent using equity
method.
4. Prepare entry D to eliminate intra-entity dividend
transfers.
5. Prepare entry E to recognize current year amortization
expense.
6. Prepare entry S to...
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