Homework Answers
Note :
1) If dividend is paid out of post acquisition profits, then it is credited to Profit and Loss A/c in the books of Holding Company.
2) If dividend is paid out of pre acquisition profits,
then it is credited to the Investment A/c in the books of Holding
Company
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I. Penn acquired a 90% interest in Skelly on January 1 for $50,000 when Skelly's stockholders'...
I. Prep pays $105,000 for 80% interest in Snap on January 1 2006, when Snap stockholders'...
I. Prep pays $105,000 for 80% interest in Snap on January 1 2006, when Snap stockholders' equity consists of S60,000 capital stock and $30,000 retained earnings. The excess of investment cost is allocated to patents with the 15 Years Amortization. During the year Snap's net income is $30,000 and Pay dividend $15,000. a. Calculation the income from Snap and Journal Entry? b. Dividends from Snap and Journal Entry c. Investment is Snap during the year and Journal Entry d. Minority...
2. Prep pays $87,000 for 80% interest in Snap on January 1, when Snap stockholders' equity...
2. Prep pays $87,000 for 80% interest in Snap on January 1, when Snap stockholders' equity consists of $60,000 capital stock and $30,000 retained earnings. The $15,000 excess of investment cost is allocated to patents with 15 years amortization. During the year: Net income $25,000, Dividends $10,000 Please prepare the journal entry b.Calculate the MI during the acquisition c. How much the investment at year end? d. What is Snap equity by end of the year?
1 . Prep pays $450,000 for 80% interest in Snap on January 1 2006, when Snap...
1 . Prep pays $450,000 for 80% interest in Snap on January 1 2006, when Snap stockholders' equity consists of $250,000 capital stock and $160,000 retained earnings. The excess of investment cost is allocated to Goodwill Asset Cash Account Receivable Other Current Asset 120,000 20,000 Equipment, Net Building Net Land Total Asset PrepSnap 100,000 50,000 50,000 60,000 200,000 300,000 50,000 80,000 150,000 250,000 670,000 960,000 Liabilities Account Payable Note Payable Total Liabilities Shareholder Equity Capital Retained Earning Total S.E 250,000...
Alvie Heating & Air experienced the following events during Year 2: Acquired $50,000 cash from the...
Alvie Heating & Air experienced the following events during Year 2: Acquired $50,000 cash from the issue of common stock Paid $20,000 cash to purchase land Borrowed $40,000 cash Provided services for $60,000 cash Paid $12,000 cash for rent expense Paid $18,000 cash for other operating expenses Paid 10% interest on the Note Payable. Paid a $5,000 cash dividend to the stockholders Determined that the market value of the land purchased in Event 2 is now $16,500 The January 1,...
Sonaya is a 90% owned subsidiary of Pareto Corp. , acquired in 25X1 at price $4,500...
Sonaya is a 90% owned subsidiary of Pareto Corp. , acquired in 25X1 at price $4,500 in excess of book value, because the undervaluation of Sonaya 's inventory was sold in 20X1. The fair value of non-controlling interest on acquisition date is equal to $10,500 and Pareto Corp. intends to acquire Sonaya for 100%. On that date, Sonaya had Capital stock of $ 80,000 and retained Earning of $20,000 .Comparative financial Statements for Pareto Corp. and Sonaya for the year...
On January 1, 20X9, Parker acquired 90% of Sanders for $200,000 plus $15,000 in acquisition costs. On the date of...
On January 1, 20X9, Parker acquired 90% of Sanders for $200,000 plus $15,000 in acquisition costs. On the date of acquisition, Sanders had the following balance sheet Sanders Company Balance Sheet January 1, 20x9 Assets Liabilities and Equity Accounts Receivable $40,000 Current Liabilities $110,000 100,000 100,000 Inventory 160,000 Bonds Payable 60,000 Common Stock, $1 par 150,000 Paid-in Capital (20,000) Retained Earnings 50,000 (10,000) 30,000 $460,000 Total Liabilities and Equity Land Buildings Accumulated Depreciation Equipment Accumulated Depreciation Goodwill Total Assets 50,000...
Perez Company purchased 90% of the common stock of Sanchez, Inc. on January 1, 2018, for...
Perez Company purchased 90% of the common stock of Sanchez, Inc. on January 1, 2018, for $85,000. Sanchez Inc had capital stock of $70,000 and retained earnings of $12,000 at that time. Trial balances at the end of 2019 for the companies were: Sanchez $14,000 36,000 8,000 Perez $13,000 22,000 14,000 8,000 84,000 10,000 67.800 10,000 85,000 $ 313,800 6,000 37,000 Cash Accounts Receivable Inventory, 1/1 Advance to Sanchez Company Purchases Other Expenses Plant Assets Dividends Declared Investment in Sanchez...
Lowell Company acquired 90 percent of Boston Company’s 100,000 outstanding shares on January 1, 2019, for...
Lowell Company acquired 90 percent of Boston Company’s 100,000 outstanding shares on January 1, 2019, for $234,000 cash. Boston’s share was actively traded at $2.50 per share on the market, which is deemed as the NCI’s fair value per share. Boston's stockholders' equity consisted of common stock of $120,000 and retained earnings of $80,000. An analysis of Boston's net assets revealed the following: Book Value Fair Value Buildings (10-year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land...
Parrot Corporation acquired 90% of Swallow Co. on January 1, 2014 for $27,000 cash when Swallow's...
Parrot Corporation acquired 90% of Swallow Co. on January 1, 2014 for $27,000 cash when Swallow's stockholders' equity consisted of $10,000 of Capital Stock and $5,000 of Retained Earnings. The difference between the fair value and book value of Swallow's net assets was allocated solely to a patent amortized over 5 years. The separate company statements for Parrot and Swallow appear in the first two columns of the partially completed consolidation working papers. Complete the consolidation working papers for Parrot...
Exercise 4-5 On January 1, 2014, Plate Company purchased a 90% interest in the common stock...
Exercise 4-5 On January 1, 2014, Plate Company purchased a 90% interest in the common stock of Set Company for $597,840, an amount $20,400 in excess of the book value of equity acquired. The excess relates to the understatement of Set Company's land holdings. Excerpts from the consolidated retained earnings section of the consolidated statements workpaper for the year ended December 31, 2014, follow: 1/1/14 retained earnings Net income from above Set Company 171,200 119,700 (50,300 ) 240,600 Consolidated Balances...
I. Prep pays $105,000 for 80% interest in Snap on January 1 2006, when Snap stockholders' equity consists of S60,000 capital stock and $30,000 retained earnings. The excess of investment cost is allocated to patents with the 15 Years Amortization. During the year Snap's net income is $30,000 and Pay dividend $15,000. a. Calculation the income from Snap and Journal Entry? b. Dividends from Snap and Journal Entry c. Investment is Snap during the year and Journal Entry d. Minority...
2. Prep pays $87,000 for 80% interest in Snap on January 1, when Snap stockholders' equity consists of $60,000 capital stock and $30,000 retained earnings. The $15,000 excess of investment cost is allocated to patents with 15 years amortization. During the year: Net income $25,000, Dividends $10,000 Please prepare the journal entry b.Calculate the MI during the acquisition c. How much the investment at year end? d. What is Snap equity by end of the year?
1 . Prep pays $450,000 for 80% interest in Snap on January 1 2006, when Snap stockholders' equity consists of $250,000 capital stock and $160,000 retained earnings. The excess of investment cost is allocated to Goodwill Asset Cash Account Receivable Other Current Asset 120,000 20,000 Equipment, Net Building Net Land Total Asset PrepSnap 100,000 50,000 50,000 60,000 200,000 300,000 50,000 80,000 150,000 250,000 670,000 960,000 Liabilities Account Payable Note Payable Total Liabilities Shareholder Equity Capital Retained Earning Total S.E 250,000...
On January 1, 20X9, Parker acquired 90% of Sanders for $200,000 plus $15,000 in acquisition costs. On the date of acquisition, Sanders had the following balance sheet Sanders Company Balance Sheet January 1, 20x9 Assets Liabilities and Equity Accounts Receivable $40,000 Current Liabilities $110,000 100,000 100,000 Inventory 160,000 Bonds Payable 60,000 Common Stock, $1 par 150,000 Paid-in Capital (20,000) Retained Earnings 50,000 (10,000) 30,000 $460,000 Total Liabilities and Equity Land Buildings Accumulated Depreciation Equipment Accumulated Depreciation Goodwill Total Assets 50,000...
Perez Company purchased 90% of the common stock of Sanchez, Inc. on January 1, 2018, for $85,000. Sanchez Inc had capital stock of $70,000 and retained earnings of $12,000 at that time. Trial balances at the end of 2019 for the companies were: Sanchez $14,000 36,000 8,000 Perez $13,000 22,000 14,000 8,000 84,000 10,000 67.800 10,000 85,000 $ 313,800 6,000 37,000 Cash Accounts Receivable Inventory, 1/1 Advance to Sanchez Company Purchases Other Expenses Plant Assets Dividends Declared Investment in Sanchez...
Parrot Corporation acquired 90% of Swallow Co. on January 1, 2014 for $27,000 cash when Swallow's stockholders' equity consisted of $10,000 of Capital Stock and $5,000 of Retained Earnings. The difference between the fair value and book value of Swallow's net assets was allocated solely to a patent amortized over 5 years. The separate company statements for Parrot and Swallow appear in the first two columns of the partially completed consolidation working papers. Complete the consolidation working papers for Parrot...
Exercise 4-5 On January 1, 2014, Plate Company purchased a 90% interest in the common stock of Set Company for $597,840, an amount $20,400 in excess of the book value of equity acquired. The excess relates to the understatement of Set Company's land holdings. Excerpts from the consolidated retained earnings section of the consolidated statements workpaper for the year ended December 31, 2014, follow: 1/1/14 retained earnings Net income from above Set Company 171,200 119,700 (50,300 ) 240,600 Consolidated Balances...
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