Question

Pie Corporation acquired 65 percent of Slice Company's common stock on r 31, 20X5, at underlying book value. The book values and fair values of Slice's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 35 percent of the total book value of Slice. Slice provided the following trial balance data at December 31, 20X5: Deco Acco Required: a. How much did Pie pay to purchase its shares of Slice? (Round your answer to nearest whole dollar amount.) b. If consolidated financial statements are prepared at December 31, 20X5, what amount will be assigned to the noncontrolling interest in the consolidated balance sheet? (Round your answer to nearest whole dollar amount.) c. If Pie reported income of $141.750 from its separate operations for 20X5, what amount of consolidated net income will be reported for 20X5? d. If Pie had purchased its ownership of Slice on January 1, 20X5, at underlying book value and Pie reported income of $141,750 from its separate operations for 20X5, what amount of consolidated net income would be reported for 20X5?

Answer 1

Please find below table useful to compute desired results: -

AB 1 Part:A 2 Cash 27000 3 Accounts Receivable 64750 4 Inventory 91200 5 Buildings and Equipment (net) 216000 6 Less: liabilites 7 Accounts Payable 33920 8 Notes Payable 122000 9 Book Value of Stock =SUM(B2:B5)-B7-B8 10 Pie should pay =B9*(1-0.35) 11 Part:B 12 Non Controlling Interest =B9*0.35 13 Part:C 14 Consolidated Income of Pie: 15 Separate Income of Pie 141750 16 Income from Slice 17 Total Income =B15+B16 18 Since controlling interest is acquired at end 19 Part :D 20 Consolidated Income of Pie 21 Separate Income of Pie 141750 22 Income from Slice =B30 23 Total Income 163385 24 *Income of Slice 25 Sales 196220 26 Less: Cost of Goods Sold 105700 27 Depreciation Exp 23650 28 Operating Exp 31340 29 Total =B25-B26-B27-B28 30 Share in Slice's Income =B29*(1-0.35)

А 1 Part:A 2 Cash $27,000.00 3 Accounts Receivable $64,750.00 4 Inventory $91,200.00 5 Buildings and Equipment (net) $216,000.00 6 Less: liabilites 7 Accounts Payable $33,920.00 8 Notes Payable $122,000.00 9 Book Value of Stock $243,030.00 10 Pie should pay $157,969.50 11 Part:B 12 Non Controlling Interest $85,060.50 13 Part:C 14 Consolidated Income of Pie: 15 Separate Income of Pie $141,750.00 16 Income from Slice $0.00 17 Total Income $141,750.00 18 Since controlling interest is acquired at end 19 Part :D 20 Consolidated Income of Pie 21 Separate Income of Pie $141,750.00 22 Income from Slice $23,094.50 23 Total Income $163,385.00 24 *Income of Slice 25 Sales $196,220.000 26 Less: Cost of Goods Sold $105,700.00 27 Depreciation Exp $23,650.00 28 Operating Exp $31,340.000 29 Total $35,530.00 30 Share in Slice's Income $23,094.50