Pie Corporation acquired 75 percent of Slice Company’s common stock on December 31, 20X5, at underlying...

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Pie Corporation acquired 75 percent of Slice Company’s common stock on December 31, 20X5, at underlying...

Pie Corporation acquired 75 percent of Slice Company’s common stock on December 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 25 percent of the total book value of Slice. Slice provided the following trial balance data at December 31, 20X5:

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 $143,000 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 $143,000 from its separate operations for 20X5, what amount of consolidated net income would be reported for 20X5?

business accounting

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Answer 1

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Answer #1

Part:A
Cash	28700
Accounts Receivable	64300
Inventory	88400
Buildings and Equipment (net)	203000
Less:
Accounts Payable	(32720)
Notes Payable	(116000)
Book Value of Stock	235,680

Pie should pay	$176,760
(75% of 235,680)

Part:B
Non Controlling Interest(235680*25%)	$ 58,920

Part:C
Consolidated Income of Pie:
Separate Income of Pie	143,000
Income from Slice	0
Total Income	143000

Since controlling interest is acquired on 31 dec 2015.

Part :D
Consolidated Income of Pie
Separate Income of Pie	143000
Income from Slice(see work below)*	20,385
Total Income	163,385

*Income of Slice
Sales	185690
Less: Cost of Goods Sold	(103300)
Depreciation Exp	(24150)
Operating Exp	31060
Total	27,180
Share in Slice's Income@75%	20,385

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