Homework Answers
Part-1) Cost method:
|
Particulars |
Debit |
Credit |
|
|
Year-2015 |
Cash |
40,000 |
|
|
Dividend income (.8 x $50,000) |
40,000 |
||
|
Year-2016 |
Cash |
28,000 |
|
|
Investment in Song (.8 x $35,000) |
28,000 |
Part-2) Partial Equity method:
|
Particulars |
Debit |
Credit |
|
|
Year-2014 |
Investment in Song |
42,000 |
|
|
Cash |
42,000 |
||
|
Investment in Song |
40,000 |
||
|
Equity income (.8 x $63,500) |
40,000 |
||
|
Year-2015 |
Equity loss (.8 x $55,000) |
44,000 |
|
|
Investment in Song |
44,000 |
||
|
Cash |
28,000 |
||
|
Investment in Song (.8 x $35,000) |
28,000 |
||
|
Year-2016 |
Equity loss (.8 x $55,000) |
44,000 |
|
|
Investment in Song |
44,000 |
||
|
Cash |
28,000 |
||
|
Investment in Song (.8 x $35,000) |
28,000 |
Part-3)
|
Particulars |
Debit |
Credit |
|
|
Year-2014 |
Investment in Song |
387,000 |
|
|
Cash |
387,000 |
||
|
Investment in Song |
50,800 |
||
|
Equity income (.8 x $63,500) |
50,800 |
||
|
Cash |
20,000 |
||
|
Investment in Song (.8 x $25,000) |
20,000 |
||
|
Cost of investment |
387,000 |
||
|
Book value acquired ($475,000 x 80%) |
380,000 |
||
|
Difference between Cost and Book value |
7,000 |
||
|
Equity income ($7,000 / 10 yrs.) |
700 |
||
|
Investment in Song |
700 |
||
|
Year-2015 |
Investment in Song |
42,000 |
|
|
Equity income (.8 x $52,500) |
42,000 |
||
|
Cash |
40,000 |
||
|
Investment in Song (.8 x $50,000) |
40,000 |
||
|
Equity income ($7,000 / 10 yrs.) |
700 |
||
|
Investment in Song |
700 |
||
|
Year-2016 |
Equity loss (0.8*$55,000) |
44,000 |
|
|
Investment in Song |
44,000 |
||
|
Cash |
28,000 |
||
|
Investment in Song (.8 x $35,000) |
28,000 |
||
|
Equity income ($7,000 / 10 yrs.) |
700 |
||
|
Investment in Song |
700 |
Add Answer to:
EXERCISE 4-1 Parent Company Entries, Liquidating Dividend LO 2 Perey Company purchased 80% of the outstanding...
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the...
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted to $496,800. Income and dividend distributions for Song Company from 2014 through 2016 are as follows: Net Income (loss) Dividend distribution 2014 2015 2016 $60,600 $53,900 ($57,200 ) 23,800 50,600 36,300 Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to...
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the...
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted to $496,800. Income and dividend distributions for Song Company from 2014 through 2016 are as follows: Net Income (loss) Dividend distribution 2014 2015 2016 $60,600 $53,900 ($57,200 ) 23,800 50,600 36,300 Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to...
Percy Company uses the complete equity method to record its investment. The difference between book value...
Percy Company uses the complete equity method to record its
investment. The difference between book value of equity acquired
and the value implied by the purchase price was attributed solely
to an excess of market over book values of depreciable assets, with
a remaining life of 10 years.
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted...
Mohammed Company acquired 80% of the outstanding common stock of Sami Company on January 2, 2012 for O.R. 675,000. At th...
Mohammed Company acquired 80% of the outstanding common stock of Sami Company on January 2, 2012 for O.R. 675,000. At that time, Sami’s total stockholders’ equity amounted to O.R. 1,000,000. Sami Company reported net income (loss) and dividends for the last two years as follows: 2012 2013 Reported net income O.R 45,000 O.R (50,000) Dividends distributed 35,000 0 Instructions: Prepare journal entries for Mohammed Company for 2012 and 2013 assuming Mohammed uses the partial equity method to record its investment....
Exercise 4-6 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of...
Exercise 4-6 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $352,500. On that date, Sales Company's stockholders' equity consisted of common stock, $100,400; other contributed capital, $40,500; and retained earnings, $143,800. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $153,600 and declared and paid a $50,300 dividend....
Problem 4-1 On January 1, 2011, Perelli Company purchased 90,000 of the 100,000 outstanding shares of...
Problem 4-1 On January 1, 2011, Perelli Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a long-term investment. The purchase price of $4,934,300 was paid in cash. At the purchase date, the balance sheet of Singer Company included the following: Current assets Long-term assets Other assets Current liabilities Common stock, $20 par value Other contributed capital Retained earnings $2,954,600 3,908,000 757,000 1,553,500 2,010,600 1,844,200 1,609,200 Additional data on Singer Company for the four...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
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...
On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company...
On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $370,700. On that date, Sales Company’s stockholders’ equity consisted of common stock, $108,900; other contributed capital, $43,800; and retained earnings, $137,700. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company’s land was significantly less than its fair value. During 2014 Sales Company earned $159,100 and declared and paid a $52,800 dividend. Pert Company...
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted to $496,800. Income and dividend distributions for Song Company from 2014 through 2016 are as follows: Net Income (loss) Dividend distribution 2014 2015 2016 $60,600 $53,900 ($57,200 ) 23,800 50,600 36,300 Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to...
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted to $496,800. Income and dividend distributions for Song Company from 2014 through 2016 are as follows: Net Income (loss) Dividend distribution 2014 2015 2016 $60,600 $53,900 ($57,200 ) 23,800 50,600 36,300 Prepare journal entries on the books of Percy Company from the date of purchase through 2016 to...
Percy Company uses the complete equity method to record its
investment. The difference between book value of equity acquired
and the value implied by the purchase price was attributed solely
to an excess of market over book values of depreciable assets, with
a remaining life of 10 years.
Exercise 4-1 Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2014 for $406,000. At the time of purchase, Song Company's total stockholders' equity amounted...
Exercise 4-6 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $352,500. On that date, Sales Company's stockholders' equity consisted of common stock, $100,400; other contributed capital, $40,500; and retained earnings, $143,800. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $153,600 and declared and paid a $50,300 dividend....
Problem 4-1 On January 1, 2011, Perelli Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a long-term investment. The purchase price of $4,934,300 was paid in cash. At the purchase date, the balance sheet of Singer Company included the following: Current assets Long-term assets Other assets Current liabilities Common stock, $20 par value Other contributed capital Retained earnings $2,954,600 3,908,000 757,000 1,553,500 2,010,600 1,844,200 1,609,200 Additional data on Singer Company for the four...
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
Exercise 4-7 On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $361,700. On that date, Sales Company's stockholders' equity consisted of common stock, $93,900; other contributed capital, $37,000; and retained earnings, $148,500. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value. During 2014 Sales Company earned $134,900 and declared and paid a $50,500 dividend....
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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