Homework Answers
A) computation of difference between cost/(implied) and book value applying using :
1) parent company theory
| particular | calculation | amounts |
| cost of 75% S company's common stock (as investment) | $900000 | |
| less : value of equity acquired as per records of S company (75% of common stock and retained earnings) | 75% x ($720000 + $160000) | -$660000 |
| difference as per parent company theory | $240000 |
2) economic unit theory
| particular | calculation | amounts |
| implied value of S company (cost of investment/share of P company) | $900000/75% | $1200000 |
| less : book value of S company (common stock and retained earnings) | ($720000 + $160000) | -$880000 |
| difference as per economic unit theory | $320000 |
B) economic unit theory :
share of noncontrolling interest = 100% - share of P company in S company
share of noncontrolling interest = 100% - 75% = 25%
1) computation of noncontrolling interest in consolidated income for 2016 :
| net income for 2016 | $180000 |
| less : diiference between cost/(implied) and book value as per economic unit theory/ total remaining useful lifeon january 1, 2016 ($320000/10) | -$32000 |
| $148000 | |
| multiply by share of non controlling interest | x 25% |
| noncontrolling interest in consolidated income for 2016 ($148000 x 25%) | $37000 |
2) computaion of noncontrolling interest in net intereston december 31, 2016 :
| total assets | $1020000 |
| add : (diiference between cost/(implied) and book value as per economic unit theory x remaining useful life on december 31, 2016)/total remaining useful life on january 1, 2016 [($320000 x 9)/10] | $288000 |
| $1308000 | |
| multiply by share of non controlling interest | x 25% |
| noncontrolling interest in net assets on december 31, 2016 ($1308000 x 25%) | $327000 |
note - it is assumed that where 2013 or 13 is mentioned, it is 2016 or 16 for beginning and/or ending balances.
thank you
please give your feed back and rating
Add Answer to:
The following balances were taken from the records of S Common stock (1/1/13 and 12/31/13) Retained...
1) The balance of common stock of S Co. at acquisition date was: * a) $1,625,000...
1) The balance of common stock of S Co. at acquisition
date was: *
a) $1,625,000
b) $1,850,000
c) $2,000,000
d) $1,960,000
2) The eliminating entries for a consolidated statements workpaper
on December 31, 2019, will include: *
a) Debit Investment in S Co. $2,080,000
b) Credit Retained Earnings $600,000
c) Credit Dividends Declared $160,000
d) Debit Dividend Income $128,000
3) The difference between implied and book value at acquisition
date was: *
a) $120,000
b) $175,000
c) $125,000
d)...
Exercise 5-5 On January 1, 2014, P Company purchased an 80% interest in s Company for...
Exercise 5-5 On January 1, 2014, P Company purchased an 80% interest in s Company for $590,400, at which time S Company had retained earnings of $310,800 and common stock of $344,300. Any difference between book value and the value implied by the purchase price was entirely attributable to a patent with a remaining useful life of 10 years. Assume that P and S Companies reported net incomes from their independent operations of $195,800 and $100,300, respectively. Calculate the controlling...
On January 1, 2018, Sledge had common stock of $340,000 and retained earnings of $480,000. During...
On January 1, 2018, Sledge had common stock of $340,000 and
retained earnings of $480,000. During that year, Sledge reported
sales of $350,000, cost of goods sold of $180,000, and operating
expenses of $62,000.
On January 1, 2016, Percy, Inc., acquired 70 percent of Sledge's
outstanding voting stock. At that date, $82,000 of the
acquisition-date fair value was assigned to unrecorded contracts
(with a 20-year life) and $42,000 to an undervalued building (with
a 10-year remaining life).
In 2017, Sledge...
Problem 3 Pennington Corporation purchased 80% of the votine common stock of Stafford Corporation for $3,200,000...
Problem 3 Pennington Corporation purchased 80% of the votine common stock of Stafford Corporation for $3,200,000 cash on January 1, 2016. On this date the book values and fair values of Stafford Corporation's assets and liabilities were as follows: Book Value Fair Value Cash $ 70,000 $ 70,000 Receivables 240,000 240,000 Inventories 600,000 700.000 Other Current Assets 340.000 405,000 Land 600,000 720,000 Buildings -net 1,050,000 1.920,000 Equipment - net 850,000 750,000 $3.750,000 $4.805.000 $250,000 670.000 Accounts Payable Other Liabilities Capital...
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...
Problem 5-26 (LO 5-3, 5-4, 5-5, 5-7) On January 1, 2018, Sledge had common stock of $180,000 and retained earnings of $...
Problem 5-26 (LO 5-3, 5-4, 5-5, 5-7) On January 1, 2018, Sledge had common stock of $180,000 and retained earnings of $320,000. During that year, Sledge reported sales of $190,000, cost of goods sold of $100,000, and operating expenses of $46,000. On January 1, 2016, Percy, Inc., acquired 90 percent of Sledge's outstanding voting stock. At that date, $66,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $26,000 to an undervalued building (with...
On January 1, 2018, Sledge had common stock of $150,000 and retained earnings of $290,000. During...
On January 1, 2018, Sledge had common stock of $150,000 and retained earnings of $290,000. During that year, Sledge reported sales of $160,000, cost of goods sold of $85,000, and operating expenses of $43,000. On January 1, 2016, Percy, Inc., acquired 90 percent of Sledge's outstanding voting stock. At that date, $63,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $23,000 to an undervalued building (with a 10-year remaining life). In 2017, Sledge...
On January 1, 2018, Sledge had common stock of $320,000 and retained earnings of $460,000. During...
On January 1, 2018, Sledge had common stock of $320,000 and retained earnings of $460,000. During that year, Sledge reported sales of $330,000, cost of goods sold of $170,000, and operating expenses of $60,000. On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $80,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $40,000 to an undervalued building (with a 10-year remaining life). In 2017, Sledge...
On January 1, 2018, Sledge had common stock of $320,000 and retained earnings of $460,000. During...
On January 1, 2018, Sledge had common stock of $320,000 and retained earnings of $460,000. During that year, Sledge reported sales of $330,000, cost of goods sold of $170,000, and operating expenses of $60,000. On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $80,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $40,000 to an undervalued building (with a 10-year remaining life). In 2017, Sledge...
Photo Corporation acquired 75 percent of Shutter Corporation's voting common stock on January 1, 20X2, at...
Photo Corporation acquired 75 percent of Shutter Corporation's voting common stock on January 1, 20X2, at underlying book value. At the acquisition date, the book values and fair values of Shutter'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 Shutter. Noncontrolling interest was assigned income of $8,000 in Photo's consolidated income statement for 20X2 and a balance of $65,500 in Photo's consolidated balance sheet...
1) The balance of common stock of S Co. at acquisition
date was: *
a) $1,625,000
b) $1,850,000
c) $2,000,000
d) $1,960,000
2) The eliminating entries for a consolidated statements workpaper
on December 31, 2019, will include: *
a) Debit Investment in S Co. $2,080,000
b) Credit Retained Earnings $600,000
c) Credit Dividends Declared $160,000
d) Debit Dividend Income $128,000
3) The difference between implied and book value at acquisition
date was: *
a) $120,000
b) $175,000
c) $125,000
d)...
Exercise 5-5 On January 1, 2014, P Company purchased an 80% interest in s Company for $590,400, at which time S Company had retained earnings of $310,800 and common stock of $344,300. Any difference between book value and the value implied by the purchase price was entirely attributable to a patent with a remaining useful life of 10 years. Assume that P and S Companies reported net incomes from their independent operations of $195,800 and $100,300, respectively. Calculate the controlling...
On January 1, 2018, Sledge had common stock of $340,000 and
retained earnings of $480,000. During that year, Sledge reported
sales of $350,000, cost of goods sold of $180,000, and operating
expenses of $62,000.
On January 1, 2016, Percy, Inc., acquired 70 percent of Sledge's
outstanding voting stock. At that date, $82,000 of the
acquisition-date fair value was assigned to unrecorded contracts
(with a 20-year life) and $42,000 to an undervalued building (with
a 10-year remaining life).
In 2017, Sledge...
Problem 3 Pennington Corporation purchased 80% of the votine common stock of Stafford Corporation for $3,200,000 cash on January 1, 2016. On this date the book values and fair values of Stafford Corporation's assets and liabilities were as follows: Book Value Fair Value Cash $ 70,000 $ 70,000 Receivables 240,000 240,000 Inventories 600,000 700.000 Other Current Assets 340.000 405,000 Land 600,000 720,000 Buildings -net 1,050,000 1.920,000 Equipment - net 850,000 750,000 $3.750,000 $4.805.000 $250,000 670.000 Accounts Payable Other Liabilities Capital...
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...
Problem 5-26 (LO 5-3, 5-4, 5-5, 5-7) On January 1, 2018, Sledge had common stock of $180,000 and retained earnings of $320,000. During that year, Sledge reported sales of $190,000, cost of goods sold of $100,000, and operating expenses of $46,000. On January 1, 2016, Percy, Inc., acquired 90 percent of Sledge's outstanding voting stock. At that date, $66,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $26,000 to an undervalued building (with...
On January 1, 2018, Sledge had common stock of $150,000 and retained earnings of $290,000. During that year, Sledge reported sales of $160,000, cost of goods sold of $85,000, and operating expenses of $43,000. On January 1, 2016, Percy, Inc., acquired 90 percent of Sledge's outstanding voting stock. At that date, $63,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $23,000 to an undervalued building (with a 10-year remaining life). In 2017, Sledge...
On January 1, 2018, Sledge had common stock of $320,000 and retained earnings of $460,000. During that year, Sledge reported sales of $330,000, cost of goods sold of $170,000, and operating expenses of $60,000. On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $80,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $40,000 to an undervalued building (with a 10-year remaining life). In 2017, Sledge...
On January 1, 2018, Sledge had common stock of $320,000 and retained earnings of $460,000. During that year, Sledge reported sales of $330,000, cost of goods sold of $170,000, and operating expenses of $60,000. On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $80,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $40,000 to an undervalued building (with a 10-year remaining life). In 2017, Sledge...
Photo Corporation acquired 75 percent of Shutter Corporation's voting common stock on January 1, 20X2, at underlying book value. At the acquisition date, the book values and fair values of Shutter'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 Shutter. Noncontrolling interest was assigned income of $8,000 in Photo's consolidated income statement for 20X2 and a balance of $65,500 in Photo's consolidated balance sheet...
Most questions answered within 3 hours.
-
Computer Programming II CS141(Java)
Mention the appropriate relationship between following
classes:
HOD–StaffMember
Car–Ferrari
Student-Address
BankAccount–FixedAccount
House-Building...
asked 1 hour ago -
Assume one of your finals has 50 questions on it, and
lucky for you, it's all...
asked 3 hours ago -
Rice Products in Bangladesh
Business behavior is derived in large part from the basic cultural
environment...
asked 4 hours ago -
The following base sequence is found for a mRNA fragment from
wild-type E. coli: 5'- UAUCAGUAGAUAAUGUAACC-3'...
asked 4 hours ago -
For this exercise, round all regression parameters to three
decimal places.
One of the two tables...
asked 5 hours ago -
What is the 5% level of significance for mean = 3.60, standard
deviation = 0.94, and...
asked 5 hours ago -
Prior to beginning work on this discussion, please read the
article by Hayley Peterson, 15 Companies...
asked 5 hours ago -
Which pair of aqueous solutions, when mixed, will form a
precipitate?
A) NaNO3 and AgC2H3O2
B)...
asked 5 hours ago -
1-Write an algorithm to get two numbers from the user (as
inputs) and calculate the sum...
asked 9 hours ago -
Define white-collar crime. What is the difference between
offender and offense-based definitions of white-collar crime? What...
asked 9 hours ago -
Consider a reaction which is 1st order with respect to A and 1st
order with respect...
asked 10 hours ago -
c++
The length of the hypotenuse of a right-angled triangle is the
square root of the...
asked 10 hours ago