Polka Corporation acquired 100 percent of Song Company's voting stock on January 1, 20X4, at underlying book value.Polka uses the equity method in accounting for its ownership of Song. On December 31, 20X4, the trial balances of the twocompanies are as follows:ItemCurrent AssetsDepreciable AssetsInvestment in Song CompanyDepreciation ExpenseOther ExpensesDividends DeclaredAccumulated DepreciationCurrent LiabilitiesLong-Term DebtCommon StockRetained EarningsSalesIncome from Song CompanyPolka CorporationDebit$ 254,000514,000246,00020,000156,00069,000CreditSong CompanyDebit$ 156,000308,00010,00081,00030,000Credit$ 60,00040,000118,00084,000142,000141,000$ 186,00060,00098,000186,000463,000216,00050,000$ 1,259,000 $ 1,259,000 $ 585,000 $ 585,000Required:a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.b. Prepare a three-part consolidation worksheet as of December 31, 20X4.

Investment in Associates and Joint venture and Subsidiary Equity Accounting method - This method is…

Answered: Polka Corporation acquired 100 percent…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Ship reported retained earnings of $75,000 on the date of acquisition. The trial balances for Plimsol Company and Shipping Corporation as of December 31, 20X4, follow: Item Current Assets Depreciable Assets (net) Investment in Shipping Corporation Other Expenses Depreciation Expense Dividends Declared Current Liabilities. Long-Term Debt Common Stock Retained Earnings Sales Dividend Income Plimsol Company Debit Credit $ 160,000 180,000 125,000 85,000 20,000 30,000 $ 600,000 $ 25,000 75,000 100,000 210,000 175,000 15,000 $ 600,000 Shipping Corporation Debit Credit $ 115,000 135,000 60,000 15,000 15,000 $ 20,000 50,000 50,000 100,000 120,000 $ 340,000 $ 340,000 Required: 1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4. 2. Prepare a…
On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Sharp at that date. Pierce uses the equity method in accounting for its ownership of Sharp. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Sharp Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Subsidiary Required: Pierce Company Debit $ 200,000 300,000 139,500 30,000 100,000 30,000 $ 799,500 Credit $ 120,000 62,000 75,000 100,000 120,000 300,000 22,500 $ 799,500 Sharp Corporation Debit $ 120,000 225,000 25,000 60,000 10,000 $ 440,000 Credit $ 75,000 25,000 90,000 75,000 65,000 110,000 $ 440,000 1) Provide all consolidating entries required as of December 31, 20X4, to prepare…
On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Shipping's reported retained earnings of $75,000 on the date of acquisition. The trial balances for Plimsol Company and Shipping Corporation as of December 31, 20X4, follow: 24 Item Current Assets Depreciable Assets (net) Investment in Shipping Corporation Other Expenses Depreciation Expense Dividends Declared Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Dividend Income Plimsol Company Debit Credit $ 160,000 180,000 125,000 85,000 20,000 30,000 Shipping Corporation Debit Credit $ 115,000 135,000 60,000 15,000 15,000 $ 25,000 75,000 100,000 210,000 175,000 15,000 $ 600,000 $ 600,000 $ 340,000 $ 340,000 $ 20,000 50,000 50,000 Required: 1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4. 2. Prepare a three-part…
2) On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Standard Company Other Expenses Depreciation Expense Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Standard Company Peery Company Debit $ 238,000 300,000 100,000 90,000 30,000 32,000 Credit $ 120,000 50,000 120,000 100,000 175,000 200,000 25,000 Standard Company Debit Credit $ 95,000 170,000 70,000 17,000 10,000 $ 790,000 $ 790,000 $362,000 $ 85,000 30,000 50,000 50,000 35,000 112,000 $362,000 Required: 1. Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet. 2. Prepare a three-part consolidation worksheet as of December 31, 20X5.
Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor's net assets was equal to $370,000. Accumulated depreciation on this date was $24,000. Paper uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Paper and Scissor as of December 31, 20X9: Cash Accounts Receivable Inventory Investment in Scissor Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scissor Company Total Debit $ 232,000 165,000 193,000 515,000 250,000 875,000 278,000 65,000 312,000 90,000 $ 2,975,000 Paper Company Credit $ 630,000 85,000 150,000 625,000 498,000 880,000 107,000 $ 2,975,000 Scissor Company Debit $ 116,000 97,000 115,000 1-0 125,000 250,000 178,000 12,000…
Police Corporation acquired 100 percent of Station Corporation's voting shares on January 1, 20X3, at underlying book value. At that date, the book values and fair values of Station's assets and liabilities were equal. Police uses the equity method in accounting for its investment in Station. Adjusted trial balances for Police and Station on December 31, 20X4, are as follows: Item Current Assets Depreciable Assets (net) Investment in Station Corporation Depreciation Expense Other Expenses Dividends Declared Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Station Corporation Police Corporation Debit $ 223,000 320,000 230,000 24,000 165,000 62,000 Credit $ 50,000 93,000 193,000 414,000 223,000 51,000 $ 1,024,000 $ 1,024,000 Station Corporation Debit Credit $ 161,000 212,000 14,000 82,000 31,000 $ 500,000 $ 30,000 113,000 83,000 127,000 147,000 $ 500,000 Required: a. Prepare the consolidation entries required on December 31, 20X4, to prepare…
On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Peery Company Standard Company Debit Credit Debit Credit Current Assets $ 238,000 $ 95,000 Depreciable Assets 300,000 170,000 Investment in Standard Company 100,000 Other Expenses 90,000 70,000 Depreciation Expense 30,000 17,000 Dividends Declared 32,000 10,000 Accumulated Depreciation $ 120,000 $ 85,000 Current Liabilities 50,000 30,000 Long-Term Debt 120,000 50,000 Common Stock 100,000 50,000 Retained Earnings 175,000 35,000 Sales 200,000 112,000 Income from Standard Company 25,000 $ 790,000 $ 790,000 $ 362,000 $ 362,000 Required: Prepare the consolidation entries needed as of December 31, 20X5, to complete a…
On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Sharp at that date. Pierce uses the equity method in accounting for its ownership of Sharp. On December 31, 20X4, the trial balances of the two companies are as follows: Item Sales Depreciation Expense Other Expenses Income from Subsidiary Net Income Current Assets Investment in Sharp Depreciable Assets Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings at Jan.1 20x4 Dividends Declared Pierce Company Debit $30,000 100,000 $ 200,000 139,500 300,000 30,000 $799,500 Credit $300,000 22,500 $192,500 $ 120,000 62,000 75,000 100,000 120,000 $799,500 Sharp Corporation Debit $25,000 60,000 $120,000 225,000 10,000 $ 440,000 Credit $110,000 $25,000 $75,000 25,000 90,000 75,000 65,000 $440,000 Required: Provide Basic consolidation entry and Accumulated…
Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $321,300 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $357,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of January 1, 20X8, follow: Assets Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Accumulated Depreciation Total Assets Liabilities and Stockholders' Equity Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities and Equity Peanut Company Snoopy Company $ 24,000 34,000 72,000 $ 71,000 66,000 117,000 321,300 231,000 719,000 (392,000) $ 1,133,300 $ 66,000 195,000 481,000 391,300 $ 1,133,300 113,000 210,000 (8,000) $ 445,000 $ 22,000 66,000 195,000 162,000 $ 445,000 Required: a. Prepare the journal entry on Peanut's books for the acquisition of Snoopy on January 1, 20X8. b. Prepare a consolidation worksheet on the acquisition date, January 1,…
Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $52,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Spirited Company $ Proud Corporation Debit 255,000 518,000 133,280 23,000 148,000 53,000 Credit $ 200,000 63,000 127,880 193,000 277,000 231,000 38,400 $1,130,280 $1,130,280 Spirited Company Credit Debit $169,000 311,000 13,000 85,000 25,400 $603,400 $ 78,000 43,000 192,400 87,000…
Jam Ltd acquired all the equity in Cab Ltd on 31 December 20X4 for $360 000. At the control date, the equity of Cab was recorded as Paid-up capital of $260 000 and Retained profits of $30 000. The purchase price was based on the agreed fair values of Cab's identifiable assets and liabilities on that date. The following items were not at fair value in Cab's financial statements on the control date. Inventory Property (Cost of $250 000, Accumulated depreciation of $40 000) Carrying amount ($) 32 000 210 000 Fair value ($) 24 000 252 000 Other information: • Both Cab and the group entity account for its property by the cost model, and apply straight-line depreciation to the property. The property in Cab Ltd is expected to have a remaining life of 21 years from 31 December 20X4, and no residual value. Cab sold goods to Jam for $5,000 during FY20X5, the cost of these inventories was 4,000. All these inventories were still on hand by Jam by 31 December 20X5, the year-end. . Required: Prepare…
The following are summarized Balance Sheets as on March 31, 2020 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisitionall the assets and liabilities of S Ltd were reflected at fair valueThe Retained earnings of S Ltd. on April 1, 2019 was $ 200H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's netidentifiable assets.S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding company

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