Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Question
Chapter 1, Problem 1.26P
a.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary
To Calculate: The book value of the total assets (not net assets) transferred to S Company.
b.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Calculate: the amount that P reports as its investment in S after the transfer.
c.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Calculate: the number of shares of
d.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Calculate: the impact, the transfer of assets and accounts payable has on the amount reported by Plumb as total assets.
e.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Calculate: the impact, the transfer of assets and accounts payable have on the amount that P and the consolidated entity reported as shares outstanding.
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Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and
liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $7 par value common stock. The following information is
provided on the assets and accounts payable transferred:
Cash
Inventory
Land
Buildings
Equipment
Accounts Payable
Required A
Required:
a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon
b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Complete this question by entering your answers in the tabs below.
Required B
View transaction list
Cost
$ 38,000
89,000
61,000
174,000
99,000
45,000
A
Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Journal entry…
A partially owned subsidiary sold a non-depreciable assets to its parent at a loss. In the year subsequent to the year of intercompany sale of non-depreciable assets, the working paper consolidation entry under cost method will debit:
I. Non-depreciable assets Ill. NCI
I. Investment in subsidiary IV. Retained Earnings
a. I, III and IV
b. I
c. III and IV
d. I, II, and IV
TRUE OR FALSE: Indicate whether the statements are true or false.
1. Assuming the parent acquired 100 percent of the subsidiary’s stock and there are no purchase differentials, the investment income recorded by the parent in the current period will equal the subsidiary’s current net income recognized subsequent to the acquisition date.
2.
Chapter 1 Solutions
Advanced Financial Accounting
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- A partially owned subsidiary sold a machine to its parent at a gain. In the year subsequent to the year of intercompany sale of equipment, the working paper consolidation entry under cost method will debit: I. Equipment Ill. Accumulated Depreciation V. NCI lIl. Investment in subsidiary IV. Retained Earnings a. IV and V b. I, IV and V c. I, II and V d. IIII and IVarrow_forwardWhich of the following transactions will affect both the consolidated net income attributable to the parent and the non-controlling interest in net assets of subsidiary (NCINAS)? A. Goodwill impairment under the partial goodwill method. B. Dividend declared but not yet paid by the subsidiary. C. Dividend declared and paid by the parent. D. Provisional amount finalized two months prior to the preparation of consolidated financial statements.arrow_forwardWhich of the following is true regarding consolidation of net income?A. Parent net income is decreased by the dividend income recognized due to declared bysubsidiary at full amount even if less than 100% ownership is acquired.B. Amortization of excess must be done to adjust net income of parent to arrive at parent netincome own operation.C. Adjusted net income of subsidiary is shared by Parent’s holding interest andnoncontrolling interest.D. Dividend declared by subsidiary is shared by Parent’s holding interest and noncontrollinginterest.arrow_forward
- In a business combination resulting in a parent company-subsidiary relationship, the parent company's Investment in Subsidiary Common Stock ledger account balance is: a. Eliminated with a working paper elimination for the working paper for consolidated balance sheet b. Allocated to individual asset and liability ledger accounts in a parent company journal entry c. Used as a basis for adjusting the subsidiary's asset and liability account balances in the subsidiary's ledger to current fair values Select one :- d. Displayed among noncurrent assets in the consolidated balance sheetarrow_forwardThe December 31, 20x8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: Assets Cash and Receivables Inventory Buildings and Equipment (net) Investment in Saloon Company Total Assets Liabilities and Equity Accounts Payable Common Stock Retained Earnings Total Liabilities and Equity PINT CORPORATION AND SALOON COMPANY Balance Sheets December 31, 20x8 view transaction list Consolidation Worksheet Entries A B < Pint acquired the shares of Saloon Company on January 1, 20X7. On December 31, 20X8, assume Pint sold Inventory to Saloon during 20X8 for $105,000 and Saloon sold Inventory to Pint for $309,000. Pint's balance sheet contains Inventory Items purchased from Saloon for $100,000. The Items cost Saloon $60,000 to produce. In addition, Saloon's Inventory contains goods it purchased from Pint for $27,000 that Pint had produced for $16,200. Assume Saloon reported net Income of $72,000 and dividends of $14,400.…arrow_forwardTRUE OR FALSE: Indicate whether the statements are true or false. 1. Worksheet elimination 1 will include only the subsidiary’s stock (par value and additional paid-in capital), Retained Earnings, and the parent’s Investment in Subsidiary account when the parent has acquired 100 percent of the subsidiary’s stock at book value at the beginning of the period. 2.arrow_forward
- A wholly owned subsidiary declared dividend and half remains unpaid bythe end of the year, which of the following is TRUE? a. Only half of the amount of the dividend will be used to reduce the profit ofthe parent for consolidation purposes. b. The total amount of the dividend will be eliminated in the working paperelimination entry by debiting “dividend revenue” account.c. The transaction will have an impact in the computation of the balance ofNCI at the end.d. The elimination entry will include a debit to non-controlling interest for theamount of dividend received by the non-controlling shareholders.arrow_forwardAny inter-company gain on a downstream sale of fixed assets should be recognized in consolidated net income: I. in the year of the downstream sale.II. over the period of time the subsidiary uses the asset.III. in the year the subsidiary sells the assets to an unrelated party. Group of answer choices I. II. III. I and IIarrow_forwardWhile going through the process of date alignment for Simple Equity method, how is the balance of Investment in subsidiary account calculated to return the account to its beginning of the year balance? Investment in Subsidiary + Subsidiary Income - Dividend's Declared (Subsidiary) Investment in Subsidiary - Subsidiary Income + Dividend's Declared (Subsidiary) Investment in Subsidiary - Dividend's Declared (Subsidiary) O Investment in Subsidiary + Subsidiary Incomearrow_forward
- Which of the following is not typical of the journal entries prepared by a parentcompany to account for its subsidiary’s operations under the cost method ofaccounting A. A credit to the intercompany dividend income account B. Deprecation and amortization of differences between current fair values and book values of the subsidiary’s identifiable net assets on the date of the acquisition. C. None of the foregoing. D. Accrual of the parent company’s share of the subsidiary’s net income or lossarrow_forwardProvided are the consolidated trial balances of a parent and its less-than-wholly-owned subsidiary. Account Dr (Cr) Current assets Property, net Intangible assets, net Goodwill Liabilities Capital stock Retained earnings, beginning Accumulated other comprehensive income, beginning Noncontrolling interest Dividends Sales revenue Cost of sales and operating expenses Other comprehensive income Noncontrolling interest in net income Noncontrolling interest in other comprehensive income Total $5,000 105,000 10,000 80,000 (162,405) (10,000) (15,000) (200) (2,500) 1,000 (400,000) 390,000 (1,000) 100 5 $0arrow_forwardWhen a parent company uses the equity method to account for investment in a subsidiary, the amortization expense entry recorded during the year is eliminated on a consolidation worksheet as a component of Entryarrow_forward
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