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- Pink Co. Acquires 80% controlling interest in Violet Co. For P1,200,000. Violet Co.'s identifiable assets and liabilities have fair values of P3,300,000 and P1,700,000, respectively. Included in Violet's assets is a web press machine with fair value of P900,000 which Pink Co. Intends to sell immediately. The machine qualifies for classification as "held fr sale". The costs to sell are P150,000. Pink Co. Opts to measure the non- controlling interest at fair value. How much is the goodwill? (Assume the fair value of the NCI is equal to the grossed-up value of the consideration transferred multiplied by the NCI percentage)Pie Corporation acquired 75 percent of Slice Company's ownership on January 1, 20X8, for $93,000. At that date, the fair value of the noncontrolling interest was $31,000. The book value of Slice's net assets at acquisition was $90,000. The book values and fair values of Slice's assets and liabilities were equal, except for Slice's buildings and equipment, which were worth $18,000 more than book value. Accumulated depreciation on the buildings and equipment was $27,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Pie concluded at December 31, 20X8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $2,900. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. Trial balance data for Pie and Slice on December 31, 20X8, are as follows: Item Cash Accounts Receivable Inventory Land…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…
- On January 1, 20X1, P sells an equipment with P20,000 book value to its subsidiary S for P30,000. S intends to use the equipment for 4 years. On December 31, 20x2, S sells the equipment to an outside party for P14,000. What amount of gain or (loss) for sale of equipment is reported on the consolidated financial statements? A. Gain 14,000 B. Loss 6,000 C. Loss 1,000 D. Gain 4,000Package Corporation acquired 90 percent ownership of Sack Grain Company on January 1, 20X4, for $116,100 when the fair value of Sack’s net assets was $13,000 higher than its $116,000 book value. The increase in value was attributed to amortizable assets with a remaining life of 10 years. At that date, the fair value of the noncontrolling interest was equal to $12,900. During 20X4, Sack sold land to Package at a $7,000 profit. Sack Grain reported net income of $25,000 and paid dividends of $4,800 in 20X4. Package reported income, exclusive of its income from Sack Grain, of $34,000 and paid dividends of $14,300 in 20X4. Required: Compute the amount of income assigned to the controlling interest in the consolidated income statement for 20X4. By what amount will the 20X4 income assigned to the controlling interest increase or decrease if the sale of land had been from Package to Sack Grain, the gain on the sale of land had been included in Package’s $34,000 income, and the $25,000 was…Franklin purchases 40 percent of Johnson Company on January 1 for $621,200. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson’s operating and financing policies. Johnson reports assets on that date of $1,505,000 with liabilities of $536,000. One building with a seven-year remaining life is undervalued on Johnson’s books by $276,500. Also, Johnson’s book value for its trademark (10-year remaining life) is undervalued by $307,500. During the year, Johnson reports net income of $177,000 while declaring dividends of $110,000. What is the Investment in Johnson Company balance (equity method) in Franklin’s financial records as of December 31?
- Pineburst Inc. acquired an 80% interest in Smallwood Company in January 1, 2003, for an amount equal to book value. Smallwood sold land to Pineburst in 2003 at a profit of $5,000. The land is held by the buying affiliate firm until 2005, when it is sold to an unaffiliated party for a profit of $6,000. Smallwood reported net income for 2003, 2004, and 2005 of $30,000, $40,000, and $50,000, respectively. Assume that the 2003 intercompany transfer of land was upstream from Smallwood to Pinehurst. Prepare the consolidation worksheet adjustment journal entry on December 31, 2005, concerning the intercompany sale of landItem Cash Pie Corporation acquired 75 percent of slice Company's ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of slice's net assets at acquisition was $92,000. The book values and fair values of Slice's assets and liabilities were equall, except for Slice's buildings and equipment, which were worth $18,400 more than book value. Accumulated depreciation on the buildings and equipment was $24,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Pie concluded at December 31, 20Xx8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $2,600. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. Trial balance data for Pie and Slice on December 31, 20X8, are as follows: Prepare a three-part consolidation…P owns 40% of S. Professional judgement has applied, and it is concluded that P controls S. The 2019 partial pre-tax income statements of both companies are shown below. Assume no other expenses than indicated below. Revenues S $150,000 $85,000 Miscellaneous Expenses Depreciation Expense $40,000 $30,000 $20,000 $25,000 On January 1, 2019, S sold equipment to P at a profit of $7,000 (before tax). The equipment had a remaining useful life of twenty-five years on that date. During 2019 S declared a dividend of $2.000. Further during 2019, there was a goodwill impairment of $1.000. Required: Assuming a tax rate of 40%. Create a consolidated income statement, including the share attributable to the non-controlling interest.
- 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…Parent Corporation purchased 80% of the stock of Sub Inc. on January 1, 2019 for $208,000, which reflected 80% of Sub’s total fair value. At that date, Sub had common stock of $120,000 and retained earnings of $80,000. Fair values equaled book values of Sub’s net assets except for the fair value of Sub’s buildings and equipment which was $24,000 greater than book value (remaining useful life of 8 years). Sub reported net income of $40,000 and dividends declared of $12,500 for 2021. At January 1, 2021, Sub reported Retained Earnings of $135,000. At December 31, 2021, Parent Corporation reported balances of: Income from Subsidiary, $29,600; Investment in Subsidiary, $266,800. There have been no goodwill impairments to date. Required: Prepare the December 31, 2021 consolidation adjusting and eliminating entries in general journal format.
