Bulalo Corporation acquired 30% of Tawilis Inc.’s common stock for P300,000 book value on January 1, 2020 when Tawilis equity consisted of P500,000 capital stock and P500,000 retained earnings. On October 1, 2020 Bulalo bought an additional 30% interest in Tawilis for P354,000. In both cases, Tawilis book value equaled the fair value. Tawilis had income of P240,000 earned evenly through 2020 and paid no dividends. The consolidated income statement of Bulalo Corporation and Subsidiary for the year 2020 should show controlling income of: 90,000 144,000 96,000
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- Grouper Inc. acquired 10% of the outstanding common shares of Gregson Inc. on December 31, 2019. The purchase price was $904,000 for 45,200 shares, and is equal to 10% of Gregson’s carrying amount. Gregson declared and paid a $0.80 per share cash dividend on June 15 and again on December 15, 2020. Gregson reported net income of $516,000 for 2020. The fair value of Gregson’s shares was $24 per share at December 31, 2020. Grouper is a public company and applies IFRS. Prepare the journal entries for Grouper for 2019 and 2020, assuming that Grouper cannot exercise significant influence over Gregson. The investment is accounted for using the FV-OCI model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit choose a transaction date…Grouper Inc. acquired 10% of the outstanding common shares of Gregson Inc. on December 31, 2019. The purchase price was $904,000 for 45,200 shares, and is equal to 10% of Gregson’s carrying amount. Gregson declared and paid a $0.80 per share cash dividend on June 15 and again on December 15, 2020. Gregson reported net income of $516,000 for 2020. The fair value of Gregson’s shares was $24 per share at December 31, 2020. Grouper is a public company and applies IFRS. What amount is reported for the investment in Gregson shares on the December 31, 2020 statement of financial position under each of these methods in Fair Value Method and Equity Method? Fair ValueMethod Equity Method Investment $enter a dollar amount $enter a dollar amount Where is the investment reported on statement of financial position? The Investment accounts under both Fair Value Method and Equity Method are likely to be included in current assets / non-current assets /…On January 1, 2020, Elite Company paid P 18,000,000 for 50,000 ordinary shares of Craze Company which represent a 25% interest in the in the net assets of Craze. The acquisition cost is equal to the carrying amount of the net assets acquired. Elite has the ability to exercise significant influence over Craze. Elite received a dividend of P35 per share from Craze in 2020. Craze reported net income of P9,600,000 for the year ended December 31, 2020. In the December 31, 2020 statement of financial position, what amount should be reported as investmentin Craze Company?a. 22,150,000b. 20,400,000c. 18,650,000d. 18,000,000
- Stellar Co. acquired 25% of the 500,000 shares of outstanding common stock of Overload Inc. on December 31, 2020. The purchase price was $3,550,000. Overload declared and paid $1.10 per share cash dividends on June 18, 2021, and on November 29, 2021. Overload reported net income of $1,200,000 for 2021. The fair value of Overload common stock was $28 per share at December 31, 2021. (a) Prepare the journal entries for Stellar Co. for 2021, assuming that Stellar cannot exercise significant influence over Overload. The securities should be classified as available-for-sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit choose a transaction date enter an account title enter a debit amount…On January 2, 2020, Pat Corporation acquired 75% of the outstanding common stock of Sol Company for P270,000. The investment was accounted for by the cost method. On January 2, 2020, Sol Company’s identifiable assets (book value and fair value) were P300,000. Sol Company’s comprehensive income for the year ended December 31, 2020 was P160,000. During the year 2020, Pat Corporation received P60,000 cash dividends from Sol Company. There were no other intercompany transactions. The balance of the non-controlling interest (NCI) account on December 31, 2020 is:Heidebrecht Design acquired 30% of the outstanding common stock of Oriole Company on January 1, 2020, by paying $684,000 for the 45,600 shares. Oriole declared and paid $0.60 per share cash dividends on March 15, June 15, September 15, and December 15, 2020. Oriole reported net income of $356,000 for the year. At December 31, 2020, the market price of Oriole common stock was $26 per share. Prepare the journal entries for Heidebrecht Design for 2020 assuming Heidebrecht Design cannot exercise significant influence over Oriole. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31…
- On January 1, 2020, Alice Company purchased 40,000 shares of Jasper at P100 per share. The investment is measured at fair value through other comprehensive income. Brokerage fees amounted to P120,000. A P5 dividend per share of Jasper had been declared on December 15, 2019, to be paid on March 31, 2020 to shareholders of record on January 31, 2020. No other transactions occurred in 2020 affecting the investment in Jasper's share. What is the initial measurement of the investment?On January 2, 2021, Normal Inc. acquired 15% interest in Laco Co. by paying P1,500,000 for 7,500 ordinary shares. On this date, the net assets of Laco Co. totaled P9 million. The investment was classified as a financial asset at fair value through other comprehensive income. The fair values of Laco Co.’s identifiable assets and liabilities approximate their book values. On August 1, 2021, Normal received dividends of P4 per share from Laco Co. Fair value of the stocks on December 31, 2021 was P190. Net income reported by Laco for the year ended amounted to P1,500,000. On July 1, 2022, Normal Inc. paid P1 million to purchase 5,000 additional shares of Laco Co. from another shareholder. On this date the fair value of the net assets exceeds carrying value by P500,000 attributable to depreciable asset with estimated remaining life of 5 years. On February 1, 2022, cash dividends of P5 were received while dividends of P6 were received on August 1, 2022. Net income reported for the year ended…On January 1, 2020, Merlo Company acquired 80% of the stocks of Fritzie Company for P2,000,000. On this date, Fritzie Company had P1,000,000 of Capital Stock and P800,000 of Retained Earnings. On this date, the carrying values of the identifiable assets and liabilities of Fritzie Company are equal to their fair values.During the year, Merlo Company ships merchandise to Fritzie Company merchandise amounting to P800,000, which includes 25% gross profit rate. At the end of the year, records show the following: Merlo Company Fritzie CompanyInventories, Jan 1. P350,000 P120,000Inventories, Dec. 31 400,000 200,000Sales 5,500,000 2,500,000Cost of Sales 3,200,000 1,600,000Operating expenses 650,000 300,000Dividends paid 500,000 350,000The ending…
- Renfroe, Inc. acquired 10% of Stanley Corporation on January 4, 2020, for $90,000 when the book value of Stanley was $1,000,000. During 2020, Stanley reported net income of $215,000 and paid dividends of $50,000. The book value of the 10% investment was the same as the fair value of that investment when, on January 1, 2021, Renfroe purchased an additional 30% of Stanley for $325,000. Any excess of cost over book value is attributable to goodwill with an indefinite life. During 2021, Stanley reported net income of $320,000 and paid dividends of $50,000. How much is the adjustment to the Investment in Stanley Corporation for the change from the fair-value method to the equity method on January 1, 2021? O There is no adjustment. O A debit of $165,000. O A debit of $90,000 O A debit of $16,500On January 1, 2020, KISSES acquired 90% of the equity share capital of HUGS in a share exchange in which KISSES issued two new shares for every three shares it acquired in HUGS. Additionally, on December 31, 2020, KISSES will pay the shareholders of HUGS P13.2 per share acquired. KISSES's cost of acquisition is 10% per annum. At the date of acquisition, shares in KISSES and HUGS had a stock market value of P48.75 and P42.00, each respectively. Income statements for the year ended September 30, 2020 follows: HUGS KISSES Profit for the year Equity as at October 1, 2019 Equity shares of P7.50 each Retained earnings At the date of acquisition, the fair values of HUGS assets were equal to their carrying amounts with the exception of Land which had a fair value of P135,000 above its carrying amount. Also, HUGS had a contingent liability which KISSES estimated to have a fair value of P337,500. This has not changed as at September 30, 2019. HUGS has not incorporated these fair values changes…On June 30, 2020, Pearl Co. acquired 80% of the outstanding shares of Scott Co. for P3,125,000. Onthis date Pearl Co.’s net assets had book value of P5,000,000 but with a fair value of P4,062,500. Theliabilities of Scott Co have a book and fair value of P250,000. Pearl Co. paid P62,500 to a CPA Lawyer who facilitated the combination. The fair value of the non-controlling interest on this date was P750,000. Compute the goodwill (gain from bargain price) arising from the above combinationa. P62,500b. P75,000c. P(62,500)d. P(125,000)