Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.   On January 1, 2017, Hamilton sold $1,000,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2019. Both companies utilize the straight-line method of amortization.   Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) December 31, 2019 December 31, 2020 December 31, 2021

Newman Corporation owns 90 shares of SP Corporation. The remaining 10 shares are owned by Kenny (an individual). After several years of operations, Newman decided to liquidate SP Corporation by distributing the assets to Newman and Kenny. The tax basis of Newman's shares is $9,000, and the tax basis of Kenny's shares is $4,000. SP reported the following balance sheet at the date of liquidation: Cash Accounts receivable Stock investment Land Total assets Common stock-Newman (90%) Common stock-Kenny (10%) Total shareholder equity Required: Adjusted tax basis $ 22,000 9,000 8,200 26,000 $ 65,200 FMV $ 22,000 9,000 20,000 149,000 $ 200,000 $ 180,000 20,000 $ 200,000 a. Compute the gain or loss recognized by SP, Newman, and Kenny on a complete liquidation of the corporation, where SP distributes $20,000 of cash to Kenny and the remaining assets to Newman. b. Compute the gain or loss recognized by SP, Newman, and Kenny on a complete liquidation of the corporation, where SP distributes the…

Bloom Corporation purchased $1,750,000 of Taylor Company 5% bonds, at their face amount, with neither the intent nor the ability to hold the bonds until they matured in 2028, so Bloom classifies its investment as AFS. Unfortunately, a combination of problems at Taylor Company and in the debt securities market caused the fair value of the Taylor investment to decline to $1,200,000 during 2024. The following are the two alternative scenarios that should be analyzed independent of each other. Bloom now believes it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $550,000 decline in fair value, Bloom attributes $325,000 to credit losses, and $225,000 to noncredit losses. Bloom does not plan to sell the Taylor bonds prior to maturity, and does not believe it is more likely than not that it will have to sell the Taylor bonds before the bonds have a chance to recover their fair value. Of the $550,000 decline…

Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities:  On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.  During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. Required: (i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory 2. Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales.

Pablo Inc. owns 75% of Sammy Corp. and uses the Equity Method to account for its investment. Sammy purchased $120,000 face value of Pablo's 12% par value bonds on January 1, 2021, for $100,000, when Pablo's bond liability consisted of $240,000 par of 12% bonds maturing on January 1, 2031. There was an unamortized bond discount of $20,000 attached to the bonds on that date. Interest payment dates are June 30 and December 31 each year. Straight line amortization is used. Both companies have a December 31 year end. Intercompany bond gains and losses are to be allocated to each company. During 2021, Sammy earned a net income of $80,000 and paid dividends of $20,000. What was the pre-tax gain or loss to Sammy Inc. on the intercompany purchase of the bonds?   a. $20,000 loss   b. $40,000 loss   c. $20,000 gain   d. Nil

On January 5, 2020, Splish Brothers Company purchased the following stock securities:   282 shares Bonter Corporation common stock for $4,230. 470 shares Wane Corporation common stock for $9,400. 752 shares Strauss Corporation common stock for $21,432.   Assume that Splish Brothers Company cannot exercise significant influence over the activities of the investee companies and that the cost method is used to account for the investments.On June 30, 2020, Splish Brothers Company received the following cash dividends: Bonter Corporation$2.00 per share Wane Corporation$1.00 per share Strauss Corporation$1.50 per share     On November 15, 2020, Splish Brothers Company sold 156 shares of Strauss Corporation common stock for $7,020.On December 31, 2020, the fair value of the securities held by Splish Brothers Company is as follows:   Bonter Corporation common stock $10 Wane Corporation common stock 16 Strauss Corporation common stock 28

On January 1, 2017, James Company purchased 100 percent of the outstanding voting stock of Nolan, Inc., for $1,000,000 in cash and other consideration. At the purchase date, Nolan had common stock of $500,000 and retained earnings of $185,000. James attributed the excess of acquisition-date fair value over Nolan's book value to a trade name with an estimated 25-year remaining useful life. James uses the equity method to account for its investment in Nolan.Required Create an Excel spreadsheet that computes the following: 1. Equity method balance in James' Investment in Nolan, Inc., account as of December 31, 2018.2. Worksheet adjustments for the December 31, 2018, consolidation of James and Nolan. Formulate your solution so that Nolan's gross profit rate on sales to James is treated as a variable.

On January 2, 2020, Megan, INC. acquired a 15% interest in Kiyosaki Corp. by paying P8, 000, 000 for 100,000 ordinary shares. On this date, the net assets of Kiyosaki Corp. totaled P40, 000, 000. The fair values of Kiyosaki Corp.'s identifiable assets and liabilities were equal to their book values. Megan did not have the ability to exercise significant influence over the operating and financial policies of Kiyosaki. Megan received dividends of P1.40 per share from Kiyosaki on October 1, 2020. Kiyosaki reported net income of P5, 000, 000 for the year ended December 31, 2020. Megan classified the investment as at fair value through other comprehensive income. Market price for the 100,000 shares was P9, 000, 000 on December 31, 2020.Megan paid P30, 000, 000 on January 1, 2021, for 300,000 additional Kiyosaki ordinary shares, which represents a 25% interest in Kiyosaki. The fair value of Kiyosaki Corp.'s identifiable assets, net of liabilities, was equal to their book values of P92, 000,…

You are given financial statements and a Dupont analysis for Tesco and Ahold. What do you conclude about the two companies’ performances based on these numbers?

Choose the correct.On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc., for $540,000 cash. The acquisition-date fair value of the noncontrolling interest was $60,000. At January 1, 2016, Star’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $80,000. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $70,000 in 2016 and $80,000 in 2017. Each year since the acquisition, Star has declared a $20,000 dividend. At January 1, 2018, Pride’s retained earnings show a $250,000 balance.Selected account balances for the two companies from their separate operations were as follows:                                     Pride        Star2018 Revenues. . . $498,000 $285,0002018 Expenses. . .   350,000   195,000 What is…