FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2018. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2018, Sea-Breeze had the following assets and liabilities: Current assets Land Buildings (net) (6-year remaining life) Equipment (net) (4-year remaining life) Patent (10-year remaining life) Liabilities Revenues Operating expenses Investment income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 The companies' financial statements for the year ending December 31, 2021, follow: Current assets Land Buildings (net) Equipment (net) Investment in Sea-Breeze Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities $ Annual excess amortization f. g. $ $ $ $ Book Value $ 150,000 200,000 300,000 300,000 (400,000) 330,000 220,000 700,000 400,000 414,000 $ 2,064,000 $ b. c. Investment income d. Parent's portion of consolidated retained earnings e. Consolidated net Income. Nascent Sea-Breeze (600,000) $ (300,000) 210,000 410,000 (42,000) (232,000) (500,000) (724,000) (840,000) $(2,064,000) Net income attributable to noncontrolling interest Net income attributable to Nascent, Inc. 0 (90,000) (300,000) (700,000) (232,000) (90,000) 70,000 92,000 (840,000) $ (320,000) $ Fair Value $ 150,000 200,000 360,000 280,000 100,000 (400,000) $ Subsidiary's building balance included in consolidated buildings Consolidated balance 0 b. What is the annual excess amortization initially recognized in connection with this acquisition? c. If the parent had applied the equity method, what investment income would the parent have recorded in 2021? d. What amount should the parent report as retained earnings in its January 1, 2021, consolidated balance sheet? e. What is consolidated net income for 2021, and what amounts are attributable to the controlling and noncontrolling interests? f. Within consolidated statements at January 1, 2018, what balance is included for the subsidiary's Buildings account? g. What is the consolidated Buildings reported balance as of December 31, 2021? 100,000 200,000 200,000 500,000 0 $ 1,000,000 $ (200,000) (480,000) (320,000) $(1,000,000)
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Transcribed Image Text:Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2018. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2018, Sea-Breeze had the following assets and liabilities: Current assets Land Buildings (net) (6-year remaining life) Equipment (net) (4-year remaining life) Patent (10-year remaining life) Liabilities Revenues Operating expenses Investment income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 The companies' financial statements for the year ending December 31, 2021, follow: Current assets Land Buildings (net) Equipment (net) Investment in Sea-Breeze Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities $ Annual excess amortization f. g. $ $ $ $ Book Value $ 150,000 200,000 300,000 300,000 (400,000) 330,000 220,000 700,000 400,000 414,000 $ 2,064,000 $ b. c. Investment income d. Parent's portion of consolidated retained earnings e. Consolidated net Income. Nascent Sea-Breeze (600,000) $ (300,000) 210,000 410,000 (42,000) (232,000) (500,000) (724,000) (840,000) $(2,064,000) Net income attributable to noncontrolling interest Net income attributable to Nascent, Inc. 0 (90,000) (300,000) (700,000) (232,000) (90,000) 70,000 92,000 (840,000) $ (320,000) $ Fair Value $ 150,000 200,000 360,000 280,000 100,000 (400,000) $ Subsidiary's building balance included in consolidated buildings Consolidated balance 0 b. What is the annual excess amortization initially recognized in connection with this acquisition? c. If the parent had applied the equity method, what investment income would the parent have recorded in 2021? d. What amount should the parent report as retained earnings in its January 1, 2021, consolidated balance sheet? e. What is consolidated net income for 2021, and what amounts are attributable to the controlling and noncontrolling interests? f. Within consolidated statements at January 1, 2018, what balance is included for the subsidiary's Buildings account? g. What is the consolidated Buildings reported balance as of December 31, 2021? 100,000 200,000 200,000 500,000 0 $ 1,000,000 $ (200,000) (480,000) (320,000) $(1,000,000)
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