PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021. Fair value versus carrying value differences were identified as follows: Jan 1, 2021 SUB Inc. carrying value fair value Cash $5,000 $5,000 Accounts Receivable $30,000 $30,000 Inventory $30,000 $50,000 Equipment (net) $25,000 $20,000 Land $20,000 $30,000 Trademark $10,000 $18,000 Total Assets $120,000 $153,000
Q: On January 2, 2021. PABC corporation acquired 75% of the outstanding ordinary shares of SDEF Company…
A: Net assets:- Net assets shows the total net value of particular firm and it can be calculated by…
Q: epare the journal entries for Grouper for 2019 and 2020, assuming that Grouper cannot exercise…
A:
Q: On January 1, 2021, Manette Company acquired 100,000 ordinary shares of Nette Company for…
A: Solution: Manette should recognized in profit or loss for the year 2021 = Income of Netter company *…
Q: On January 1, 2021, Jimin Co. acquired 30,000 ordinary shares out of the 100,000 outstanding shares…
A: Associate company is the company where a company acquire 20-50% of the equity share capital of…
Q: On December 31, 2021, JV Company purchased for P4,000,000 cash all of the outstanding ordinary…
A: Goodwill: When one firm is acquired by another, there is often a transfer of goodwill, which is an…
Q: n January 1, 2021, Jimin Co. acquired 30,000 ordinary shares out of the 100,000 outstanding shares…
A: Step 1 An associate is an entity over which an investor has influence, such as the ability to engage…
Q: the amount paid, how much is attributable to goodwill?
A: Goodwill is an intangible asset that can't be touched but increases the image of the company. The…
Q: On August 31, 2020, SG Corporation (SME) purchased all the net assets of Popsters Corporation by…
A: The capitalized cost of the investment is P2,949,000.
Q: On January 1, 2021, Family Company purchased 10% of San Company's 100,000 outstanding ordinary…
A: Reported Income : Consequently, the investor's part of the joint venture's revenues and losses is…
Q: PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1,…
A: Calculation of Fair Value of Net Assets Particulars Amount ($) Cash 5000 Accounts Receivable…
Q: On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for…
A: Since the Parent acquired 30% interest in the Sub, the Sub is an associate enterprise. Accounting…
Q: On December 31, 2019, Purple Company purchased 80% of the common stock of Sage Company for…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for…
A: When an investment in an entity increases and it is increased to the level that the investee company…
Q: On January 2, 2021. PABC corporation acquired 75% of the outstanding ordinary shares of SDEF Company…
A: Total share in subsidiary company = 100% parent co. holds PABC corporation = 75% in SDEF company…
Q: 5% mark-up based on co
A: When one company acquires the shares of other company then the former one is called holding company…
Q: On January 1, 2022, Sun Company acquired 85% of outstanding shares of Moon Corp. The consideration…
A: Consolidation - Legally speaking, consolidation refers to the merging of two or more enterprises,…
Q: On January 1, 2020, Elite Company paid P 18,000,000 for 50,000 ordinary shares of Craze Company…
A: The total amount of investment at the end is the net value of an investment which is calculated by…
Q: On January 1, 2021, Jimin Co. acquired 30,000 ordinary shares out of the 100,000 outstanding shares…
A: On 01.01.2021, Jimin Co. acquired ordinary shares of HYBE Inc. = 30000 shares Outstanding shares of…
Q: Pauline Company acquired 4,000 shares of the outstanding stock of Sophia Company for P1,200,000 on…
A: It is the net income of parent company of its own and share in subsidiary company. The share of…
Q: On January 2, 2021, X Co. acquired all the ordinary share of Y Co. for P2,060,000. On that date, Y…
A: Goodwill is calculated when Purchase consideration paid to acquire a company (acquiree) is greater…
Q: On July 1, 2019, GAR Company acquired 800,000 shares of FAR Company at a price of P13 per share. GAR…
A: Total number of shares outstanding of FAR Company = P5,000,000P5 per share = 1,000,000 shares % of…
Q: Corporation by transferring cash of P500,000 and issuing 40,000 ordinary shares with par value of…
A: A cost involved in the acquisition of ownership in the entity for long-term benifits to the entity.…
Q: On April 7, 2021, Nestle Co. paid P620,000 for all the issued and outstanding ordinary shares of…
A: Net assets = Cash + Fair value of inventory + Fair value of Property and equipment - Liabilities =…
Q: On January 2, 2021, Power Company acquired 90% of the outstanding shares of Solar Inc. at book…
A: When a company purchases more than 51% shares of another company ,…
Q: On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for…
A: As per PFRS 3, Business combination, On acquisition of control, to adopt the acquisition method of…
Q: On January 1, 2021, Family Company purchased 10% of San Company's 100,000 outstanding ordinary…
A: Total income includes any increase in value of investment and share of dividend received.
Q: Grouper Inc. acquired 10% of the outstanding common shares of Gregson Inc. on December 31, 2019. The…
A: Step1 Under equity method, return is not accountable, i.e., dividend is not considered and in fair…
Q: On August 31, 2020, SG Corporation (SME) purchased all the net assets of Popsters Corporation by…
A: Purchase consideration = Cash paid + fair value of shares + consulting fees + listing fee
Q: On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for…
A: Here, Parent acquired 30% interest in Subsidiary on January 1, 2018. Since the parent acquired…
Q: On January 1, 2021, merma Corp. purchased 80% of the outstanding shares of sand Co. at a cost of…
A: Consolidated net income is associated with parent companies and their subsidiaries. A parent company…
Q: On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for…
A: Working note: Computation of fair value of the existing investment on July 1, 2018: Fair value of…
Q: On January 1. 2021, Family Company purchased 10% of San Company's 100,000 outstanding ordinary…
A: An increase in fair value of 10% interest which is acquired on January 1, 2021 is not reported as…
Q: On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney…
A:
Q: PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1,…
A: The corporation uses the FV method to identify their business value in the competitive market mostly…
Q: On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for…
A: SOLUTION- GOODWILL IS THE VALUE OF BUSINESS THAT EXCEEDS ITS ASSETS MINUS THE LIABILITIES.
Q: On January 2, 2020, Parker Company purchased 100% of the outstanding ordinary shares of Pocket…
A: The consolidated statement shows the financial position of a group, when the acquired shares are…
Q: On January 1, 2021, Patter Corp. purchased 80% of the outstanding shares of Saturn Co. at a cost of…
A: Solution Working- 1- Amortization excess = 50000/4 =12500. 2-Inter company dividend =…
Q: Popsters Corporation purchased 60% of the shares of SG Corporation on January 01, 2019 for…
A: The consolidated retained earnings represent the amount of the total earnings retained by the whole…
Q: On January 1, 2020, HULK CORP. acquired 70% of outstanding ordinary shares of HALL INC. at a price…
A: Consolidated financial statements are a set of financial statements prepared for a group company…
Q: On January 1, 2020, Churl Company paid $1,700,000 for a 40% stake in Flip Company. The Flip…
A: Your investment in the subsidiary will be recognized using the equity method or the fair value…
Q: On January 1, 2018, Parent acquired 30,000 out of 100,000 outstanding ordinary shares of Sub for…
A: SOLUTION GOODWILL IS AN INTANGIBLE ASSET THAT ACCOUNTS FOR THE EXCESS PURCHASE PRICE OF ANOTHER…
Q: On December 31, 2021, JV Company purchased for P4,000,000 cash all of the outstanding ordinary…
A: Goodwill reported on consolidated financial position represents the amount excess paid over the…
Q: Prepare the journal entries that would be booked in Parent Inc. from the acquisition the…
A: Consolidation: A process under which one company acquires or gets merged with another business…
Q: On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration…
A: Solution Non controlling interest is an ownership position wherein a shareholder owns less than 50%…
Q: tely after the acquisition are shown below: Jan. 1, 2019 GRANGER Co.…
A: The Consolidated Statement of Financial Position displays the parent's resources (Assets) as well as…
Q: On January 1, 2021, PLDT acquired 60% of outstanding ordinary shares of Smart Inc. with a gain on…
A: On 01.01.2021, PLDT acquired = 60% of outstanding shares of Smart Inc. Purchase consideration =…
Q: n January 1, 2021, Jimin Co. acquired 30,000 ordinary shares out of the 100,000 outstanding shares…
A: Step 1 Goodwill is Excess of Purchase Consideration over Net Assets and vice versa it lead to…
Q: On June 30, 2021, ABC Co. acquired 75,000 of DEF Co.'s 100,000 outstanding shares with par value per…
A: Shares:- A firm’s total capital is divided into small equal units, these each units is known as a…
Q: On January 1, 2021, ABC Co. acquired 80% interest in XYz, Inc. by issuing 5,000 shares with fair…
A: An acquisition is the process of acquiring more than 50% of shares of one company by the other…
PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021.
Fair value versus carrying value differences were identified as follows:
Jan 1, 2021 |
SUB Inc. |
|
|
carrying value |
fair value |
Cash |
$5,000 |
$5,000 |
|
$30,000 |
$30,000 |
Inventory |
$30,000 |
$50,000 |
Equipment (net) |
$25,000 |
$20,000 |
Land |
$20,000 |
$30,000 |
Trademark |
$10,000 |
$18,000 |
Total Assets |
$120,000 |
$153,000 |
Liabilities |
$70,000 |
$70,000 |
Common Shares |
$30,000 |
|
|
$20,000 |
|
Total Liabilities and Equity |
$120,000 |
The equipment had a remaining useful life of 10 years from the date of acquisition. SUB's trademark is estimated to have a remaining life of 5 years from the date of acquisition.
ASSUME INSTEAD that PAR has chosen to use the identifiable net assets method to value the non-controlling interest.
Calculate at acquisition date:
- NCI
- ii)
Goodwill
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021. Fair value versus carrying value differences were identified as follows: Jan 1, 2021 SUB Inc. carrying value fair value Cash $5,000 $5,000 Accounts Receivable $30,000 $30,000 Inventory $30,000 $50,000 Equipment (net) $25,000 $20,000 Land $20,000 $30,000 Trademark $10,000 $18,000 Total Assets $120,000 $153,000 Liabilities $70,000 $70,000 Common Shares $30,000 Retained Earnings $20,000 Total Liabilities and Equity $120,000 The equipment had a remaining useful life of 10 years from the date of acquisition. SUB's trademark is estimated to have a remaining life of 5 years from the date of acquisition. Part A PAR has chosen the fair value enterprise method and value the non-controlling interest in SUB assuming a linear relationship for the non-controlling interest value (our…On January 1, 2021, the fair values of CHAESOO Inc. net assets were as follows:Current assets P100,000Equipment 150,000Land 50,000Buildings 300,000Liabilities 80,000On January 1, 2021, BLACKPINK Corp. purchased the net assets of CHAESOO by issuing 100,000shares of its P1 par value stock when the fair value of the stock was P6.20. It was further agreed thatBLACKPINK would pay an additional amount on January 1, 2023, if the average income during the2- year period of 2021 – 2022 exceeded P80,000 per year. The expected value of this consideration wascalculated as P184,000; the measurement period is one year. Requirement:Compute for the Goodwill or (Gain on Bargain Purchase) on January 1, 2021.PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021. Fair value versus carrying value differences were identified as follows: Jan 1, 2021 SUB Inc. carrying value fair value Cash $5,000 $5,000 Accounts Receivable $30,000 $30,000 Inventory $30,000 $50,000 Equipment (net) $25,000 $20,000 Land $20,000 $30,000 Trademark $10,000 $18,000 Total Assets $120,000 $153,000 Liabilities $70,000 $70,000 Common Shares $30,000 Retained Earnings $20,000 Total Liabilities and Equity $120,000 The equipment had a remaining useful life of 10 years from the date of acquisition. SUB's trademark is estimated to have a remaining life of 5 years from the date of acquisition. Assume INSTEAD that PAR has chosen to use the fair value enterprise method but value the non-controlling interest in SUB using the market value of the shares on acquisition date…
- On July 1, 2019, GAR Company acquired 800,000 shares of FAR Company at a price of P13 per share. GAR estimated that the price paid include P1.50 premium in order to gain control over FAR Company. On this date, the fair values of FAR Company’s identifiable assets and liabilities and their carrying values are given below: Book Value Fair ValueCurrent assets P2,000,000 P2,000,000Property, plant and equipment 9,000,000 11,000,000Liabilities P3,000,000 Ordinary shares, P5 par 5,000,000 Retained earnings 3,000,000 Determine the amount of goodwill assuming the non-controlling interest is measured at the proportionate share in the net assets:Anthem Co. acquired 60% of the outstanding shares of Bethel Co. on January 2, 2021. Anthem Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of Anthem Co. and Bethel Co. for 2022 are as follows: Anthem Co. Bethel Co. Net Sales P875,000 P350,000 Cost of Sales 525,000 210,000 Gross Profit 350,000 140,000 Operating Expenses 105,000 52,500 Operating Income 245,000 87,500 Dividend Income 56,000 0 Net Income P301,000 P87,500 Bethel Co. made sales to Anthem Co. of P112,000 in 2021 and P168,000 in 2022. Anthem Co. reported inventory on December 31, 2021 amounting to P70,000 of which 20% comes from Bethel Co. and inventory on December 31, 2022 amounting to P84,000 of which 30% comes from Bethel Co. Anthem Co. made sales to Bethel Co. of P273,000 in 2021 and P338,000 in 2022. Bethel reported inventory coming from Anthem Co. as of December 31, 2021 and December 31,…A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…
- A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…
- Blush Company has the ability to exercise significant when the fair value of net assets was P20,000,000. outstanding ordinary shares of an investee for P4,000,000 On July 1, 2020 Blush Company purchased 20% of the influence over the operating and financial policies of the investee. The following data concerning the investee are available: 12 months ended December 31, 2020 December 31, 2020 6 months ended Net income Dividend declared and paid 3,000,000 1,900,000 1,600,000 1,000,000 in the income statement for the year ended December 31, o020, what amount of income should be reported from the investment?Atlas Company purchased the following investments during 2020: Classification Cost Market Value December 31, 2020 Security A Trading 900,000 1,000,000 Security B Trading 1,000,000 1,600,000 On July 31, 2021, the entity sold all of the shares of Security B for P1,100,000. On December 31. 2021, the shares of Security A had a market value of P600,000. No other activity occurred during 2021 in relation to the trading security portfolio. 14. What total loss on the trading securities should be reported in the income statement for 2021? a. 400,000 c. 500,000 b. 900,000 d. 100,000Stellar 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…