Pawn Corporation acquired 70 percent of Shop Corporation's voting stock on January 1, 20OX2, for $416,500. The fair value of thenoncontrolling interest was $178,500 at the date of acquisition. Shop reported common stock outstanding of $200,000 and retainedearnings of $350,000. The differential is assigned to buildings with an expected life of 15 years at the date of acquisition.On December 31, 20X4, Pawn had $25,000 of unrealized profits on its books from inventory sales to Shop, and Shop had $40,000 ofunrealized profit on its books from inventory sales to Pawn. All inventory held at December 31, 20X4, was sold during 20X5.On December 31, 20X5, Pawn had $14,000 of unrealized profit on its books from inventory sales to Shop, and Shop had unrealizedprofit on its books of $55,000 from inventory sales to Pawn.Pawn reported income from its separate operations (excluding income on its investment in Shop and amortization of purchasedifferential) of $118,000 in 20X5, and Shop reported net income of $65,00.Required:Compute consolidated net income and income assigned to the controlling interest in the 20X5 consolidated income statement.Consolidated net incomeIncome assigned to the controlling interest

The question is based on the concept of Financial Accounting.

Answered: Pawn Corporation acquired 70 percent of…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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Lexus Corporation acquired 70 percent of Triumph Corporation's voting stock on January 1, 20x2, for $280,000. The fair value of the noncontrolling interest was $120,000 at the date of acquisition. Triumph reported common stock outstanding of $80,000 and retained earnings of $270,000. The differential is assigned to buildings with an expected life of 10 years at the date of acquisition. On December 31, 20X4, Lexus had $10,000 of unrealized profits on its books from inventory sales to Triumph, and Triumph had $15,000 of unrealized profit on its books from inventory sales to Lexus. All inventory held at December 31, 20X4, was sold during 20X5. On December 31, 20X5, Lexus had $12,000 of unrealized profit on its books from inventory sales to Triumph, and Triumph had unrealized profit on its books of $28,000 from inventory sales to Lexus. In 20X5 Triumph reported net income of $160,000. The amount Lexus will report as Income from Triumph Company for year 20X5 would be: O $98,800. O $100,900.…
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On January 1, 2023, Holland Corporation paid $8 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $6.50 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 14,000 Liabilities 268,000 Common stock. 190,000 Retained earnings $ 212,000 100,000 160,000 $ 472,000 $ 472,000 es On January 1, 2023, Holland assessed the carrying amount of Zeetand's equipment (5-year remaining life) to be undervalued by $55,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $285,000. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's…
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