Please do not give solution in image format thanku Peter Company acquired 80 percent of the commonstock of Paul Company on January 1, 2022, when Paulhad the following balances in its stockholders' equityaccounts:Common stock (40,000 shares outstanding) $ 100,000Additional paid-in capital 75,000Retained earnings, 1/1/22 540,000Total stockholders' equity $715,000To acquire this interest in Paul, Peter pays a total of$592,000. The acquisition-date fair value of the 20percent noncontrolling interest was $148,000. Anyexcess fair value was allocated to goodwill, which hasnot experienced any impairment.Peter uses the equity method to account for itsinvestment in Paul. On January 1, 2023, Paul hasretained earnings of $620,000.On January 1, 2023, Paul reacquires 8,000 of theoutstanding shares of its own common stock for $24per share. None of these shares belonged to Peter.What is the adjustment (if any) required to theinvestment account? What is the journal entry for theadjustment if one is needed?

Peter Company acquired more than 50% of the shares of Paul Company. It means that the company has…

Answered: Peter Company acquired 80 percent of…

Peter Company acquired 80 percent of the common stock of Paul Company on January 1, 2022, when Paul had the following balances in its stockholders' equity accounts:

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

See similar textbooks

Similar questions

Peter Company acquired 80 percent of the common stock of Paul Company on January 1, 2022, when Paul had the following balances in its stockholders’ equity accounts: Common stock (40,000 shares outstanding) $ 100,000 Additional paid-in capital 75,000 Retained earnings, 1/1/22 540,000 Total stockholders’ equity $ 715,000 To acquire this interest in Paul, Peter pays a total of $592,000. The acquisition-date fair value of the 20 percent noncontrolling interest was $148,000. Any excess fair value was allocated to goodwill, which has not experienced any impairment. Peter uses the equity method to account for its investment in Paul. On January 1, 2023, Paul has retained earnings of $620,000. Treat each of the following scenarios as an independent situation: On January 1, 2023, Paul issues 10,000 additional shares of common stock for $15 per share. Peter does not acquire any of this newly issued…
Peter Company acquired 80 percent of the common stock of Paul Company on January 1, 2022, when Paul had the following balances in its stockholders’ equity accounts: Common stock (40,000 shares outstanding) $ 100,000 Additional paid-in capital 75,000 Retained earnings, 1/1/22 540,000 Total stockholders’ equity $ 715,000 To acquire this interest in Paul, Peter pays a total of $592,000. The acquisition-date fair value of the 20 percent noncontrolling interest was $148,000. Any excess fair value was allocated to goodwill, which has not experienced any impairment. Peter uses the equity method to account for its investment in Paul. On January 1, 2023, Paul has retained earnings of $620,000. Treat each of the following scenarios as an independent situation: On January 1, 2023, Paul issues 10,000 shares as stock dividend when the stock’s fair market value is $15 per share. What is the adjustment (if…
Vaughn Joseph Inc. acquired 20% of the outstanding common stock of Theresa Carla Vista Inc. on December 31, 2025. The purchase price was $1,294,800 for 49,800 shares. Carla Vista Inc. declared and paid an $0.75 per share cash dividend on June 30 and on December 31, 2026. Carla Vista reported net income of $764,000 for 2026. The fair value of Carla Vista's stock was $29 per share at December 31, 2026. Assume that the security is a trading security. (a) Prepare the journal entries for Vaughn Joseph Inc. for 2025 and 2026, assuming that Joseph cannot exercise significant influence over Carla Vista. (List all debit entries before credit entries. 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 O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit
iller Company acquired an 80 percent interest in Taylor Company on January 1, 2022. Miller paid $744,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $186,000 both before and after Miller's acquisition. On January 1, 2022, Taylor reported a book value of $530,000 (Common Stock = $265,000; Additional Paid-In Capital = $79,500; Retained Earnings = $185,500). Several of Taylor's buildings that had a remaining life of 20 years were undervalued by a total of $70,600. During the next three years, Taylor reports income and declares dividends as follows: Year Net Income Dividends 2022 $ 61,900 $ 8,900 2023 80, 100 13,400 2024 89,300 17,900 Required: Determine the appropriate answers for each of the following questions: a. What amount of excess depreciation expense should be recognized in the consolidated financial statements for the initial years following this acquisition? b. If a…
Astris Company acquires an 80% interest in Exile Company for P250,000 in cash on January 1, 2022, when Exile Company has the following balance sheet: Assets Liabilities and Equity Current assets P100,000 Current liabilities P50,000 Non-current assets 2000,000 Common stock, P10 par 100,000 Retained earnings 150,000 Total assets P300,000 Total liabilities and equity P300,000 Any excess of the price paid over the book value is attributable to fixed assets, which have a 10-year remaining life, Astris Company uses the cost method to record its investment in Exile Company. The following trail balances of the two companies are prepared on December 31, 2022: Required: Astris Company Exile Company Current assets Non-current assets Investment in Exile Company Current liabilities P60,000 P130,000 294,000 180,000 250,000 (60,000) (40,000) Common stock, P10 par (300,000) (100,000) Retained earnings, January 1, 2022 (200,000) (150,000) Sales (150,000) (100,000) Expenses 110,000 75,000 Dividend…
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2022. Miller paid $784,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $196,000 both before and after Miller’s acquisition. On January 1, 2022, Taylor reported a book value of $768,000 (Common Stock = $384,000; Additional Paid-In Capital = $115,200; Retained Earnings = $268,800). Several of Taylor’s buildings that had a remaining life of 20 years were undervalued by a total of $102,500. During the next three years, Taylor reports income and declares dividends as follows: Year Net Income Dividends 2022 $ 90,200 $ 13,100 2023 117,900 19,700 2024 131,300 26,300 If a consolidation worksheet is prepared as of January 1, 2022, what Entry S and Entry A should be included?
Astris Company acquires an 80% interest in Exile Company for P250,000 in cash on January 1, 2022, when Exile Company has the following balance sheet: Assets Liabilities and Equity Current assets P100,000 Current liabilities P50,000 Non-current assets 2000,000 Common stock, P10 par 100,000 Retained earnings 150,000 Total assets P300,000 Total liabilities and equity P300,000 Any excess of the price paid over the book value is attributable to fixed assets, which have a 10-year remaining life, Astris Company uses the cost method to record its investment in Exile Company. The following trail balances of the two companies are prepared on December 31, 2022: Astris Company Exile Company Current assets Non-current assets Investment in Exile Company P60,000 P130,000 294,000 180,000 250,000 Current liabilities (60,000) (40,000) Common stock, P10 par (300,000) (100,000) Retained earnings, January 1, 2022 (200,000) (150,000) Sales (150,000) (100,000) Expenses 110,000 75,000 Dividend income (from…
Astris Company acquires an 80% interest in Exile Company for P250,000 in cash on January 1, 2022, when Exile Company has the following balance sheet: Assets Liabilities and Equity Current assets Non-current assets P100,000 2000,000 Current liabilities P50,000 Common stock, P10 par 100,000 Retained earnings 150,000 Total assets P300,000 Total liabilities and equity P300,000 Any excess of the price paid over the book value is attributable to fixed assets, which have a 10-year remaining life, Astris Company uses the cost method to record its investment in Exile Company. The following trail balances of the two companies are prepared on December 31, 2022: Required: Astris Company Exile Company Current assets Non-current assets Investment in Exile Company Current liabilities P60,000 P130,000 294,000 180,000 250,000 (60,000) (40,000) Common stock, P10 par (300,000) (100,000) Retained earnings, January 1, 2022 (200,000) (150,000) Sales (150,000) Expenses 110,000 (100,000) 75,000 Dividend…
Astris Company acquires an 80% interest in Exile Company for P250,000 in cash on January 1, 2022, when Exile Company has the following balance sheet: Assets Liabilities and Equity Current assets Non-current assets P100,000 2000,000 Current liabilities P50,000 Common stock, P10 par 100,000 Retained earnings 150,000 Total assets P300,000 Total liabilities and equity P300,000 Any excess of the price paid over the book value is attributable to fixed assets, which have a 10-year remaining life, Astris Company uses the cost method to record its investment in Exile Company. The following trail balances of the two companies are prepared on December 31, 2022: Astris Company Exile Company Current assets Non-current assets Investment in Exile Company Current liabilities P60,000 P130,000 294,000 180,000 250,000 (60,000) (40,000) Common stock, P10 par (300,000) (100,000) Retained earnings, January 1, 2022 (200,000) (150,000) Sales (150,000) (100,000) Expenses 110,000 75,000 Dividend income (from…