Police Corporation acquired 100 percent of Station Corporation's voting shares on January 1, 20X3, at underlying bookvalue. At that date, the book values and fair values of Station's assets and liabilities were equal. Police uses the equitymethod in accounting for its investment in Station. Adjusted trial balances for Police and Station on December 31, 20X4,are as follows:ItemCurrent AssetsDepreciable Assets (net)Investment in Station CorporationDepreciation ExpenseOther ExpensesDividends DeclaredCurrent LiabilitiesLong-Term DebtCommon StockRetained EarningsSalesIncome from Station CorporationPolice CorporationDebit$ 223,000320,000230,00024,000165,00062,000Credit$ 50,00093,000193,000414,000223,00051,000$ 1,024,000 $ 1,024,000Station CorporationDebitCredit$ 161,000212,00014,00082,00031,000$ 500,000$ 30,000113,00083,000127,000147,000$ 500,000Required:a. Prepare the consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.

Journal entry records the accounting transactions of a business in a journal book. All the business…

Answered: Police Corporation acquired 100 percent…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Shipping's reported retained earnings of $75,000 on the date of acquisition. The trial balances for Plimsol Company and Shipping Corporation as of December 31, 20X4, follow: 24 Item Current Assets Depreciable Assets (net) Investment in Shipping Corporation Other Expenses Depreciation Expense Dividends Declared Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Dividend Income Plimsol Company Debit Credit $ 160,000 180,000 125,000 85,000 20,000 30,000 Shipping Corporation Debit Credit $ 115,000 135,000 60,000 15,000 15,000 $ 25,000 75,000 100,000 210,000 175,000 15,000 $ 600,000 $ 600,000 $ 340,000 $ 340,000 $ 20,000 50,000 50,000 Required: 1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4. 2. Prepare a three-part…
On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Sharp at that date. Pierce uses the equity method in accounting for its ownership of Sharp. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Sharp Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Subsidiary Required: Pierce Company Debit $ 200,000 300,000 139,500 30,000 100,000 30,000 $ 799,500 Credit $ 120,000 62,000 75,000 100,000 120,000 300,000 22,500 $ 799,500 Sharp Corporation Debit $ 120,000 225,000 25,000 60,000 10,000 $ 440,000 Credit $ 75,000 25,000 90,000 75,000 65,000 110,000 $ 440,000 1) Provide all consolidating entries required as of December 31, 20X4, to prepare…
On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Ship reported retained earnings of $75,000 on the date of acquisition. The trial balances for Plimsol Company and Shipping Corporation as of December 31, 20X4, follow: Item Current Assets Depreciable Assets (net) Investment in Shipping Corporation Other Expenses Depreciation Expense Dividends Declared Current Liabilities. Long-Term Debt Common Stock Retained Earnings Sales Dividend Income Plimsol Company Debit Credit $ 160,000 180,000 125,000 85,000 20,000 30,000 $ 600,000 $ 25,000 75,000 100,000 210,000 175,000 15,000 $ 600,000 Shipping Corporation Debit Credit $ 115,000 135,000 60,000 15,000 15,000 $ 20,000 50,000 50,000 100,000 120,000 $ 340,000 $ 340,000 Required: 1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4. 2. Prepare a…
On December 31, Year 1, P Company obtains control over the net assets of S Company by purchasing 100% of the ordinary shares of S Company. P Company paid for the purchase by issuing ordinary shares with a fair value of $44,000. In addition, P Company paid $1,000 for professional fees to facilitate the transaction. The following information has been assembled just prior to the acquisition date: Show Transcribed Text Goodwill Plant assets (net) Current assets Shareholders' equity Long-term debt Current liabilities Show Transcribed Text (i) the acquisition method (ii) the new-entity method Carrying Amount $ 80,000 50.000 $130,000 $ 75,000 25,000 30.000 3 $130,000 ü P Company 3 Fair Value $ 38,000 90,000 55,000 $ 183,000 $ 29,000 30,000 Carrying Amount $ 20.000 15,000 $35.000 $18,000 7,000 10,000 S Company $35,000 Fair Value $ 22,000 26,000 14.000 $ 62,000 $ 8,000 10,000 Required (a) Prepare a consolidated statement of financial position for P Company and calculate the debt-to-equity ratio…
Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor's net assets was equal to $370,000. Accumulated depreciation on this date was $24,000. Paper uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Paper and Scissor as of December 31, 20X9: Cash Accounts Receivable Inventory Investment in Scissor Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scissor Company Total Debit $ 232,000 165,000 193,000 515,000 250,000 875,000 278,000 65,000 312,000 90,000 $ 2,975,000 Paper Company Credit $ 630,000 85,000 150,000 625,000 498,000 880,000 107,000 $ 2,975,000 Scissor Company Debit $ 116,000 97,000 115,000 1-0 125,000 250,000 178,000 12,000…
E Company Ltd, a reporting entity, purchases all the issued shares of D Company Pty Ltd for $2,100,000. The net assets of D Company Pty Ltd at the date of acquisition consist of land $2,500,000 and a liability of $400,000 with these values representing their respective fair values. E Company Ltd will record the acquisition in its separate accounting records as follows: O a. Dr. Investment in D Company Pty Ltd $2,100,000 Cr. Issued Capital $2,100,000 O b. None of these options is correct O. Dr. Investment in D Company Pty Ltd $2,100,000 Cr. Cash $2,100,000 O d. Dr. Land $2,500.000 Cr. Liability $400,000 Cr. Cash $2,100,000
Polka Corporation acquired 100 percent of Song Company's voting stock on January 1, 20X4, at underlying book value. Polka uses the equity method in accounting for its ownership of Song. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Song Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Song Company Polka Corporation Debit $ 254,000 514,000 246,000 20,000 156,000 69,000 Credit Song Company Debit $ 156,000 308,000 10,000 81,000 30,000 Credit $ 60,000 40,000 118,000 84,000 142,000 141,000 $ 186,000 60,000 98,000 186,000 463,000 216,000 50,000 $ 1,259,000 $ 1,259,000 $ 585,000 $ 585,000 Required: a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. b. Prepare a three-part consolidation worksheet as of December 31, 20X4.
As of December 31, 20X4, Blue Co.’s statement of financial position shows the book values of $15,000,000 for total assets and $12,000,000 for total liabilities. Also on December 31, 20X4, an appraisal shows the fair values of $18,500,000 for total assets and $14,000,000 for total liabilities. Green Co. purchased all of the net assets of Blue Co. on December 31, 20X4 for $5,500,000. What amount of goodwill, if any, did Green Co. record on the acquisition date? a. $2,500,000 b. $1,000,000 c. $4,500,000 d. $0
On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows: Cash Accounts Receivable Inventory Fixed Assets (net) Investment in Sentence Co. Total Debits Accounts Payable Notes Payable Common Stock Retained Earnings Total Credits Assets Paragraph Corporation $ 74,000 120,000 180,000 Total Assets Liabilities and Stockholders' Equity 350,000 136,000 $860,000 Total Liabilities and Stockholders' Equity $ 65,000 350,000 150,000 295,000 $860,000 PARAGRAPH CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8. Sentence Company $ 20,000…
On January 1, 2019, an entity purchased 25% of the outstanding ordinary shares of another entity for P3,000,000. On such date, the carrying amounts of the net assets of the investee amounted to P8,000,000 The carrying amounts of net assets equaled fair value except for land and building. The fair value of land exceeded carrying amount by P2,000,000 and the fair value of building exceeded carrying amount by P3,000,000. The investee reported net income of P1,500,000 and paid dividends of P300,000 in 2019. The building has a remaining life of 5 years. On January 1, 2020, the entity sold 60% of its interest to another entity for P2,500,000. On such date, the fair value of the remaining interest was P1,800,000. The remaining interest was reclassified at FVPL. The investee paid dividend of P200,000 during 2020 and on December 31, 2020, the investee reported net income of P1,000,000. The fair value of the remaining interest on December 31, 2020 is P1,600,000. Question: The gain on disposal of…
On January 1, 2019, an entity purchased 25% of the outstanding ordinary shares of another entity for P3,000,000. On such date, the carrying amounts of the net assets of the investee amounted to P8,000,000 The carrying amounts of net assets equaled fair value except for land and building. The fair value of land exceeded carrying amount by P2,000,000 and the fair value of building exceeded carrying amount by P3,000,000. The investee reported net income of P1,500,000 and paid dividends of P300,000 in 2019. The building has a remaining life of 5 years. On January 1, 2020, the entity sold 60% of its interest to another entity for P2,500,000. On such date, the fair value of the remaining interest was P1,800,000. The remaining interest was reclassified at FVPL. The investee paid dividend of P200,000 during 2020 and on December 31, 2020, the investee reported net income of P1,000,000. The fair value of the remaining interest on December 31, 2020 is P1,600,000. Question: The carrying amount of…
Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $52,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Spirited Company $ Proud Corporation Debit 255,000 518,000 133,280 23,000 148,000 53,000 Credit $ 200,000 63,000 127,880 193,000 277,000 231,000 38,400 $1,130,280 $1,130,280 Spirited Company Credit Debit $169,000 311,000 13,000 85,000 25,400 $603,400 $ 78,000 43,000 192,400 87,000…

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