POM acquired 80% of the share of SOM for $26,550 on 1 Jan 2019, the date of acquisition (DOA). At this date, the equity of SOM consisted of share capital of $15,000 and retained earnings of $12,250. At 1 Jan 2019, all the identifiable assets and liabilities of SOM were recorded at fair value except for the following: Carrying amount Fair value $10,000 Plant $7,500 The plant had a remaining useful life of 5 years with depreciation based on the straight-line method. The fair value of the non-controlling interest (NCI) in SOM on DOA was $6,000. Tax rate is 10%. On 1 Jan 2021, POM acquired 30% of the shares of AOM for $7,450. Significance influence on AOM was obtained as a result. At this date, AOM's equity consisted of the share capital of $7,500 and retained earnings of $11,250. AOM made a profit of $5,200 for the year ended 31 Dec 2021. The following intra-group or inter-entity transactions happened in the period from 1 Jan 2021 to 31 Dec 2021 1. On 1 Jan 2021, POM held an inventory of $2,500 purchased from SOM during the year ended 31 Dec 2020. The inventory had been manufactured by SOM at a cost of $1,600. The inventory was sold by POM for $3,000 to a third party during the year 2021. 2. In 2021, SOM sold inventory costing $6,000 to POM for $9,000 and 35% of these inventories were still on hand at 31 Dec 2021. 3. In Jan 2021, POM Ltd sold a plant costing $8,000 to SOM Ltd for $10,000. SOM Ltd applies a straight-line 20% per annum on cost for its depreciation. 4. SOM made profits of $9,000 in 2019 and 2020. And it further made a $3,750 profit for the year ended 31 Dec 2021.

On 1/1/2020, X Company acquired 100% of Y Company's Net assets for $150,000 cash. The Book value of Y's Net assets was equal to the fair value of Y Company's net assets at the date of acquisition except for Land (included in fixed assets) its market value was less than the book value by $1,000, the balance sheet data at 1/1/2020, are as follows: item X co Y co cash 404,000 150,000 Fixed assets 100,000 66,000 Liabilities 144,000 72,000 Common stock 120,000 60,000 Retained earning 240,000 84,000 required: if the acquisition are merger record the journal entries and prepare x balance sheet after the merger

On January 1, 2023, French Company acquired 60 percent of K-Tech Company for $306,000 when K-Tech's book value was $406,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $204,000. At the acquisition date, K-Tech's trademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5- year remaining life) was undervalued by $24,000. In 2023, K-Tech reports $28,000 net income and declares no dividends. At the end of 2024, the two companies report the following figures (stockholders' equity accounts have been omitted): Itens Current assets Trademarks Patented technology Liabilities Revenues Expenses Investment income French Company Carrying Amounts $ 624,000 264,000 414,000 (394,000) (904,000) 496,000 Not given K-Tech Company Carrying Amounts $ 304,000 204,000 154,000 (124,000) (404,000) 304,000 K-Tech Company Fair Values $ 324,000 284,000 178,000 (124,000) Note: Parentheses indicate a credit…

On January 1, 2025, Henderson Company purchased 100% of the common stock of Caramel Company for $590,000 cash. Fair values differed from book values as follows:      Fair value Land   100,000 Patent   250,000 Bonds Payable   105,000 The trial balances of the companies at the acquisition date are as follows:   Trial Balance       Account Titles Henderson Caramel Cash 650,000  65,000  Land 120,000  30,000  Buildings, net 250,000  180,000  Goodwill 400,000  200,000 Current Liabilities 170,000  75,000  Bonds Payable 500,000 100,000  Common Stock 70,000  30,000  APIC 350,000  70,000  Retained Earnings 330,000 200,000  The amount reported for Cash on the consolidated balance sheet at the acquisition date is Question Answer a. $125,000 b. $650,000 c. $65,000 d. $715,000

On January 2, 2019, Peace Co. acquired 80% of the outstanding common stock of Shade Co. for ₱1,344,000 with no goodwill resulting from the acquisition. The following selected account balances were taken from the accounting records of Shade Co.   BV FV Building 12,000,000 12,400,000 Machinery 620,000 500,000 The building has an estimated useful life of 10 years and the equipment is expected to last for 5 years. For the year 2019, Peace Co. reported net income from own operations of ₱2,240,000 and Shade Co. reported ₱600,000 net income from own operations. Peace Co. accounts its investment in Shade Co. using the cost method. What is the consolidated income statement for the year 2019.

Grand Champion Inc. purchased America’s Sweethearts Corporation on January 1, 2019. At the time, America’s Sweethearts had the following assets and liabilities (stated at fair value): Cash $62,000 Accounts receivable 138,000 Inventory 185,000 Property, plant, and equipment 300,000 Patent 65,000 Accounts payable 200,000 Notes payable 325,000 Grand Champion paid $900,000 for America’s Sweethearts. Assume that America’s Sweethearts is a reporting unit of Grand Champion. At the end of 2020, America’s Sweethearts has a fair value of $720,000 and a book value of $850,000, which includes any goodwill recorded. Of this fair value, $350,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities. Required:   Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry.

Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,185,400 cash. The balance sheet of Succo Company immediately prior to the acquisition showed:     Book value   Fair value Current assets   $ 871,440   $871,440 Plant and equipment   1,025,090   1,437,590 Total   $1,896,530   $2,309,030           Liabilities   $194,060   $207,670 Common stock   484,800     Other contributed capital   632,900     Retained earnings   584,770     Total   $1,896,530     As part of the negotiations, Pritano agreed to pay the stockholders of Succo $356,690 cash if the post-combination earnings of Pritano averaged $2,185,400 or more per year over the next two years. The estimated fair value of the contingent consideration was $143,480 on the date of the acquisition.             (a) Prepare the journal entry on the books of Pritano to record the acquisition on December 31, 2013. (If no entry is required, select…

On January 2, 2019, ABC Co. acquired 80% of the outstanding common stock of Shade Co. for ₱1,344,000 with no goodwill resulting from the acquisition. The following selected account balances were taken from the accounting records of XYZ Co. Details shown doe XYZ Co.  in the image. The building has an estimated useful life of 10 years and the equipment is expected to last for 5 years. For the year 2019, ABC Co. reported net income from own operations of ₱2,240,000 and XYZ Co. reported ₱600,000 net income from own operations. ABC Co. accounts its investment in XYZ Co. using the cost method. What is the consolidated income statement for the year 2019. NCI in the consolidated FS for the year 2019.

On January 1, 2015, Pomegranate Company acquired 80% of the voting stock of Starfruit Company for $47,100,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $6,900,000. Starfruit's book value was $12,000,000 at the date of acquisition. Starfruit's assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $13,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $16,000,000 and 5-year life, straight- line, which were capitalized following GAAP. Additional information: Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $1,000,000 in 2015 and 2016, and by $250,000 in 2017. It is now December 31, 2017, the accounting year-end.Here is Starfruit Company's trial balance at…

Required: On January 3, 2024, Matteson Corporation acquired 40 percent of the outstanding common stock of O'Toole Company for $1,379,000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $863,000. Any excess cost over the underlying book value was assigned to a copyright that was undervalued on its balance sheet. This copyright has a remaining useful life of 10 years. For the year ended December 31, 2024, O'Toole reported net income of $353,000 and declared cash dividends of $35,000. On December 31, 2024, what should Matteson report as its investment in O'Toole under the equity method? Investment