Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At theacquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book valuewas only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values asfollows:Book ValueLand$65,000Fair Value$ 290,000Buildings and equipment (10-year remaining life)287,000Copyright (20-year remaining life)Notes payable (due in 8 years)122,000(176,000)263,000216,000(157,600)For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balancesare for the year ending December 31, 2021, for both companies.PadreRevenuesCost of goods soldDepreciation expenseAmortization expenseInterest expenseEquity in income of SierraNet incomeRetained earnings, 1/1/21Net incomeDividends declaredRetained earnings, 12/31/21Current assetsInvestment in SierraLandBuildings and equipment (net)CopyrightTotal assetsAccounts payableNotes payableCommon stockAdditional paid-in capitalRetained earnings (above)Total liabilities and equitiesSierra$ (1,394,980)774,000274,000$(684,900)432,00011,6006,10052,100(177,120)9,200$ (472,000)$(226,000)$ (1,275,000)$(530,000)(472,000)260,000(226,000)65,000$ (1,487,000)$(691,000)$856,160$764,700927,840360,00065,000909,000275,4000115,900$ 3,053,000$1,221,000$ (275,000) $(194,000)(541,000)(176,000)(300,000)(100,000)(450,000)(60,000)(1,487,000)(691,000)$(3,053,000) $ (1,221,000)At year-end, there were no intra-entity receivables or payables.Prepare a worksheet to consolidate the financial statements of these two companies. (For accounts where multiple consolidationentries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet.Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input allamounts as positive values.)

The consolation is the accounting process in which the financial results of the parent company and…

Prepare a worksheet to consolidate the financial statements of these two companies. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

Prepare a worksheet to consolidate the financial statements of these two companies. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

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

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Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra’s total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra’s book value was only $690,000. Also, several individual items on Sierra’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Land $ 65,000 $ 290,000 Buildings and equipment (10-year remaining life) 287,000 263,000 Copyright (20-year remaining life) 122,000 216,000 Notes payable (due in 8 years) (176,000 ) (157,600 ) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Padre Sierra Revenues $ (1,394,980 ) $ (684,900 ) Cost of goods sold 774,000 432,000…
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Fair Value $ 65,000 287,000 $ 290,000 263,000 216,000 (157,600) Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) 122,000 (176,000) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Padre Sierra $(1,394,980) 774,000 274,000 (684,900) 432,000 11,600 6,100 9,200 Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense 52,100…
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $802,720 cash. At the acquisition date, Sierra’s total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra’s book value was only $690,000. Also, several individual items on Sierra’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Land $ 65,000 $ 290,000 Buildings andequipment (10-year remaining life) 287,000 263,000 Copyright (20-year remaining life) 122,000 216,000 Notes payable (due in 8 years) (176,000) (157,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Padre Sierra Revenues $(1,394,980) $ (684,900) Cost of goods sold 774,000 432,000 Depreciation expense 274,000 11,600…
Padre, Incorporated, buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2024, for $791,520 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $989,400, although Sierra's book value was only $638,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Account Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Book Value $ 65,200 295,000 Fair Value $ 307,200 276,000 104,000 (187,000) 218,000 (172,600) For internal reporting purposes, Padre, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Account Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings,…
Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2021, in exchange for $900,000 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date, Stanford's book value was $690,000. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Trade names (indefinite life) $ 360,000 $ 383,000 Property and equipment (net, 8-year remaining life) 290,000 330,000 Patent (14-year remaining life) 132,000 272,000 For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Plaza Stanford Revenues $ (1,400,000 ) $ (825,000 ) Cost of goods sold 774,000 395,750…
Padre, Incorporated, buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2024, for $757,280 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $946,600, although Sierra's book value was only $696,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Revenues Cost of goods sold Depreciation expense Amortization expense Account For internal reporting purposes, Padre, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Current assets Investment in Sierra Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24…
On January 1, 2019, ABC Inc., paid P700,000 for 10,000 shares of XYZ’s Company’s voting ordinary shares, which was a 10% interest in XYZ. At that date the net assets of XYZ totaled P6,000,000. The fair values of all of XYZ’s identifiable assets and liabilities were equal to their book values. ABC does not have the ability to exercise significant influence over the operating and financial policies of XYZ. ABC received dividends of P0.90 per share from XYZ on October 1, 2019. XYZ reported net income of P400,000 for the year ended December 31, 2019. On July 1, 2020, ABC paid P2,400,000 for 30,000 additional shares of XYZ Company’s voting ordinary shares, which represents a 30% investment in XYZ.. The fair values of XYZ’s identifiable assets net of liabilities were equal to their book values of P6,500,000. As a result of this transaction, ABC has the ability to exercise significant influence over the operating and financial policies of XYZ. ABC received dividends of P1.10 per share from…
On January 1, 2020, the Gim Corporation purchased equity securities for P2,000,000. The company also paid commissions, taxes and other transaction costs amounting to P50,000. Because the securities were not acquired for immediate trading, Gim exercised the option to take the change in fair value through other comprehensive income. The securities had fair values at December 31, 2020 and 2021, respectively: P1,750,000 and P2,100,000. No securities were sold during 2020. What amount of unrealized gain (loss) should be reported in the 2020 statement of financial position? a. P250,000 cumulative unrealized loss b. P100,000 cumulative unrealized gain c. P200,000 cumulative unrealized loss d. P50,000 cumulative unrealized gain
On January 1, 2020, the Gim Corporation purchased equity securities for P2,000,000. The company also paid commissions, taxes and other transaction costs amounting to P50,000. Because the securities were not acquired for immediate trading, Gim exercised the option to take the change in fair value through other comprehensive income. The securities had fair values at December 31, 2020 and 2021, respectively: P1,750,000 and P2,100,000. No securities were sold during 2020. What amount of unrealized gain (loss) should be reported in the 2020 statement of financial position?Required to answer. Single choice.
On January 1, 2020, the Pacita Corporation purchased equity securities for P2,000,000. The company also paid commission, taxes and other transaction costs amounting to P50,000. Because the securities were acquired not for immediate trading, Pacita exercised its option to measure the change in fair value through other comprehensive income. The securities had the following market values at December 31, 2020 and 2021, respectively: P1,750,000 and P2,100,000. No securities were sold during 2020 and 2021. What amount of unrealized gain or loss should be reported in December 31, 2021 statement of financial position as a component of shareholders’ equity?
On January 2, 2020, Megan, INC. acquired a 15% interest in Kiyosaki Corp. by paying P8, 000, 000 for 100,000 ordinary shares. On this date, the net assets of Kiyosaki Corp. totaled P40, 000, 000. The fair values of Kiyosaki Corp.'s identifiable assets and liabilities were equal to their book values. Megan did not have the ability to exercise significant influence over the operating and financial policies of Kiyosaki. Megan received dividends of P1.40 per share from Kiyosaki on October 1, 2020. Kiyosaki reported net income of P5, 000, 000 for the year ended December 31, 2020. Megan classified the investment as at fair value through other comprehensive income. Market price for the 100,000 shares was P9, 000, 000 on December 31, 2020.Megan paid P30, 000, 000 on January 1, 2021, for 300,000 additional Kiyosaki ordinary shares, which represents a 25% interest in Kiyosaki. The fair value of Kiyosaki Corp.'s identifiable assets, net of liabilities, was equal to their book values of P92, 000,…
On January 2, 2020, Megan, INC. acquired a 15% interest in Kiyosaki Corp. by paying P8, 000, 000 for 100,000 ordinary shares. On this date, the net assets of Kiyosaki Corp. totaled P40, 000, 000. The fair values of Kiyosaki Corp.'s identifiable assets and liabilities were equal to their book values. Megan did not have the ability to exercise significant influence over the operating and financial policies of Kiyosaki. Megan received dividends of P1.40 per share from Kiyosaki on October 1, 2020. Kiyosaki reported net income of P5, 000, 000 for the year ended December 31, 2020. Megan classified the investment as at fair value through other comprehensive income. Market price for the 100,000 shares was P9, 000, 000 on December 31, 2020.Megan paid P30, 000, 000 on January 1, 2021, for 300,000 additional Kiyosaki ordinary shares, which represents a 25% interest in Kiyosaki. The fair value of Kiyosaki Corp.'s identifiable assets, net of liabilities, was equal to their book values of P92, 000,…