Puffin Industries acquired all of Sunset Coast Digital's stock on January 1, 2014, for $1,750,000 $1,050,000 in excess of book value. At that time, Sunset Coast's inventory (LIFO) was overvalued by $250,000 and its plant assets (10-year life) were overvalued by $500,000. The remaining excess of cost over book value is attributed to undervalued identifiable intangible assets being amortized over 20 years. Sunset Coast depreciates plant assets and amortizes intangibles by the straight-line method. During the next three years, Sunset Coast reported a total net income of $425,000 and paid out 50 percent in dividends. Puffin carries its investment in Sunset Coast using the complete equity method. Sunset Coast's inventory increased each year since it was acquired by Puffin, and Sunset Coast's reported net income for 2016 was $100,000. If Puffin reports $300,000 net income from its own operations in 2016, what is the consolidated net income for 2016?

At the beginning of 2016, Metatec Inc. acquired Ellison Technology Corporation for $600 million. In addition tocash, receivables, and inventory, the following assets and their fair values were also acquired:Plant and equipment (depreciable assets) $150 millionPatent 40 millionGoodwill 100 millionThe plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a 5-year useful life, no residual value, and is amortizedusing the straight-line method.At the end of 2018, a change in business climate indicated to management that the assets of Ellison might beimpaired. The following amounts have been determined:Plant and equipment:Undiscounted sum of future cash flows $ 80 millionFair value 60 millionPatent:Undiscounted sum of future cash flows $ 20 millionFair value 13 millionGoodwill:Fair value of Ellison Technology Corporation $450 millionFair value of Ellison’s net assets (excluding goodwill)…

Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $90,000 of the fair-value price was attributed to undervalued land while $50,000 was assigned to undervalued equipment having a 10-year remaining life. The $60,000 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant applied the equity method to the recording of this investment.  Following are individual financial statements for the year ending December 31, 2018. On that date, Small owes Giant $10,000. Small declared and paid dividends in the same period. Credits are indicated by parentheses.  a. How was the $135,000 Equity in Income of Small balance computed? b. Without preparing a worksheet or consolidation entries, determine and explain the totals to be reported by this business combination for the…

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Pentagon Company acquires 80% of Square Company for P500,000 on January 1, 2012. On that date, Square's com stock and retained earnings amounted to P200,000. Inventory was overvalued by P10,000, equipment (10-year remaining life) was undervalued by P30,000 and buildings (10-year remaining life) were undervalued by P40,000. Any excess consideration is attributable to goodwill. From 2012 to 2014, Square earns income and pay dividends as follows: ommon 2012 2013 2014 Net income P100,000 P120,000 P130,000 Dividends 40,000 50,000 60,000 What amount is the non-controlling interest in net income of Square for the year ended December 31, 2012? A. P12,600 B. P20,000 C. P16,600 D. P20,600

On January 1, 2015, Bactin Corporation acquired 10% of Oakton Company for $100,000. On that date, the total book value and fair value of Oakton's net assets was $900,000. Any difference between cost and fair value is attributable to goodwill. In 2015, Oakton reported net income of $60,000 and paid dividends of $30,000. On January 1, 2016, Bactin Corporation bought another 10% of Oakton for $100,000, and on that date, the book value and fair value of Oakton's net assets still was $900,000 (the fair value of Oakton did not change during 2015). Bactin concluded that its 20% ownership now allowed it to significantly influence Oakton's operations. In 2016, Oakton reported net income of $80,000 and paid dividends of $40,000. Required: Prepare all journal entries for Bactin for 2015 and 2016, assuming no change in fair value of the Oakton stock during that time period.

Giant acquired all of Small’s common stock on January 1, 2017, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $32,500 of the fair-value price was attributed to undervalued land while $95,500 was assigned to undervalued equipment having a 10-year remaining life. The $72,000 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant applied the equity method to the recording of this investment.   The following are individual financial statements for the year ending December 31, 2021. On that date, Small owes Giant $11,900. Small declared and paid dividends in the same period. Credits are indicated by parentheses.     Giant   Small Revenues $ (1,183,550 )   $ (462,500 ) Cost of goods sold   583,000       98,500   Depreciation expense   187,000       148,000   Equity in income of Small   (206,450 )     0…

Giant acquired all of Small’s common stock on January 1, 2017, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $90,000 of the fair-value price was attributed to undervalued land while $50,000 was assigned to undervalued equipment having a 10-year remaining life. The $60,000 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant applied the equity method to the recording of this investment. The following are individual financial statements for the year ending December 31, 2021. On that date, Small owes Giant $10,000. Small declared and paid dividends in the same period. Credits are indicated by parentheses. How was the $135,000 Equity in Income of Small balance computed? Without preparing a worksheet or consolidation entries, determine and explain the totals to be reported by this business combination for the…

On January 1, 2014, Plastam Industries acquired an 80% interest in Sparta Company to assure a steady supply of Sparta's inventory that Plastam uses in its own manufacturing businesses. Sparta sold 100% of its output to Plastam during 2014 and 2015 at a markup of 125% of Sparta's cost. Plastam had $12,000 of these items remaining in its inventory at December 31, 2015. If Plastam neglected to eliminate unrealized profits from all intercompany sales from Sparta, the inventory on the consolidated balance sheet at   A. overstated by $2,400.   B. understated by $1,920.   C. overstated by $1,920.   D. understated by $2,400.

Giant acquired all of Small’s common stock on January 1, 2017, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $37,500 of the fair-value price was attributed to undervalued land while $98,000 was assigned to undervalued equipment having a 10-year remaining life. The $64,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant applied the equity method to the recording of this investment.   The following are individual financial statements for the year ending December 31, 2021. On that date, Small owes Giant $12,800. Small declared and paid dividends in the same period. Credits are indicated by parentheses.     Giant   Small Revenues $ (1,298,800 )   $ (460,000 ) Cost of goods sold   610,000       115,000   Depreciation expense   190,000       203,000   Equity in income of Small   (132,200 )     0…