Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.6.2P
To determine
Introduction:
Worksheet of Consolidated
Elimination Entries eliminate the investment account against the accounts that are to be shown on the consolidated worksheet.
To prepare: Consolidated worksheet on acquisition date.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On April 1, 2015, Benton Corporation purchased 80% of the outstanding stock of Crandel Company for $425,000. A condensed balance sheet of Crandel Company at the purchase date is shown below.All book values approximated fair values on the purchase date. Any excess cost was attributed to goodwill.The following information was gathered pertaining to the first two years of operation since Benton’s purchase of Crandel Company stock:a. Intercompany merchandise sales were summarized as follows:
Date
Transaction
Sales
Gross Profit
MerchandiseRemaining inPurchaser’sEnding Inventory
April 1, 2015 to March 31, 2016
April 1, 2016 toMarch 31, 2017
Benton to Crandel Crandel to Benton
Benton to Crandel Crandel toBenton
$40,000 20,000
32,000 30,000
20% 25
20 25
$9,000 4,000
6,000 3,000
b. On March 31, 2017, Benton owed Crandel $10,000, and Crandel owed Benton $5,000 as a result of the intercompany sales.c. Benton paid $25,000 in cash…
On January 1, 2023, Tamarisk Company issued 1,450 of its $20 par value common shares with a fair value of $60 per share in
exchange for the 2,000 outstanding common shares of Sheffield Company in a purchase transaction. Registration costs amounted to
$2,500, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows:
Cash
Accounts receivable (net)
Inventory
Plant and equipment (net)
Land
Total assets
Accounts payable
Notes payable
Common stock, $20 par value
Other contributed capital
Retained earnings
Total equities
Tamarisk Company
$83,000
103,000
56,000
95,000
23,500
$360,500
$63,000
89,500
100,000
60,000
48,000
$360,500
Sheffield Company
$12,600
18,000
25,000
46,500
22,000
$124,100
$19,500
30,000
40,000
27,500
7,100
$124,100
Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.
On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows:
Peach Company
Swartz Company
Cash
$71,250
$13,190
Accounts receivable (net)
99,260
20,070
Inventory
63,300
26,980
Plant and equipment (net)
99,340
39,970
Land
27,990
21,440
Total assets
$361,140
$121,650
Accounts payable
$64,130
$16,800
Notes payable
85,460
20,800
Common stock, $20 par value
108,400
36,400
Other contributed capital
58,280
23,800
Retained earnings
44,870
23,850
Total equities
$361,140
$121,650
Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.…
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1UTICh. 2 - Prob. 2UTICh. 2 - Prob. 3UTICh. 2 - Prob. 4UTICh. 2 - Prob. 5UTICh. 2 - Prob. 6UTICh. 2 - Santos Corporation is considering investing in...Ch. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Prob. 3.1E
Ch. 2 - Prob. 3.2ECh. 2 - Prob. 4.1ECh. 2 - Prob. 4.2ECh. 2 - Prob. 4.3ECh. 2 - Prob. 5.1ECh. 2 - Prob. 5.2ECh. 2 - Prob. 6.1ECh. 2 - Prob. 6.2ECh. 2 - Prob. 7.1ECh. 2 - Prob. 7.2ECh. 2 - Prob. 8.1ECh. 2 - Prob. 9.1ECh. 2 - Prob. 9.2ECh. 2 - Prob. 9.4ECh. 2 - Prob. 2A.1AECh. 2 - Prob. 2.1.1PCh. 2 - Prob. 2.1.2PCh. 2 - Prob. 2.2.1PCh. 2 - Prob. 2.2.2PCh. 2 - Prob. 2.2.3PCh. 2 - Prob. 2.3.1PCh. 2 - Prob. 2.3.2PCh. 2 - Prob. 2.3.3PCh. 2 - Prob. 2.4.1PCh. 2 - Prob. 2.4.2PCh. 2 - Prob. 2.4.3PCh. 2 - Prob. 2.5.1PCh. 2 - Prob. 2.5.2PCh. 2 - Prob. 2.5.3PCh. 2 - Prob. 2.6.1PCh. 2 - Prob. 2.6.2PCh. 2 - Prob. 2.7.1PCh. 2 - Prob. 2.7.2PCh. 2 - Prob. 2.8.1PCh. 2 - Prob. 2.8.2PCh. 2 - Prob. 2.9.1PCh. 2 - Prob. 2.9.2PCh. 2 - Prob. 2.10.1PCh. 2 - Prob. 2.11.1PCh. 2 - Prob. 2.12.1PCh. 2 - Prob. 2.12.2PCh. 2 - Prob. 2.13.1PCh. 2 - Prob. 2.13.2PCh. 2 - Prob. 2.14.1PCh. 2 - Prob. 2.14.2PCh. 2 - Prob. 2.15.1PCh. 2 - Prob. 2.15.2PCh. 2 - Prob. 2A.1.1APCh. 2 - Prob. 2A.1.2APCh. 2 - Prob. 2.1.1CCh. 2 - Prob. 2.1.2C
Knowledge Booster
Similar questions
- On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $71,250 $13,190 Accounts receivable (net) 99,260 20,070 Inventory 63,300 26,980 Plant and equipment (net) 99,340 39,970 Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800 Notes payable 85,460 20,800 Common stock, $20 par value 108,400 36,400 Other contributed capital 58,280 23,800 Retained earnings 44,870 23,850 Total equities $361,140 $121,650 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.…arrow_forwardLiala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. Required: (i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory 2. Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales.arrow_forwardLiala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. The tax rate is 30%. Required: (i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales.arrow_forward
- Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2015, Sea-Breeze had the following assets and liabilities:The companies’ financial statements for the year ending December 31, 2018, follow:Answer the following questions:a. How can the accountant determine that the parent has applied the initial value method?b. What is the annual excess amortization initially recognized in connection with this acquisition?c. If the parent had applied the equity method, what investment income would the parent have recorded in 2018?d. What amount should the parent report as retained earnings in its January 1, 2018, consolidated balance sheet?e. What is consolidated net income for 2018 and what amounts are attributable to the controlling and noncontrolling interests?f. Within consolidated statements at January 1,…arrow_forwardKraus Company has the following balance sheet on July 1, 2016: (attached)On July 1, 2016, Neiman Company purchases 80% of the outstanding common stock of Kraus Company for $310,000. Any excess of book value over cost is attributed to the equipment, which has an estimated 5-year life. Kraus Company closes its books before the acquisition on July 1. On December 31, 2016, Neiman Company and Kraus Company prepare the following trial balances: Neiman Kraus (July 1–Dec. 31)Current Assets . . . . . . . . . . . . . . . . . . . . 220,000 220,000Equipment . . . . . . . . . . . . . . . . . . . . . . . 500,000 300,000Accumulated Depreciation—Equipment (140,000) (20,000)Investment in Kraus Company . . . . . . . . . 310,000Current Liabilities . . . . . . . . . . . . . . . . . . . . . (200,000) (70,000)Common Stock ($10 par) . . . . . . . . . . . . .…arrow_forwardLiala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactionsoccurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previouslycosted Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to otherentities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at costplus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd on 30 June 2017. Thetax rate is 30%.Required:(i) Prepare the consolidation worksheet entries for Liala Ltd on 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales. b) On 1 July 2016, Liala Ltd sold an item of plant to Jordan Ltd Ltd for $150,000…arrow_forward
- Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactionsoccurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previouslycosted Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to otherentities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at costplus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. Thetax rate is 30%.Required:(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory. (ii) Compute the amount of cost of goods sold to be reported in the consolidated incomestatement for 2017 relating to the relevant intra-group sales. b) On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for $150,000…arrow_forwarda) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities: On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000. During the 2016–17 period, Jordan Ltd sold inventory to Liala Ltd for $6,000, this being at cost plus 20% mark-up. Of this inventory, 20 % remained on hand in Liala Ltd at 30 June 2017. Thetax rate is 30%.Required:(i) Prepare the consolidation worksheet entries for Liala Ltd at 30 June 2017 in relation to the intragroup transfers of inventory.(ii) Compute the amount of cost of goods sold to be reported in the consolidated income statement for 2017 relating to the relevant intra-group sales. On 1 July 2016, Liala ltd sold an item of plant to Jordan Ltd Ltd for…arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education