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
Concept explainers
Question
Chapter 3, Problem 3.3.1P
To determine
Determination and distribution of excess income schedule
Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.
To calculate:
Prepare determination and distribution of excess income schedule for the year end December 31, 2016.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. On this date, Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar Company are as follows: 2015 2016Net income . . . . . . . . . . . . . . . . . . . . .$60,000 $90,000Dividends. . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributable to goodwill.The trial balances for Paro and Solar are as…
On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. On this date, Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar Company are as follows: 2015 2016 Net income . . . . . . . . . . . . . . . . . . . . . . $60,000 $90,000 Dividends. . . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000 On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributable to goodwill. 1. Using this…
. Min Hyun Jing Ltd. purchased 21,600 common shares of Glastone Ltd. on January 1, 2018, when the market price was $27.50 per share. This gave Min Hyun Jing 12% of the shares issued by Glastone Ltd. Min Hyun Jing Ltd. has a December 31 year end.
For the year ended December 31, 2018, Glastone reported net income of $260,000 and declared dividends of $1.10 per share on December 31. The trading price of Glastone’s shares on that date was $31.20.
For the year ended December 31, 2019. Glastone reported net income of $280,000 and declared dividends of $1.15 per share on December 31. The trading price of Glastone’s shares on December 31 was 34.60. Min Hyun Jing Ltd. purchased an additional 20,000 common shares on this date.
For the year ended December 31, 2020, Glastone reported a net loss of $80,000, but still declared dividends on December 31, in the amount of $0.75 per share. The trading price of Glastone’s shares on December 31, 2019 was $30.50 per share.
For the year ended…
Chapter 3 Solutions
Advanced Accounting
Ch. 3 - Prob. 1UTICh. 3 - Prob. 2UTICh. 3 - Prob. 3UTICh. 3 - Prob. 4UTICh. 3 - Prob. 5UTICh. 3 - Prob. 6UTICh. 3 - Prob. 7UTICh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3.1E
Ch. 3 - Prob. 3.2ECh. 3 - Prob. 3.3ECh. 3 - Prob. 3.4ECh. 3 - Prob. 3.5ECh. 3 - Equity method, second year, eliminations, income...Ch. 3 - Prob. 4.2ECh. 3 - Prob. 5.1ECh. 3 - Prob. 5.2ECh. 3 - Prob. 5.3ECh. 3 - Prob. 5.4ECh. 3 - Prob. 5.5ECh. 3 - Prob. 6.1ECh. 3 - Prob. 6.2ECh. 3 - Prob. 7.1ECh. 3 - Prob. 7.2ECh. 3 - Prob. 7.3ECh. 3 - Prob. 7.4ECh. 3 - Prob. 7.5ECh. 3 - Prob. 8.1ECh. 3 - Prob. 8.2ECh. 3 - Prob. 9ECh. 3 - Prob. 10.1ECh. 3 - Prob. 10.2ECh. 3 - Prob. 10.3ECh. 3 - Prob. 11ECh. 3 - Prob. 3B.1.1AECh. 3 - Prob. 3B.1.2AECh. 3 - Prob. 3B.1.3AECh. 3 - Prob. 3B.2.1AECh. 3 - Prob. 3B.2.2AECh. 3 - Prob. 3B.3AECh. 3 - Prob. 3.1.1PCh. 3 - Prob. 3.1.2PCh. 3 - Prob. 3.1.3PCh. 3 - Prob. 3.2.1PCh. 3 - Prob. 3.2.2PCh. 3 - Prob. 3.3.1PCh. 3 - Prob. 3.3.2PCh. 3 - Prob. 3.3.3PCh. 3 - Prob. 3.3.4PCh. 3 - Prob. 3.4.1PCh. 3 - Prob. 3.4.2PCh. 3 - Prob. 3.5.1PCh. 3 - Prob. 3.5.2PCh. 3 - Prob. 3.5.3PCh. 3 - Prob. 3.6.1PCh. 3 - Prob. 3.6.2PCh. 3 - Prob. 3.6.3PCh. 3 - Prob. 3.7.1PCh. 3 - Prob. 3.7.2PCh. 3 - Prob. 3.7.3PCh. 3 - Prob. 3.8.1PCh. 3 - Prob. 3.8.2PCh. 3 - Prob. 3.9.1PCh. 3 - Prob. 3.9.2PCh. 3 - Prob. 3.10.1PCh. 3 - Prob. 3.10.2PCh. 3 - Prob. 3.11.1PCh. 3 - Prob. 3.11.2PCh. 3 - Prob. 3.12.1PCh. 3 - Prob. 3.12.2PCh. 3 - Prob. 3.13.1PCh. 3 - Prob. 3.13.2PCh. 3 - Prob. 3.15.1PCh. 3 - Prob. 3.15.2PCh. 3 - Prob. 3.16.1PCh. 3 - Prob. 3.16.2PCh. 3 - Prob. 3.17.1PCh. 3 - Prob. 3.17.2PCh. 3 - Prob. 3.18.1PCh. 3 - Prob. 3.18.2PCh. 3 - Prob. 3A.1.1APCh. 3 - Prob. 3A.1.2APCh. 3 - Prob. 3A.2APCh. 3 - Prob. 3A.3APCh. 3 - Prob. 3B.1APCh. 3 - Prob. 3B.2APCh. 3 - Prob. 3B.3.1APCh. 3 - The trial balances of Campton Corporation and Dorn...Ch. 3 - The trial balances of Campton Corporation and Dorn...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar are as follows: 2015 2016Net income . . . . . . . . . . . . . . . . . . . . . . $60,000 $90,000Dividends. . . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributed to goodwill.1. Using this information and the information in the following…arrow_forwardHanson Corporation purchases a 10% interest in Novic Company on January 1, 2016, and an additional 15% interest on January 1, 2018. These investments cost Hanson Corporation $80,000 and $110,000, respectively. The following stockholders’ equities of Novic Company are available: December 31, 2015 December 31, 2017 Common stock ($10 par). . . . . . . . . .$500,000 $500,000 Retained earnings . . . . . . . . . . . . . . . . . 250,000 300,000 Total equity . . . . . . . . . . . . . . . . . . . . . . $750,000 $800,000 Any excess of cost over book value on the original investment is attributed to goodwill. Any excess on the second purchase is attributable to equipment with a 4-year life. Novic Company has income of $30,000, $30,000, and $40,000 for 2016, 2017, and 2018, respectively. Novic pays dividends of $0.20 per share in 2017 and 2018. Ignore income tax considerations, and assume…arrow_forwardOn January 2, 2016, Barney Co. acquired all of Dora's ordinary shares for $180,000. On that date, the carrying amounts of Dora's assets and liabilities is equal to their fair value of $198,000 and 48,000, respectively. On the same year, Dora paid cash dividends of $3,000. Below is the financial position and statement of income on December 31, 2016. Barney Co. Dora Co. Operating Income $60,000 $30,000 Income from Subsidiary $3,000 - Net Income 63,000 21,000 Investment in Subsidiary 180,000 - Accumulated Profits 105,000 84,000 Shareholders' Equity $393,000 $168,000 WHat is the consolidated accumulated profits?arrow_forward
- On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar are as follows: Net income Dividends 2015 2016 $60,000 $90,000 20,000 30,000 On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributed to goodwill.arrow_forward(Equity Investment) On July 1, 2017, Selig Company purchased for cash 30% of the outstanding common stock of Spoor Corporation. Both Selig and Spoor have a December 31 year-end. Spoor Corporation, whose common stock is actively traded on the NASDAQ exchange, paid a cash dividend on November 15, 2017, to Selig Company and its other stockholders. It also reported its total net income for the year of $920,000 to Selig Company.InstructionsPrepare a one-page memorandum of instructions on how Selig Company should report the above facts in its December 31, 2017, balance sheet and its 2017 income statement. In your memo, identify and describe the method of valuation you recommend.Provide rationale where you can. Address your memo to the chief accountant at Selig Companyarrow_forwardOn December 31, 2016, Akron, Inc. purchased 5 Percent of Zip’s Company's common shares on the open market in exchange for $16,000. On December 31, 2017, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $95,000. During the next two years, the following information is available for Zip Company: Income Dividends Declared Common StockFair Value (12/31) 2016 $320,000 2017 $75,000 $7,000 380,000 2018 88,000 15,000 480,000 At December 31, 2017, Zip reports a net book value of $290,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2017. Assume Akron applies the equity method to its Investment in Zip account: What amount of equity income should Akron report for 2018? On Akron's December 31, 2018, balance sheet, what amount is reported for the Investment in Zip…arrow_forward
- Red Inc., a public company entered into the following transactions during the year ended December 31, 2021: 1) On January 2, 2021, purchased $260,000 of the 6% bonds of Miron Ltd. The bonds mature on December 31, 2025 and pay interest every June and December 31. The bond were purchased to yield 5%. 2) 2,800 shares of Teal Company at a cost of $21 per share. No dividends were paid during 2021. Transaction costs of $1,500 were paid for this transaction. Required a) Prepare the journal entries for the investment in the bonds of Miron for the year 2021 assuming Red Inc. uses the Amortized Cost method to account for the bonds. b) Assume that on December 31, 2021, the market value of the Miron bonds was $280,000. If Red Inc. classified the bonds as FVTOCI: i) Prepare the journal entry at December 31, 2021 to adjust the bonds to the fair value.…arrow_forwardOn July 1, 2017, Entity H acquired 25% of the shares of Oki, Inc. for P1,000,000. At the date, the equity of Oki was P4,000,000, with all the identifiable assets and liabilities being measured at amounts equal to fair value. The table below shows the profits and losses made by Oki during 2017 to 2021: YEAR PROFIT(LOSS) 2017 P200,000 2018 (2,000,000) 2019 (2,500,000) 2020 160,000 2021 300,000 How much share of profit of assocaiate should Entity H report in its 2020 profit or loss? a.Nil b. P40,000 c. P60,000 d. P100,000arrow_forwardOn January 1, 2013, K Company purchased a 30 % interest in P Company for $250,000. P reported net income of $100,000 for 2013 and declared and paid a dividend $10,000. K accounts for investment using the equity method. In December 31, 2013,balance sheet, what amount should K report as its investment in P? Select one: a. 277,000 b. 223,000 c. 160,000 d. 340,000arrow_forward
- Pop corporation paid $686,000 for a 30 percent interest in son corporation's outstanding voting stock on april 1, 2016. at december 31, 2015, son had net assets of $2,000,000 and only common stock outstanding. during 2016, son declared and paid dividends of $40,000 each quarter on march 15, june 15, september 15, and december 15 ($160,000 in total). at april 1, 2016, the book value of assets and liabilities equals the fair value. son's 2016 income was reported as follows:arrow_forwardToy Co Corporation purchased 282,000 of the 940,000 common shares of Abacus Ltd. on October 1, 2021, at $2.10 per share. Near the end of the fourth quarter ended on December 29th, Abacus declared dividends on its common shares of $74,000 but the dividend payment date is not until 2022. Abacus also announced that it had net income for the quarter ended December 31, 2021, of $188,000.Record the journal entries that Toy Co would make during the last quarter ended December 31, 2021, under the following assumptions: Toy Co does not have significant influence over Abacus and uses the cost model to account for this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Please donot provide solution in image format provide solution in step by step format with fast solutionarrow_forwardOn April 15, 2023, Rizzo Inc. purchased 34,500 shares of Hernandez, Inc. for $22 per share (passive interest). During the year Rizzo Inc. sold 4,500 shares of Hernandez, Inc. for $25 per share. Rizzo Inc. started operations on January 1, 2023. At December 31, 2023 the market price of Hernandez, Inc.’s stock was $19 per share. What is the total amount of unrealized gain (loss) that Rizzo Inc. will report through its income statement for the year ended December 31, 2023 related to its investment in Hernandez, Inc. stock?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning