Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 3, Problem 35P
a.
To determine
Explain how Company A derived the $66,000 balance in the Subsidiary Earnings account.
b.
To determine
Prepare a worksheet to consolidate the financial information for these two companies.
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On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $662,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $463,400. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $96,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,500 dividend. Sedona recorded net income of $99,500 in 2016 and $110,300 in 2017.
Selected account balances from the two companies’ individual records were as follows:
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Phoenix
Sedona
2018 Revenues
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544,000
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$
381,000
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2018 Expenses
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387,000
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280,000
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2018 Income from Sedona
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63,350
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Retained earnings 12/31/18
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270,350
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224,500
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On its December 31, 2018, consolidated…
Allen Company acquired 100 percent of Bradford Company’s voting stock on January 1, 2014, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $14 per share). As of that date, Bradford had stockholders’ equity totaling $105,000. Land shown on Bradford’s accounting records was undervalued by $10,000. Equipment (with a five-year remaining life) was undervalued by $5,000. A secret formula developed by Bradford was appraised at $20,000 with an estimated life of 20 years.
Following are the separate financial statements for the two companies for the year ending December 31, 2018. There were no intra-entity payables on that date. Credit balances are indicated by parentheses.
a. Explain how Allen derived the $66,000 balance in the Subsidiary Earnings account.
b. Prepare a worksheet to consolidate the financial information for these two companies
ALPHA CORP. bought 40% of BETA INC.'s outstanding ordinary shares on January 2, 2015, for P4,000,000. The carrying amount of BETA’s net assets at the purchase date totaled P9,000,000. Fair values and carrying amounts were the same for all items except for plant and inventories, for which fair values exceeded their carrying amounts by P900,000 and P100,000, respectively. The plant has an 18-year life. All inventories were sold during 2015. During 2015, BETA reported profit of P1,200,000 and paid a P200,000 cash dividend.
What amount should ALPHA report in its statement of comprehensive income from its investment in BETA for the year ended December 31, 2015?
Chapter 3 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10Q
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Paar Corporation bought 100 percent of Kimmel,...Ch. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - If no legal, regulatory, contractual, competitive,...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - What is Phoenixs consolidated retained earnings...Ch. 3 - On its December 31, 2018, consolidated balance...Ch. 3 - Prob. 13PCh. 3 - Herbert, Inc., acquired all of Rambis Companys...Ch. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Following are selected account balances from...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - On January 1, 2017, Pinnacle Corporation exchanged...Ch. 3 - Following are selected accounts for Mergaronite...Ch. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39APCh. 3 - Prob. 40APCh. 3 - Prob. 1DYSCh. 3 - FASB ASC AND IASB RESEARCH CASE A vice president...Ch. 3 - Prob. 4DYSCh. 3 - Prob. 5DYS
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