Chapter 3, Problem 3P

On June 30, 2021, Plaster, Inc., paid $900,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $225,000. At acquisition date, Stucco reported the following book values for its assets and liabilities: Cash 58,800 Accounts receivable 124,800 Inventory 199,800 Land 64,200 Buildings 172,700 Equiptment 295,700 Accounts Payable (34,400)   On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco's assets as follows: Equiptment (3- year remaining life) 73,400 Database (10-year remaining life) 170,000 At the end of 2021, the following comparative (2020 and 2021) balance sheets and consolidated income statement were available: *See attachment* Additional information for 2021 On December 1, Stucco paid a $49,600 dividend. During the year, Plaster paid $84,000 in dividends. During the year, Plaster issued $769,420 in long-term…

Denber Co. acquired 60% of the common stock of Kailey Corp. on September 1, 2019. For 2019, Kailey reported revenues of $810,000 and expenses of $630,000, not including its investment in Denber, and all reflected evenly throughout the year. The annual amount of amortization related to this acquisition was $15,000. What is the amount of the noncontrolling interest's share of Kailey's income for 2019? a. $72,000. b. $22,000. c. $66,000. d. $24,000. e. $48,000.

On June 30, 2021, Plaster, Inc., paid $988,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $247,000. At acquisition date, Stucco reported the following book values for its assets and liabilities: Cash Accounts receivable Inventory Land Buildings Equipment Accounts payable (Parentheses indicate credit balances.) On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco's assets as follows: $ 64,500 136,900 Equipment (3-year remaining life) Database (10-year remaining life) Cash Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Database 219, 200 70,400 189,400 324,300 (37,700) At the end of 2021, the following comparative (2020 and 2021) balance sheets and consolidated income statement were available: Plaster, Inc. December 31, 2020 Total assets Accounts payable Long-term liabilities Common stock Noncontrolling interest…

On January 4, 2021, Jonathan Company purchased 75% interest in Monica Corporation for P300,000. Monica’s recorded assets and liabilities as of acquisition are P400,000 and P120,000, respectively. Net asset of Monica is fairly valued except for inventory which is over-valued by P20,000 and machinery (5-year useful life) which is under-valued by P40,000. NCI is measured at fair value. For the year 2021, Jonathan reported net income of P150,000 and paid dividend of P80,000 while Monica reported net income of P40,000 and paid dividend of P20,000. The parent elects the “equity method” in accounting for its investment in subsidiary. The working paper elimination entry for 2021 will include:   a. Debit to dividend income, P15,000. b. Credit share in profit of the subsidiary, P30,000. c. Debit goodwill, P100,000 d. Credit depreciation expense, P8,000

On July 1, 2020, Blue George Company purchased 25% interest of Pink Conrad for P150,000. Blue George incurred transaction cost equal to 5% on the transaction price. On October 1, 2020, Pink Conrad declared dividends of P80,000. At the end of 2020, Pink Conrad reported net income of P200,000. On January 1, 2021, the fair values of Pink Conrad's net assets were as follows:Current Assets - P100,000;Equipment - P150,000;Patent – P120,000;Land - P50,000;Buildings - P300,000; andLiabilities - P80,000. On January 1, 2021, Blue George Company purchased 50% interest of the Pink Conrad Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. Pink Conrad paid for the legal fees of P10,000 and securities SEC registration of P20,000 which was reimbursed by Blue George. The Patent of Pink Conrad refers to the technology purchased by Pink Conrad from Blue George years ago. Blue George had an outstanding unearned revenue related to the Patent amounting to…

On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200.The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows:Carrying Amount ($) Fair Value ($)AssetsCash 2,000 2,000Accounts receivable 10,000 10,000Inventory 64,000 68,000Equipment 320,000 232,000Accumulated depn - Equipment (96,000) -Patents 280,000 280,000LiabilitiesAccounts payable (16,000) (16,000)Debentures (64,000) (64,000)Required:a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.

On January 1, 2020, Jumper Co. acquired all of the common stock of Cable Corp. for $540,000. Annual amortization associated with the acquisition amounted to $1,800. During 2020, Cable recognized net income of $54,000 and paid dividends of $24,000. Cable's net income and dividends for 2021 were $86,000 and $24,000, respectively.   Required: Assuming that Jumper decided to use the partial equity method, prepare a schedule to show the balance in the investment account at the end of 2021.

On July 1, 2020, Blue George Company purchased 25% interest of Pink Conrad for P150,000. Blue George incurred transaction cost equal to 5% on the transaction price. On October 1, 2020, Pink Conrad declared dividends of P80,000. At the end of 2020, Pink Conrad reported net income of P200,000. On January 1, 2021, the fair values of Pink Conrad's net assets were as follows:Current Assets - P100,000;Equipment - P150,000;Patent – P120,000;Land - P50,000;Buildings - P300,000; andLiabilities - P80,000. On January 1, 2021, Blue George Company purchased 50% interest of the Pink Conrad Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. Pink Conrad paid for the legal fees of P10,000 and securities SEC registration of P20,000 which was reimbursed by Blue George. The Patent of Pink Conrad refers to the technology purchased by Pink Conrad from Blue George years ago. Blue George had an outstanding unearned revenue related to the Patent amounting to…

Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021:        On January 1, 2021, Peregrine acquired all of Sprano’s outstanding stock for $680,000 fair value in cash and common stock. At the date of acquisition, copyrights (with a 6-year remaining life) were undervalued by $120,000 (i.e., market value was higher than book value). Peregrine applies the equity method to maintain the Investment in Sprano account. For the year ending December 31, 2021 determined the total Equity Income in Sprano reported in Peregrine’s book.