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 5.1E
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 consolidated worksheet for 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
Parker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet: (attached)The excess of the price paid over book value is attributable to the fixed assets, which have a fair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parker Company uses the simple equity method to record its investment in Sargent Company. The following trial balances of the two companies are prepared on December 31, 2015: Parker Sargent Current Assets . . . . . . . . . . . . . . . . . . . . . . . . 10,000 130,000 Depreciable Fixed A . . . . . . . . . . . . . . . . . . 400,000 200,000 Accumulated Depreciation . . . .. . . . . . . (106,000) (20,000) Investment in Sargent . .. .. . . . . . . . . . . . . 316,000 Current Liabilities. . . . . . . . . . . . . . . . . . . . . (60,000)…
Alpha Company used debentures with a par valueof $660,000 to acquire 100% of Zeta, on January 1, 2013. On that date the fair value of the debentures issued was $644,000. The following balance sheet data were reported by Zeta at the point of the acquisition:
Historical Cost
Fair Value
Cash and Receivabled
80,000
75,000
Inventory
145,000
200,000
Land
75,000
75,000
Plant & Equipment
450,000
350,000
Less: Accumulated Depreciation
-170,000
Total Assets
580,000
700,000
Accounts Payable
50,000
50,000
Common Stock
100,000
Additional Paid i n Capital
60,000
Retained Earnings
370,000
Total Liabilities & Equity
580,000
Prepare the entry to record the above transaction.
Parker Company acquires an 80% interest in Sargent Company for $300,000 on January 1, 2015, when Sargent Company has the following balance sheet: (See image)
The excess of the price paid over book value is attributable to the fixed assets, which have afair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parkeruses the sophisticated equity method to record the investment in Sargent Company.
The trial balances of Parker and Sargent companies for December 31, 2016, are presented as follows: (see image)
Parker Company continues to use the sophisticated equity method.
Required:1. Prepare all the eliminations and adjustments that would be made on the 2016 consolidatedworksheet.
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
- Tomato co. Purchased 40% of MU corp. On april 1,2017, for 500,000 when MU's book value was 1,260,000. On the date of acquisition, the market value of MU's net asset equaled their book values, except for the following: •MU's equipment has a fair value of 50,000 less than it's books value. The equip. Has a remaining useful life of 10 years. •MU's building has a fair value of 40,000 more than it's book value. The building has a remaining useful life of 20 years. MU's results of operation for 2017 and 2018 are as follows: •2017 net income 150,000 •2018 net loss 30,000 MU's cash dividends of 20,000 and 10,000 respectively for 2017 and 2018. Required: journal entries and balances for the following 1. Investment income 2017 2. Investment loss 2018 3. Investment Carrying value for 2017 and 2018arrow_forwardOn October 1, 2017, the Puppy Eyes Company acquired the net assets of The Cat Love Company when the fair value of Cat Love’s net assets was P116 million and their carrying amount was P120 million. The consideration transferred comprised P200 million in cash transferred at acquisition date, plus another P60 million in cash to be transferred 11 months after the acquisition date if a specified profit target being met by Cat Love. At the acquisition date there was only a low probability of the profit target being met, so the fair value of the additional consideration liability was P10 million. In the event the profit target was met and the P60 million cash was transferred, what amount should Puppy Eyes present for Goodwill in its statement of Financial position on December 31, 2017, according to IFRS 3 Business Combinations?arrow_forwardOn October 1, 2017, the Puppy Eyes Company acquired the net assets of The Cat Love Company when the fair value of Cat Love’s net assets was P116 million and their carrying amount was P120 million. The consideration transferred comprised P200 million in cash transferred at acquisition date, plus another P60 million in cash to be transferred 11 months after the acquisition date if a specified profit target being met by Cat Love. At the acquisition date there was only a low probability of the profit target being met, so the fair value of the additional consideration liability was P10 million. In the event the profit target was met and the P60 million cash was transferred, what amount should Puppy Eyes present for Goodwill in its statement of Financial position on December 31, 2017, according to IFRS 3 Business Combinations? Group of answer choices 84 million 144 million 94 million 140 millionarrow_forward
- Choose the correct. Dosmann, Inc., bought all outstanding shares of Lizzi Corporation on January 1, 2016, for $700,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $35,000 to equipment and goodwill of $88,000. At the acquisition date, Dosmann also agrees to pay Lizzi’s previous owners an additional $110,000 on January 1, 2018, if Lizzi earns a 10 percent return on the fair value of its assets in 2016 and 2017. Lizzi’s profits exceed this threshold in both years. Which of the following is true?a. The additional $110,000 payment is a reduction in consolidated retained earnings.b. The fair value of the expected contingent payment increases goodwill at the acquisition date.c. Consolidated goodwill as of January 1, 2018, increases by $110,000.d. The $110,000 is recorded as an expense in 2018.arrow_forwardProForm acquired 70 percent of ClipRite on June 30, 2017, for $910,000 in cash. Based on Clip- Rite’s acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition.The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2018 financial statements are as follows:ProForm sold ClipRite inventory costing $72,000 during the last six months of 2017 for $120,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $200,000 during 2018 for $250,000. At year-end, 10 percent is left. With these facts, determine the consolidated balances for the following:SalesCost of Goods SoldOperating ExpensesDividend IncomeNet Income Attributable to Noncontrolling InterestInventoryNoncontrolling Interest in Subsidiary, 12/31/18arrow_forwardDuckworth Corporation purchases an 80% interest in Panda Corporation on January 1, 2017, in exchange for 5,000 Duckworth shares (market value of $18) plus $155,000 cash. The fair value of the NCI is proportionate to the price paid by Duckworth for its interest. The appraisal shows that some of Panda’s equipment, with a 4-year estimated remaining life, is undervalued by $20,000. The excess is attributed to goodwill. Panda Corporation’s balance sheet on December 31, 2016 is attached.The following information relates to the activities of the two companies for 2017:a. Panda pays off $10,000 of its long-term debt.b. Duckworth purchases production equipment for $76,000.c. Consolidated net income is $103,200; the NCI’s share is $5,000. Depreciation expense taken by Duckworth and Panda on their separate books is $92,000 and $28,000, respectively.d. Duckworth pays $30,000 in dividends; Panda pays $15,000.Prepare the consolidated statement of cash flows for the year ended December 31, 2017, for…arrow_forward
- ProForm acquired 70 percent of ClipRite on June 30, 2017, for $910,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2018 financial statements are as follows: ProForm ClipRite $ (800,000) $ (600,000) 400,000 Sales Cost of goods sold Operating expenses 535,000 100,000 100,000 Dividend income (35,000) $ (200,000) $ (100,000) -0- Net income $ (1,300,000) $ (850,000) (100,000) 50,000 Retained earnings, 1/1/18 Net income (200,000) Dividends declared 100,000 Retained earnings, 12/31/18 $ (1,400,000) $ (900,000) $ 400,000 $ 300,000 700,000 Cash and receivables Inventory .... Investment in ClipRite. 290,000 910,000 -0- Fixed assets 1,000,000 600,000 Accumulated depreciation (300,000) $ 2,300,000 (200,000) Totals $1,400,000 $ (600,000) $…arrow_forwardBorn Company acquires an 80% interest in Roland Company for $660,000 cash on January 1, 2017. The NCI has a fair value of $165,000. Any excess of cost over book value is attributed to goodwill. To help pay for the acquisition, Born Company issues 5,000 shares of its common stock with a fair value of $70 per share. Roland’s balance sheet on the date of the purchase is as follows: Assets Liabilities and Equity Cash . . . . . . . . . . . . . . . . . . . . $ 20,000 Inventory . . . . . . . . . . . . . . . . 140,000 Property, plant, andequipment (net). . . . . . . . . . 550,000 Total assets . . . . . . . . . . . . . $710,000 Current liabilities . . . . . . . $110,000 Bonds payable . . . . . . . . . 100,000 Common stock ($10 par) . . 200,000 Retained earnings . . . . .. . . 300,000 Total liabilities and equity $710,000 Controlling share of net income for 2017 is $150,000, net of the noncontrolling interest of $10,000. Born declares and pays dividends of $10,000, and Roland…arrow_forwardTweeden Corporation is contemplating the acquisition of the net assets of Sylvester Corporation in anticipation of expandingits operations. The balance sheet of Sylvester Corporation on December 31, 2015, is as attached:n appraiser for Tweeden determined the fair values of Sylvester’s assets and liabilities to be as shown as in attachment 2The agreed-upon purchase price is $580,000 in cash. Acquisition costs paid in cash total $20,000.Using the above information, do value analysis and prepare the entry on the books of Tweeden Corporation to acquire the net assets of Sylvester Corporation on December 31, 2015.arrow_forward
- P Company acquired 90% of S Corporation on January 1, 2014 for $2,250,000. S had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between S's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from S, P reported net income in 2014 and 2015 of $550,000 and $575,000, respectively. Calculate the Investment in S shown on P's ledger at December 31, 2014. Calculate the Investment in S shown on P's ledger at December 31, 2015. S reported the following net income and dividend payments: (refer to attached picture)arrow_forwardP Company acquired 90% of S Corporation on January 1, 2014 for $2,250,000. S had net assets at that time with a fair value of $2,500,000. At the time of the acquisition, Patterson computed the annual excess fair-value amortization to be $20,000, based on the difference between S's net book value and net fair value. Assume the fair value exceeds the book value, and $20,000 pertains to the whole company. Separate from any earnings from S, P reported net income in 2014 and 2015 of $550,000 and $575,000, respectively. Calculate the Investment in S shown on P's ledger at December 31, 2015. S reported the following net income and dividend payments: 2014 $150,000 2015 $180,000 Net Income Dividends $30,000 $30,000 Your answerarrow_forwardMumtaj, Inc. is acquiring equipment as follows: Krafton will pay cash of $500,000 and sign a non-interest bearing note with a face amount of $1,661,000.The fair value (i.e. market value) of equipment on 3/31/2021 is $1,500,000The equipment will be placed in operations on the acquisition date with an expected life of 10 years. Krafton Company uses straight-line depreciation and expects no salvage value.The face amount is payable 3 years from the date of acquisition (3/31/2021). Carter Company uses a calendar year for its fiscal year. Carter Company can currently obtain loans from its banks at an interest rate of 10%Prepare an amortization table for the note payable and all necessary journal entries for the year ended 12/31/2021 including, as appropriate, adjusting entries.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
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