a.
Identify the figures which would appear in a consolidated income statement for this year.
a.
Explanation of Solution
Figures which would appear in a consolidated income statement for this year:
Particulars | Amount |
Consolidated revenues | $ 1,500,000 (1) |
Consolidated expenses | $(1,031,000) (2) |
Consolidated net income | $ 469,000 (3) |
Balance of non-controlling interest in Company S | $ (50,700) (4) |
Balance of Controlling interest in Company S | $ 418,300 (5) |
Table: (1)
Working note:
Computation of consolidated revenues:
Computation of consolidated expenses:
Computation of consolidated net income:
Computation of amount of net income of Company S allocated to non-controlling interest:
Computation of amount of net income of allocated to controlling interest:
b.
Identify the amounts which would appear in a consolidated income statement for this year.
b.
Explanation of Solution
Amounts which would appear in a consolidated income statement for this year:
Particulars | Amount |
Consolidated revenues | $ 1,350,000 (6) |
Consolidated expenses | $ (923,250) (7) |
Consolidated net income | $ 426,750 (8) |
Balance of non-controlling interest in Company S | $ (38,025) (9) |
Balance of Controlling interest in Company S | $ 388,725 (10) |
Table: (1)
Working note:
Computation of consolidated revenues:
Computation of consolidated expenses:
Computation of consolidated net income:
Computation of amount of net income of Company S allocated to non-controlling interest:
Computation of amount of net income of allocated to controlling interest:
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Chapter 4 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
- 1. S acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the "Investment in F" account on S's financial records at the acquisition date? * Book Value Market Value P30,000 Cash and Receivables P30,000 100,000 210,000 Inventory Plant Assets (net) Current Liabilities 120,000 300,000 (45,000) (115,000) (45,000) (115,000) (10,000) (170,000) Long-term Debf Common Stock Retained Earningsarrow_forwardQuail Company purchases 80% of the common stock of Commo Company for $800,000. At the time of the purchase, Commo has the following balance sheet: (see attachment)The fair values of assets are as follows: Cash equivalents . . . . . . . . . . . . . . . . . . $120,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . 250,000 Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 Building . . . . . . . . . . . . . . . . . . . . . . . . . 650,000 Equipment . . . . . . . . . . . . . . . . . . . . . . . 200,000 1. Prepare the value analysis schedule and the determination and distribution of excess schedule under three alternatives for valuing the NCI: a. The value of the NCI is implied by the price paid by the parent for the controlling interest. b. The market value of the shares held by the NCI is $45 per share. c. The international accounting option, which does not allow goodwill to be recorded as part of the NCI, is used. 2. Prepare the elimination entries that would…arrow_forwardPeer, Inc. acquires 75 percent of Sea-breeze Corporation for P600,000 cash on January 1, 2016. The remaining percent of the Sea-breeze shares traded near a total value of 200,000 both before and after the acquisition date. NCI is measured on a full basis .On January 1, 2016, Sea-breeze had the following assets and liabilities: Book Value Fair Value Current Assets P 250,000 P 250,000 Land 100,000 100,000 Building (net) – 5-year-year life 400,000 350,000 Equipment (net) – 8-year life 300,000 400,000 Patent (10-year life) -0- 50,000 Accounts Payable (200,000) (200,000) Bonds Payable – 5-years (150,000) (175,000) Net P 700,000 P 775,000 Common Stock P 650,000 Retained Earnings P 50,000 The companies’ financial statements for the year ending December 31, 2016 using cost method are as follows: Peer Sea-Breeze Revenue P (800,000) P (250,000) Operating expenses…arrow_forward
- Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2018. 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, 2018, Sea-Breeze had the following assets and liabilities: Book Value Fair Value Current assets $ 150,000 $ 150,000 Land 200,000 200,000 Buildings (net) (6-year remaining life) 300,000 360,000 Equipment (net) (4-year remaining life) 300,000 280,000 Patent (10-year remaining life) 0 100,000 Liabilities (400,000 ) (400,000 ) The companies’ financial statements for the year ending December 31, 2021, follow: Nascent Sea-Breeze Revenues $ (600,000 ) $ (300,000 ) Operating expenses 410,000 210,000 Investment income (42,000 ) 0 Net income $ (232,000 ) $ (90,000 ) Retained earnings, 1/1/21 $ (700,000 ) $ (300,000 ) Net income…arrow_forwardPam Company acquires the net assets of Jam Company for an agreed-upon price of $900,000 on July 1, 2015. The value is tentatively assigned as follows:Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,000Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 (5-year life)Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 (20-year life)Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (150,000)Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000Values are subject to change during the measurement period. Depreciation is taken to the nearest month. The measurement period expires on July 1, 2016, at which time the fair values of the equipment and building as of the acquisition date…arrow_forwardNascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2018. 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, 2018, Sea-Breeze had the following assets and liabilities: Book Value Fair Value Current assets $ 150,000 $ 150,000 Land 200,000 200,000 Buildings (net) (6-year remaining life) 300,000 360,000 Equipment (net) (4-year remaining life) 300,000 280,000 Patent (10-year remaining life) 0 100,000 Liabilities (400,000 ) (400,000 ) The companies’ financial statements for the year ending December 31, 2021, follow: Nascent Sea-Breeze Revenues $ (600,000 ) $ (300,000 ) Operating expenses 410,000 210,000 Investment income (42,000 ) 0 Net income $ (232,000 ) $ (90,000 ) Retained earnings, 1/1/21 $ (700,000 ) $ (300,000 ) Net income…arrow_forward
- 1. S acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the “Investment in F” account on S’s financial records at the acquisition date?arrow_forwardAmazon acquired 100 percent of Ferries for P275,000. At the date of acquisition, Ferries had the following book and market values: (see information below) C purchases 80 percent of D. At the date of acquisition, D has revenue of P250,000 and expenses of P170,000. What amount of pre-acquisition earnings will be created on the consolidated income statement at the acquisition date? Book value Market value Cash and Receivables 90,000 90,000 Inventory 100,000 100,000 Plant assets (net) 220,000 300,000 Current liabilities (45,000) (45,000) Long-term debt (114,000) (114,000) Common stock (10,000) Retained earnings (170,000)arrow_forward2. Banana Company purchases 80 percent of Mango. At the date of acquisition, Mango has revenue of P250,000 and expenses of P170,000. What amount of pre-acquisition earnings will be created on the consolidated income statement at the acquisition date? 3. Delta Corporation acquires 70 percent of Bravo Company’s stock. What amount of non-controlling interest is recognized on the acquisition date balance sheet if Telephone has the following account balances? Book Value Market Value Cash P10,000 P10,000 Inventory 80,000 80,000 Plant Assets (net) 350,000 350,000 Cost of Goods Sold 130,000 Depreciation Expense 20,000 Liabilities (110,000) (110,000) Common Stock (30,000) Retained…arrow_forward
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