Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 4, Problem 38P
a.
To determine
Prepare a worksheet to consolidate these two companies as of December 31, 2018.
b.
To determine
Prepare a 2018 consolidated income statement for Company H and Company D.
c.
To determine
Identify the impact on
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The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $6.40 per share on
January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $6.40 per share before and after Holtz's
acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine's
underlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark with
an estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and
a retained earnings balance of $260,000.
Following are the separate financial statements for the year ending December 31, 2024:
Holtz
Corporation
$ (787,000)
282,000
346,000
(16,000)
Accounts
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income
$ (175,000)
Retained earnings, 1/1/24
$ (727,000)
Net income (above)
Dividends declared…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.45 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $6.45 per share before and after Holtz’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine’s underlying accounts except that a building with a 5-year future life was undervalued by $65,500 and a fully amortized trademark with an estimated 10-year remaining life had a $85,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $224,500.
Following are the separate financial statements for the year ending December 31, 2021:
HoltzCorporation
Devine,Inc.
Sales
$
(747,000
)
$
(432,750
)
Cost of goods sold
207,000
135,000
Operating expenses
338,000
126,750
Dividend income
(16,000
)
0
Net income
$…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.15 per share on January 1,
2020. The remaining 20 percent of Devine's shares also traded actively at $7.15 per share before and after Holtz's acquisition. An
appraisal made on that date determined that all book values appropriately reflected the fair values of Devine's underlying accounts
except that a building with a 5-year future life was undervalued by $75,500 and a fully amortized trademark with an estimated 10-year
remaining life had a $63,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings
balance of $309,500.
Following are the separate financial statements for the year ending December 31, 2021:
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income
Retained earnings, 1/1/21
Net income (above)
Dividends declared
Retained earnings, 12/31/21
Current assets
Investment in Devine, Inc.
Buildings and equipment…
Chapter 4 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 4 - Prob. 1QCh. 4 - Atwater Company acquires 80 percent of the...Ch. 4 - What is a control premium and how does it affect...Ch. 4 - Prob. 4QCh. 4 - How is the noncontrolling interest in a subsidiary...Ch. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Prob. 9QCh. 4 - Prob. 10Q
Ch. 4 - Prob. 1PCh. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Assuming that Pride, in its internal records,...Ch. 4 - Prob. 9PCh. 4 - Prob. 10PCh. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Current liabilities: a. 50,000 b. 46,000 c. 40,000...Ch. 4 - Prob. 20PCh. 4 - Stockholders equity: a. 80,000 b. 90,000 c. 95,000...Ch. 4 - Prob. 22PCh. 4 - Prob. 23PCh. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - Prob. 31PCh. 4 - Prob. 32PCh. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - Prob. 38PCh. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Prob. 42PCh. 4 - Prob. 43PCh. 4 - Prob. 44PCh. 4 - Prob. 1DYSCh. 4 - Prob. 2DYSCh. 4 - Costco Wholesale Corporation owns and operates...
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- The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.35 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $7.35 per share before and after Holtz’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine’s underlying accounts except that a building with a 5-year future life was undervalued by $70,000 and a fully amortized trademark with an estimated 10-year remaining life had a $70,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $264,000. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc. Sales $ (741,000 ) $ (371,000 ) Cost of goods sold 218,000 173,000 Operating expenses 292,000 96,000 Dividend income (16,000 ) 0 Net income $ (247,000…arrow_forwardThe Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $7.00 per share on January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.00 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine's underlying accounts except that a building with a 5-year future life was undervalued by $65,000 and a fully amortized trademark with an estimated 10-year remaining life had a $73,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $237,000. Following are the separate financial statements for the year ending December 31, 2024: Accounts Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Current assets Investment in Devine, Incorporated…arrow_forwardThe Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.20 per share on January 1, 2020. The remaining 20 percent of Devine's shares also traded actively at $7.20 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine's underlying accounts except that a building with a five-year future life was undervalued by $85,500 and a fully amortized trademark with an estimated 10-year remaining life had a $64,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $226,500. Following are the separate financial statements for the year ending December 31, 2021: Holtz Devine, Corporation $ Inc. (641,000) 198,000 273,000 $ (399,000) 176,000 126,000 Sales Cost of goods sold Operating expenses (16,000) ( 186,000) Dividend income $ (97,000) $ (296,500) (97,000) 20,000 $ (373,500) Net…arrow_forward
- The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $7.50 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $7.50 per share before and after Holtz’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine’s underlying accounts except that a building with a 5-year future life was undervalued by $46,500 and a fully amortized trademark with an estimated 10-year remaining life had a $76,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $351,500. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc. Sales $ (786,000 ) $ (379,000 ) Cost of goods sold 291,000 118,000 Operating expenses 289,000 78,000 Dividend income (16,000 ) 0 Net income $ (222,000 )…arrow_forwardThe Hoover Corporation acquired 80 percent of the 100,000 outstanding voting shares of Rainbow, Inc., for $6.40 per share on January 1, 2020. The remaining 20 percent of Rainbow’s shares also traded actively at $4.89 per share before and after Hoover’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Rainbow’s underlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark with an estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Rainbow reported common stock of $100,000 and a retained earnings balance of $260,000. On January 1, 2021, Rainbow reported retained earnings of $330,000. During year 2021, Rainbow reported net income of $170,000 and declared dividend of $20,000. What is the balance of the noncontrolling interest in the subsidiary on December 31, 2021?arrow_forwardOn January 1, 2016, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams’ shares used in the exchange was $37,500,000. At the time of acquisition, the book value of Baker’s shareholders’ equity was $5,000,000, and the book value of Baker’s building (25-year life) exceeded its fair value by $1,000,000. From the date of acquisition to December 31, 2021, Baker had cumulative net income of $1,300,000. For 2022, Baker reported net income of $300,000. Adams uses the complete equity method to account for its investment in Baker. There is no goodwill impairment loss for the period 2016 through 2021, but there is impairment loss of $100,000 in 2022. Baker declared no dividends during the period 2016–2022. Required Prepare the working paper eliminating entries necessary to consolidate the financial statements of Adams and Baker at December 31, 2019. Enter numerical answers using all zeros (do not abbreviate in thousands or in millions).arrow_forward
- On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,141,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,380,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $240,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $415,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.During the two years following the acquisition, Sellinger reported the following net income and dividends:Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.Prepare a schedule showing Palka’s December 31, 2018, equity…arrow_forwardOn January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,666,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,070,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $300,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $656,250 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2017 2018 $525,000 $701,000 Net…arrow_forwardOn January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $592,000 consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $148,000 and Rockne's assets and liabilities had a collective net fair value of $740,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $260,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $320,000 in 2017 and $420,000 in 2018. Approximately 30 percent of the inventory purchased during any one year is not used until the following year. What is the noncontrolling interest's share of Rockne's 2018 income? Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers.arrow_forward
- The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.00 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $6.00 per share before and after Holtz’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine’s underlying accounts except that a building with a 5-year future life was undervalued by $70,500 and a fully amortized trademark with an estimated 10-year remaining life had a $62,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $158,500. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc.Sales$(731,000) $(316,000)Cost of goods sold 276,000 149,000 Operating expenses 261,000 83,000 Dividend income (16,000) 0 Net income$(210,000) $(84,000)Retained earnings, 1/1/21$(748,000)…arrow_forwardOn January 1, 2017, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $980,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $700,000, retained earnings of $250,000, and a noncontrolling interest fair value of $245,000. Corgan attributed the excess of fair value over Smashing’s book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.During the next two years, Smashing reported the following:Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 40 percent of the current year purchases remain in Smashing’s inventory.a. Compute the equity method balance in Corgan’s Investment in Smashing, Inc., account as of December 31, 2018.b. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing.arrow_forwardOn January 1, 2017, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $980,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $700,000, retained earnings of $250,000, and a noncontrolling interest fair value of $245,000. Corgan attributed the excess of fair value over Smashing’s book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.During the next two years, Smashing reported the following: Net Income Dividends declared Inventory purchases from Corgan 2017 $150000 $35000 $100000 2018 130000 45000 120000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 40 percent of the current year purchases remain in Smashing’s inventory.a. Compute the equity method balance in Corgan’s Investment in Smashing, Inc., account as of December 31, 2018. b. Prepare the…arrow_forward
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