Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Chapter 4, Problem 3P
To determine
Identify the appropriate answer for the given statement from the given choices.
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Jordon, Inc., holds 75 percent of the outstanding stock of Paxson Corporation. Paxson currently owes Jordan $400,000 for inventory acquired over the past few months. In preparing consolidated financial statements, what amount of this debt should be eliminated?
A. 0 B. $100,000 C. $300,000 D. $400,000
Brooks Company purchases debt investments as trading securities at a cost of $71,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $90,000. Brooks sells a portion of its trading securities (costing $35,500) for $40,250 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction.
Choose the correct. Jordan, Inc., holds 75 percent of the outstanding stock of Paxson Corporation. Paxson currently owes Jordan $400,000 for inventory acquired over the past few months. In preparing consolidated financial statements, what amount of this debt should be eliminated?a. –0–b. $100,000c. $300,000d. $400,000
Chapter 4 Solutions
Fundamentals of Advanced Accounting
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 - Prob. 8PCh. 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. 1DYS
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- Required information [The following information applies to the questions displayed below.] Brooks Company purchases debt investments as trading securities at a cost of $77,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $87,000. Brooks sells a portion of its trading securities (costing $38,500) for $41,000 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction.arrow_forwardOn January 1, 2XX1, Bargain Inc. acquired 100% of Wind Corporation for $9,750,000 cash. On that date, Willey's total stockholders' equity was $7,250,000. The following assets had fair values different from book values. Book Value Fair Value Buildings and Land $13,500,000 $14,500,000 Other Assets Bonds Payable 625,000 250,000 7,500,000 6,250,000 Required Prepare the [E] and [A] consolidation entries on the date of the acquisition: [E] Debit Credit [A] V (to record the [E] consolidation entry) (to record the [A] consolidation entry) Debit Creditarrow_forwardAccounting Brooks Company purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $72,000. Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction. Fill in the blanks 1. 1. Assets Debt (+) Investments increase - Trading Cash 2. Gain on sale of debt investments 3. Debt Investments - Trading 3. Cash (-) decrease (+) increase (-) decrease (+) increase Liabilities + Equity 66,000 = 66,000 = 6,000 3,000 4,000 = = = + + + + + (+) increase F 6,000arrow_forward
- 3. On April 1, 20X2, Pack Company paid $800,000 for all of Sack Corporation's issued and outstanding common stock Sack's recorded assets and liabilities on April 1, 20X2, were as follows: $ 80,000 240,000 Cash Inventory Property and equipment (net of accumulated depreciation of $320,000) Liabilities On April 1, 20X2, Sack's inventory was determined to have a fair value of $190.000, and the property and equipment had a fair value of $560.000. What is the amount of goodwill resulting from the business combination? Multiple Choice $180.000. $0. $50,000 480,000 (180,000) $150.000.arrow_forwardOn January 1, 2XX1, Bargain Inc. acquired 100% of Wind Corporation for $9,750,000 cash. On that date, Willey's total stockholders' equity was $7,250,000. The following assets had fair values different from book values. Book Value Fair Value Buildings and Land $13,500,000 $14,500,000 Other Assets 625,000 Bonds Payable 7,500,000 Required Prepare the [E] and [A] consolidation entries on the date of the acquisition: [E] Debit Credit 9,750,000 [A] Cash 250,000 6,250,000 Equity investment (to record the [E] consolidation entry) Buildings and land Other assets Goodwill Bonds payable Cash (to record the [A] consolidation entry). 0 Debit 14,500,000 250,000 4,000,000 0 0 0x 9,750,000 x Credit 0x 0x 0x 6,250,000 * 9,750,000 *arrow_forwardBrooks Company purchases debt investments as trading securities at a cost of $56,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $63,000. Exercise 15-3 (Algo) Financial statement impact of trading securities LO P1 Brooks sells a portion of its trading securities (costing $28,000) for $29,750 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or −) for each transaction. 1. 1. 2. 3. 3. Debt Investments - Trading Cash Assets (+) increase (-) decrease (+) increase 56,000 56,000 = = = = = X Answer is not complete. Liabilities + + + + + Retained earnings Equity X (+) increase × 1,750 Xarrow_forward
- 42. Company S is a 100%-owned subsidiary of Company P. On January I, Company S had $100,000 face value of 8% bonds outstanding. The bonds had 5 years to maturity and an unamortized discount of $5,000 as of that date. On January I, Company P purchased the bonds for $99,000, The net adjustment to reduce consolidated net income for the year ended December 31 is a. $4,000 b. $3,200 c. $4,800 d. $5,000arrow_forwardTuchel Company held 80% of the common stock of Chelsea Inc. and 40% of this subsidiary's convertible bonds. The following consolidated financial statements were for 2019 and 2020. 2019 2020 $ 1,064,000 ( 714,000) ( 126,000) $ 1,232,000 756,000) 140,000) 28,000 ( 42,000) ( 15,400) $ 306,600 Revenues Cost of goods sold Depreciation and amortization Gain on sale of building Interest expense Non-controlling interest Net income to controlling interest ( 42,000) ( 12,600) $ 169,400 Retained earnings, January 1 Net Income (from above) Dividends paid Retained earnings, December 31 $ 420,000 169,400 ( 70,000) $ 519,400 $ 519,400 306,600 ( 140,000) $ 686,000 $ 112,000 210,000 280,000 896,000 210,000 $ 1,708,000 $ 196,000 196,000 476,000 966,000 203,000 Cash Accounts receivable Inventory Buildings and equipment (net) Database Total assets $ 2,037,000 Accounts payable Bonds payable Non-controlling interest in Subsidiary Common stock $ (196,000) (560,000) ( 44,800) (140,000) (247,800) (519,400) $…arrow_forward2. The Polythene Pam Company purchases P2,000,000 of bonds. The asset has been designated as one at fair value through profit and loss. One year later, 10% of the bonds are sold for P400,000. Total cumulative gains previously recognized in Polythene Pam's financial statements in respect of the asset are P100,000. What is the amount of the gain on disposal to be recognized in profit or loss? Group of answer choices P90,000 P100,000 P200,000 P190,000arrow_forward
- Pharoah Corporation has income from continuing operations of $278,400 for the year ended December 31, 2025. It also has the following items (before considering income taxes). 1. 2. An unrealized loss of $76,800 on available-for-sale securities. Again of $28,800 on the discontinuance of a division (comprised of a $9,600 loss from operations and a $38,400 gain on disposal). Assume all items are subject to income taxes at a 20% tax rate. Prepare a partial income statement, beginning with income from continuing operations. Income from Continuing Operations Discontinued Operations Gain from Disposal Loss from Operations Net Income/(Loss) Prepare a statement of comprehensive income. Net Income /(Loss) PHAROAH CORPORATION Income Statement (Partial) For the Year Ended December 31, 2025 V Other Comprehensive Income PHAROAH CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2025 V Unrealized Loss of Available-for-Sale Securities V Comprehensive Income LA $ LA $ 278,400arrow_forwardThe Q3 Company purchases P2,000,000 of bonds. The asset has been designated as one at fair value through profit and loss. One year later, 10% of the bonds are sold for P400,000. Total cumulative gains previously recognized in Q3's financial statements in respect of the asset are P100,000. What is the amount of the gain on disposal to be recognized in profit or loss?arrow_forwardAssume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $9,600. Jurion pays $16,360 for James and raises the needed funds through an issue of long-term debt. Current assets $12,225 Net fixed 36,450 assets Total Jurion Co. Total Current assets $3,490 Net fixed assets 6,640 Current assets Fixed assets Goodwill Total $ 5,420 Long-term debt 9,950 Equity 33,305 $48,675 Total $48,675 Current liabilities James, Inc. $10,130 Current liabilities $ 1,420 Long-term debt 1,990 Equity 6,720 Total $10,130 Construct a postmerger balance sheet assuming that Jurion Co. purchases James, Inc., and the purchase method of accounting is used. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Jurion Co., post-merger Current liabilities Long-term debt Equity Totalarrow_forward
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