Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 5, Problem 11P
To determine
Identify the appropriate answer for the given statement from the given choices.
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On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:
Jarel
Suarez
Revenue
$(300000)
$(200000)
Cost of goods sold
140000
80000
Expenses
20000
10000
Net income
$(140000)
$(110000)
Retained earnings,1/1
$(300000)
$(150000)
Net income
(140000)
(110000)
Dividend declared
-0-
-0-
Retained earnings 12/31
$(440000)
$(260000)
Cash and receivables
$210000
$90000
Inventory
150000
110000
Investment in Suarez
260000
-0-
Equipments (net)…
On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:
Jarel
Suarez
Revenue
$(300000)
$(200000)
Cost of goods sold
140000
80000
Expenses
20000
10000
Net income
$(140000)
$(110000)
Retained earnings,1/1
$(300000)
$(150000)
Net income
(140000)
(110000)
Dividend declared
-0-
-0-
Retained earnings 12/31
$(440000)
$(260000)
Cash and receivables
$210000
$90000
Inventory
150000
110000
Investment in Suarez
260000
-0-
Equipments (net)…
On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:
Jarel
Suarez
Revenue
$(300000)
$(200000)
Cost of goods sold
140000
80000
Expenses
20000
10000
Net income
$(140000)
$(110000)
Retained earnings,1/1
$(300000)
$(150000)
Net income
(140000)
(110000)
Dividend declared
-0-
-0-
Retained earnings 12/31
$(440000)
$(260000)
Cash and receivables
$210000
$90000
Inventory
150000
110000
Investment in Suarez
260000
-0-
Equipments (net)…
Chapter 5 Solutions
Advanced Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 8PCh. 5 - Prob. 11PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - What is the consolidated total for inventory at...
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- On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows: Jarel Suarez Revenue $(300000) $(200000) Cost of goods sold 140000 80000 Expenses 20000 10000 Net income $(140000) $(110000) Retained earnings,1/1 $(300000) $(150000) Net income (140000) (110000) Dividend declared -0- -0- Retained earnings 12/31 $(440000) $(260000) Cash and receivables $210000 $90000 Inventory 150000 110000 Investment in Suarez 260000 -0- Equipments (net)…arrow_forwardOn January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows: Jarel Suarez Revenue $(300000) $(200000) Cost of goods sold 140000 80000 Expenses 20000 10000 Net income $(140000) $(110000) Retained earnings,1/1 $(300000) $(150000) Net income (140000) (110000) Dividend declared -0- -0- Retained earnings 12/31 $(440000) $(260000) Cash and receivables $210000 $90000 Inventory 150000 110000 Investment in Suarez 260000 -0- Equipments (net)…arrow_forwardOn January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life. As of December 31, the financial statements appeared as follows: Jarel Suarez Revenues $ (300,000) (200,000) Cost of goods sold 140,000 80,000 Expenses 20,000 10,000 Net income $ (140,000) (110,000) Retained earnings, 1/1 $ (300,000) (150,000) Net income (140,000) (110,000) Dividends declared –0– –0–…arrow_forward
- On January 1, Fawaz Co. acquired 60% of the outstanding voting stock of Bambi for $26,000 cash consideration. The remaining 40% percent of Bambi had an acquisition date fair value of $6,500. On January 1, Bambi possessed 5-year life equipment that was undervalued in its books by $2,500. Bambi also had developed several secret formulas that Fawaz assessed at $5,000. These formulas, although not recorded on Bambi's financial records, were estimated to have a 20-year future life. Fawaz also determined that the inventory of Bambi is overvalued by $1,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statement is as follows: Fawaz (in dollars) Bambi (in dollars) Revenues (from sales and individuals) -30,000 -20,000 Cost of goods sold 14,000 8,000 Expenses 2,000 1,000 Net Income -14,000 -11,000 Retained earnings-1/1 -30,000 -15,000 Net Income -14,000 -11,000 Dividends Paid - 1,000 Retained Earnings-12/31 -44,000…arrow_forwardUse the following data for Problems 10–15:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the total of consolidated revenues?a. $500,000b. $460,000c. $420,000d. $400,000arrow_forwardOn January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life. As of December 31, the financial statements appeared as follows: Jarel Suarez Revenues $ (300,000 ) $ (200,000 ) Cost of goods sold 140,000 80,000 Expenses 20,000 10,000 Net income $ (140,000 ) $ (110,000 ) Retained earnings, 1/1 $ (300,000 ) $ (150,000 ) Net income (140,000 ) (110,000 ) Dividends declared 0 0 Retained earnings, 12/31 $ (440,000 ) $ (260,000 ) Cash and receivables $ 210,000 $ 90,000…arrow_forward
- Use the following data for Problems 10–15:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the consolidated total of noncontrolling interest appearing on the balance sheet?a. $85,500b. $83,100c. $87,000d. $70,500arrow_forwardUse the following data for Problems 10–15:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the consolidated total for inventory at December 31?a. $240,000b. $248,000c. $250,000d. $260,000arrow_forwardUse the following data for Problems 10–15:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the total of consolidated cost of goods sold?a. $140,000b. $152,000c. $132,000d. $145,000arrow_forward
- Use the following data for Problems 10–15:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the total of consolidated expenses?a. $30,000b. $36,000c. $37,500d. $39,000arrow_forwardUse the following data for Problems 10–15:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the consolidated total for equipment (net) at December 31?a. $735,000.b. $740,000.c. $760,000.d. $765,000.arrow_forwardOn January 1, BB Acquired 60 percent of the outstanding voting stock of SS for P260,000 cash consideration. The remaining 40 percent of SS had an acquisition date fair value of P65,000. On January 1, SS possessed equipment (5-year life) that was undervalued on its books P25,000. SS also had developed several secret formulas that BB assessed at P50,000. Theses formulas, although not recorded on SS's financial records, were estimated to have a 20-year future life. BB also determined that the inventory of SS is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows: ВВ SS Revenues (from sales and dividends) Cost of goods sold P (300, 000) P (200, 000) 140, 000 20, 000 80, 000 10, 000 Expenses Net Income P (140, 000) P (110, 000) Retained earnings 1/1 P (300, 000) P (150, 000) (110, 000) 10,000 Net Income (140, 000) Dividends paid Retained earnings 12/31 -0- P (440, 000) P (250, 000) Cash and…arrow_forward
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