Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 7, Problem 26P
To determine
Concept Introduction:
The assets, liabilities, and equity of parent and subsidiary companies are accounted for as a single company in consolidated financial statements, which are the accounting reports of a group of companies.
The worksheet entries to consolidate the two companies for the year 2021. Also, calculate the net income attributable to non-controlling interest for the year 2021.
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Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2020, for $420,000 in cash.
Lowly's book value at that date was reported as $600,000, and the fair value of the noncontrolling interest was
assessed at $280,000. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to
be amortized over 20 years. Subsequently, on January 1, 2021, Lowly acquired a 20 percent interest in Mighty. The
price of $240,000 was equivalent to 20 percent of Mighty's book and fair value.
Neither company has paid dividends since these acquisitions occurred. On January 1, 2021, Lowly's book value was
$800,000, a figure that rises to $840,000 (common stock of $300,000 and retained earnings of $540,000) by year-
end. Mighty's book value was $1.70 million at the beginning of 2021 and $1.80 million (common stock of $1 million
and retained earnings of $800,000) at December 31, 2021. No intra-entity transactions have occurred, and no
additional stock has been…
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2020, for $518,400 in cash. Lowly's book value at that date was reported as $730,000, and the fair value of the noncontrolling interest was assessed at $345,600. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2021, Lowly acquired a 20 percent interest in Mighty. The price of $322,000 was equivalent to 20 percent of Mighty's book and fair value.
Neither company has paid dividends since these acquisitions occurred. On January 1, 2021, Lowly's book value was $985,000, a figure that rises to $1,026,500 (common stock of $300,000 and retained earnings of $726,500) by year-end. Mighty's book value was $1.61 million at the beginning of 2021 and $1.71 million (common stock of $1 million and retained earnings of $710,000) at December 31, 2021. No intra-entity transactions have occurred, and no additional stock has…
Mighty Company purchased a 60 percent interest in Lowly Company on January 1, 2020, for $518,400 in cash. Lowly's book value at that date was reported as $730,000, and the fair value of the noncontrolling interest was assessed at $345,600. Any excess acquisition-date fair value over Lowly's book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2021, Lowly acquired a 20 percent interest in Mighty. The price of $322,000 was equivalent to 20 percent of Mighty's book and fair value.
Neither company has paid dividends since these acquisitions occurred. On January 1, 2021, Lowly's book value was $985,000, a figure that rises to $1,026,500 (common stock of $300,000 and retained earnings of $726,500) by year-end. Mighty's book value was $1.61 million at the beginning of 2021 and $1.71 million (common stock of $1 million and retained earnings of $710,000) at December 31, 2021. No intra-entity transactions have occurred, and no additional stock has…
Chapter 7 Solutions
Advanced Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - How does the presence of an indirect ownership...Ch. 7 - Prob. 5QCh. 7 - In accounting for mutual ownerships, what is the...Ch. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10Q
Ch. 7 - Prob. 11QCh. 7 - Jones acquires Wilson, in part because the new...Ch. 7 - Prob. 13QCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Which of the following is correct for two...Ch. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 26P
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