Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 7, Problem 3P
To determine
Identify the appropriate answer for the given statement from the given choices.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 1, Balanger Company buys 10 percent of the outstanding shares of its parent, Altgeld, Inc. Although the total book and fair values of Altgeld’s net assets equaled $3.2 million, the price paid for these shares was $340,000. During the year, Altgeld reported $415,000 of separate operating income (no subsidiary income was included) and declared dividends of $35,000. How are the shares of the parent owned by the subsidiary reported at December 31?a. Consolidated stockholders’ equity is reduced by $340,000.b. An investment balance of $378,000 is eliminated for consolidation purposes.c. Consolidated stockholders’ equity is reduced by $378,000.d. An investment balance of $358,000 is eliminated for consolidation purposes.
On January 1, Stanton Company buys 10 percent of the outstanding shares of its parent, ProMart, Inc. Although the total book and fair values of ProMart's net assets equaled $4 million, the price paid for these shares was $420,000. During the year, ProMart reported $510,000 of separate operating income (no subsidiary income was included) and declared dividends of $140,000. How are the shares of the parent owned by the subsidiary reported at December 31?
Â
Please dont give solution image based
Choose the correct. On January 1, Balanger Company buys 10 percent of the outstanding shares of its parent, Altgeld, Inc. Although the total book and fair values of Altgeld’s net assets equaled $3.2 million, the price paid for these shares was $340,000. During the year, Altgeld reported $415,000 of separate operating income (no subsidiary income was included) and declared dividends of $35,000. How are the shares of the parent owned by the subsidiary reported at December 31?a. Consolidated stockholders’ equity is reduced by $340,000.b. An investment balance of $378,000 is eliminated for consolidation purposes.c. Consolidated stockholders’ equity is reduced by $378,000.d. An investment balance of $358,000 is eliminated for consolidation purposes.
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On January 1, year 1, DEF Company purchased 80% of the stock of UVW for P4,000,000 cash. Prior to the acquisition, UVW had 100,000 shares of stock outstanding. On the date of acquisition, UVW's stock had fair value of P52 per share. During the year, UVW reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on DEF's balance sheet on December 31, year 1?arrow_forwardOn January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to the acquisition, XYZ had 100,000 shares of stock outstanding. On the date of acquisition, XYZ's stock had fair value of P52 per share. During the year, XYZ reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on ABC's balance sheet on December 31, year 1?arrow_forwardSmall Company reported 20X7 net income of $40,000 and paid dividends of $15,000 during the year. Mock Corporation acquired 20 percent of Small's shares on January 1, 20X7, for $105,000. At December 31, 20X7, Mock determined the fair value of the shares of Small to be $121,000. Mock reported operating income of $90,000 for 20X7. Required: Compute Mock's net income for 20X7 assuming it a. Carries the investment in Small at fair value. b. Uses the equity method of accounting for its investment in Small. X Answer is complete but not entirely correct. Net income (fair value method) $ 92,000 X Đ°. b. Net income (equity method) 2$ 98,000arrow_forward
- On July 1, 20x6 TRUST Company purchased 80% of the outstanding shares of DUREX Company at a cost of Pl,600,000. on that date, DUREX had P1,000,000 of capital stock and P1,400,0a00 of retained earnings. For 20x6, TRUST had income of P560,000 from its separate operations and paid dividends of P300,000. For 20x6, DUREX reported income of P130,000 and paid dividends of P60,000. All the assets and liabilities of DUREX have book values equal to their respective fair market values. Assume income was earned evenly throughout the year except for the intercompany transaction on October 1. On October 1, TRUST purchased an equipment from DUREX for P200,000. The book value of the equipment on that date was P240,000. The loss of P40,000 is reflected in the income of DUREX indicated above. The equipment is expected to have a useful life of 5 years from the date of sale. In the December 31, 20x6 consolidated statement of financial position, how much is the consolidated net income attributable to the…arrow_forwardOn January 1, 20X7, Phillips Corporation acquired 35 percent of the outstanding shares of Shell Corporation for $100,000 cash. Shell Company reported net income of $175,000 and paid dividends of $25,000 for both 20X7 and 20X8. The fair value of shares held by Phillips was $310,000 and $325,000 on December 31, 20X7 and 20X8 respectively.Based on the preceding information, what amount will be reported by Phillips as its basis in the Shell investment for 20X7, if it used the equity method of accounting? Group of answer choices $122,500 $161,250 $100,000 $152,500arrow_forwardOn January 1, Barnyard Corporation acquired common stock of Fresh Hay Corporation. At the time of acquisition, the book value and the fair value of Fresh Hay Corporation's net assets were $1 billion. During the year, Fresh Hay Corporation reported net income of $480 million and declared dividends of $160 million. The fair value of the shares increased by 10 percent during the year. How much income would Barnyard Corporation report for the year related to its investment under the assumption that it:A. Paid $150 million for 15 percent of the common stock and uses the fair value method to account for its investment in Fresh Hay Corporation. (Pay attention to the "fair value method" mention, some who attempted to answer this question got it wrong because they missed that). B. Paid $300 million for 30 percent of the common stock and uses the equity method to account for its investment in Fresh Hay Corporation. Please show all your steps so we can follow what we might be doing wrong.arrow_forward
- On January 1, Barnyard Corporation acquired common stock of Fresh Hay Corporation. At the time of acquisition, the book value and the fair value of Fresh Hay Corporation's net assets were $1 billion. During the year, Fresh Hay Corporation reported net income of $480 million and declared dividends of $160 million. The fair value of the shares increased by 10 percent during the year. How much income would Barnyard Corporation report for the year related to its investment under the assumption that it: A. Paid $150 million for 15 percent of the common stock and uses the fair value method to account for its investment in Fresh Hay Corporation. (Pay attention to the "fair value method" mention, others who attempted to answer this question got it wrong because they missed that). B. Paid $300 million for 30 percent of the common stock and uses the equity method to account for its investment in Fresh Hay Corporation. Please show all your steps so we can follow what…arrow_forwardOn January 1, 20x2, Pfieter Company purchased 80 percent of the outstanding shares of Sedrosky Company at acost of P1,080,000. On that date, Sedrosky Company had P600,000 worth of ordinary shares and P750,000 worth ofaccumulated profits.For 20x2, Sedrosky Company reported income of P270,000 and paid dividends of P90,000. All of the assets andliabilities of Sedrosky Company are at fair market value.On December 31, 20x2, Pfieter Company sold equipment to Sedrosky Company for P112,500 that had a cost ofP67,500. The equipment is expected to have a useful life of 10 years from this date.For the year 20x2, Pfieter Company reported income from its own operations in the amount of P300,000, whichincluded the gain of P45,000 on equipment sold to Sedrosky Company.REQUIREMENTS:1. Prepare the elimination entries for 20x22. Compute for the following:a. Amount to be shown as consolidated net income.b. Net income attributable to owners of the parent.arrow_forwardOn January 1, Big Company acquires all of the common stock of Little Company by issuing 400,000 shares of $1 par value stock with a market value of $12 per share. Little reports earnings of $864,000 and pays dividends of $240,000 in the year of acquisition. The amortization of allocations related to the investment was $48,000. Big’s net income, not including the investment, was $6,360,000, and it paid dividends of $400,000. What is the amount of consolidated net income?arrow_forward
- On January 1, 20x2, Pfieter Company purchased 80 percent of the outstanding shares of Sedrosky Company at acost of P1,080,000. On that date, Sedrosky Company had P600,000 worth of ordinary shares and P750,000 worth ofaccumulated profits.For 20x2, Sedrosky Company reported income of P270,000 and paid dividends of P90,000. All of the assets andliabilities of Sedrosky Company are at fair market value.On December 31, 20x2, Pfieter Company sold equipment to Sedrosky Company for P112,500 that had a cost ofP67,500. The equipment is expected to have a useful life of 10 years from this date.For the year 20x2, Pfieter Company reported income from its own operations in the amount of P300,000, whichincluded the gain of P45,000 on equipment sold to Sedrosky Company. Requirement: c. Non-controlling Interest in Net Income of Subsidiary for 20x2.d. Non-controlling Interest in Net Assets of Subsidiary as of December 31, 20x2.arrow_forwardHeidebrecht Design acquired 25% of the outstanding common stock of Sunland Company on January 1, 2022, by paying $854,000 for the 42,700 shares. Sunland declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2022. Sunland reported net income of $390,500 for the year. At December 31, 2022, the market price of Sunland common stock was $26 per share. (a) Prepare the journal entries for Heidebrecht Design for 2022 assuming Heidebrecht Design cannot exercise significant influence over Sunland. (Use the cost method.) (Record journal entries in the order presented in the problem. List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Creditarrow_forwardAs a long-term investment, Fair Company purchased 20% of Midlin Company’s 120,000 shares for $144,000 at the beginning of the reporting year of both companies. During the year, Midlin earned net income of $117,000 and distributed cash dividends of $0.30 per share. At year-end, the fair value of the shares is $150,000.  Required: 1. Assume no significant influence was acquired. Record the transactions from the purchase through the end of the year, including any adjustment for the investment’s fair value, if appropriate.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
