EBK ADVANCED FINANCIAL ACCOUNTING
12th Edition
ISBN: 9781260165104
Author: Christensen
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7.25P
To determine
Concept Introduction:
Controlling Interest
Controlling Interest is referred to as the ownership interest in the company which has voting stock shares to get any stockholder’s motion. Majority of voting shares are the controlling interest.
Requirement 1
Tocalculate: The S’s corporation net income for the year of 20X4.
b
To determine
Concept Introduction:
Controlling Interest
Controlling Interest is referred to as the ownership interest in the company which has voting stock shares to get any stockholder’s motion. Majority of voting shares are the controlling interest.
Requirement 2
To calculate: The consolidated net income if P’s corporation operating income for the year 20X4 is $234,000.
c.
To determine
Concept Introduction:
Controlling Interest
Controlling Interest is referred to as the ownership interest in the company which has voting stock shares to get any stockholder’s motion. Majority of voting shares are the controlling interest.
Requirement 3
To calculate: The controlling interest income for consolidated income statement 20X4.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1,
20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and
a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an
increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years. Plus uses the equity
method in accounting for its investment in Side.
1) Based on the preceding information, the increase in the fair value of patents held by Side is:
A. $20,000
B. $25,000
C. $15,000
D. $5,000
2)…
On January 1, 20x1, Pine Corp acquired 75% interest in Sine Inc. for P2,400,000. On that date Sine Ordinary share and Retained earnings were P2,000,000 and P1,000,000. The non-controlling interest on the date of acquisition was P800,000. The assets and liabilities of Sine’s book values approximates their fair values except for the inventories and equipment which were undervalued by P30,000 and P50,000, respectively. The equipment has a remaining estimated life of five years.
On October 1, 20x1, Sine Inc. sold equipment to Pine Corp. costing P300,000 with accumulated depreciation of P120,000 for P200,000. The remaining useful life of equipment was 4 years. In year 20x1, the goodwill is impaired by P5,000.
On April 30, 20x2, Pine Corp. sold equipment to Sine Inc, costing P500,000 with accumulated depreciation P100,000 for P300,000. The remaining estimated life of equipment was five years.
The following information were extracted from the separate financial statements of Pine and Sine for…
Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $216,000. At that date, the fair
value of the noncontrolling interest was $144,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common
stock for $97,000. Summarized balance sheets for Split on the dates indicated are as follows:
Assets
Cash
Accounts Receivable
Inventory
Buildings & Equipment (net)
Total Assets
Liabilities & Equities
Accounts Payable
Bonds Payable
Common Stock
Retained Earnings
Total Liabilities & Equities
20X7
$ 49,000
51,000
72,000
370,000
$542,000
December 31
20X8
Balance in investment account
$ 79,000
91,000
102,000
350,000
$622,000
20X9
$ 99,000
121,000
162,000
330,000
$712,000
$ 77,000 $127,000 $167,000
105,000
105,000
105,000
155,000
155,000
155,000
205,000
235,000
285,000
$542,000
$622,000
$712,000
Split paid dividends of $22,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and…
Chapter 7 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Prob. 7.7QCh. 7 - Prob. 7.8QCh. 7 - Prob. 7.9QCh. 7 - Prob. 7.10Q
Ch. 7 - Prob. 7.11QCh. 7 - Prob. 7.12QCh. 7 - Prob. 7.13QCh. 7 - Prob. 7.14QCh. 7 - Prob. 7.15QCh. 7 - Prob. 7.16QCh. 7 - Prob. 7.17QCh. 7 - Prob. 7.18AQCh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3CCh. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.1.1ECh. 7 - Prob. 7.1.2ECh. 7 - Prob. 7.1.3ECh. 7 - Prob. 7.1.4ECh. 7 - Prob. 7.1.5ECh. 7 - Prob. 7.2.1ECh. 7 - Prob. 7.2.2ECh. 7 - Prob. 7.2.3ECh. 7 - Prob. 7.2.4ECh. 7 - Prob. 7.2.5ECh. 7 - Prob. 7.2.6ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Transfer of Depreciable Asset at Year-End Pitcher...Ch. 7 - Prob. 7.9ECh. 7 - Sale of Equipment to Subsidiary in Current Period...Ch. 7 - Prob. 7.11ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.23AECh. 7 - Prob. 7.24PCh. 7 - Prob. 7.25PCh. 7 - Prob. 7.26PCh. 7 - Prob. 7.27PCh. 7 - Prob. 7.28.1PCh. 7 - Prob. 7.28.2PCh. 7 - Prob. 7.28.3PCh. 7 - Prob. 7.28.4PCh. 7 - Prob. 7.29PCh. 7 - Prob. 7.30PCh. 7 - Prob. 7.31PCh. 7 - Prob. 7.32PCh. 7 - Prob. 7.33PCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.41AP
Knowledge Booster
Similar questions
- Purse Corporation acquired 70 percent of Scarf Corporation’s ownership on January 1, 20X8, for $140,000. At that date, Scarf reported capital stock outstanding of $120,000 and retained earnings of $80,000, and the fair value of the noncontrolling interest was equal to 30 percent of the book value of Scarf. During 20X8, Scarf reported net income of $30,000 and comprehensive income of $36,000 and paid dividends of $25,000. Required: Present all consolidation entries needed at December 31, 20X8, to prepare a complete set of consolidated financial statements for Purse Corporation and its subsidiary.arrow_forwardPurse Corporation acquired 70 percent of Scarf Corporation’s ownership on January 1, 20X8, for $140,000. At that date, Scarf reported capital stock outstanding of $120,000 and retained earnings of $80,000, and the fair value of the noncontrolling interest was equal to 30 percent of the book value of Scarf. During 20X8, Scarf reported net income of $30,000 and comprehensive income of $36,000 and paid dividends of $25,000. Required: Present all equity-method entries that Purse would have recorded in accounting for its investment in Scarf during 20X8.arrow_forwardOn January 1, 20X8, Ramon Corporation acquired 80 percent of Tester Company's voting common stock for $300,000. At the time of the combination, Tester reported common stock outstanding of $200,000 and retained earnings of $110,000, and the fair value of the noncontrolling interest was $75,000. The book value of Tester's net assets approximated market value except for patents that had a market value of $40,000 more than their book value. The patents had a remaining economic life of five years at the date of the business combination. Tester reported net income of $40,000 and paid dividends of $10,000 during 20X8. What is the amount of Total Excess Depreciation that will be recorded for 20X8? Group of answer choices $6,000 $5,000 $8,000 $40,000arrow_forward
- Phone Corporation owns 80 percent of Smart Company’s common stock, acquired at underlying book value on January 1, 20X4. At the acquisition date, the book values and fair values of Smart’s assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Smart. The income statements for Phone and Smart for 20X4 include the following amounts: Phone Corporation Smart Company Sales $ 538,000 $ 167,000 Dividend Income 8,000 Total Income $ 546,000 $ 167,000 Less: Cost of Goods Sold $ 378,000 $ 87,000 Depreciation Expense 27,000 15,000 Other Expenses 65,000 18,000 Total Expenses $ 470,000 $ 120,000 Net Income $ 76,000 $ 47,000 Phone uses the cost method in accounting for its ownership of Smart. Smart paid dividends of $10,000 in 20X4. Required: What amount would Phone report in its income statement as income from its investment in Smart if Phone used equity-method accounting? What…arrow_forwardAt the beginning of current year, Cynosure Company purchased 30% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000 At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. The investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year. Required: 1. Prepare journal entries for the current year. 2. Compute the investment income for the current year.arrow_forwardRR Corporation acquired 80 percent of the stock of GG Company by issuing shares of its common stock with a fair value of P192,000. At that time, the fair value of non-controlling interest was estimated to be P48,000 and the fair values of its identifiable assets and liabilities were P310,000 and P95,000, respectively. GG’s assets and liabilities had book values of P220,000 and P95,000, respectively. Compute for "Investment in GG" reported by RR to be reported immediately after the combination Additional question: Using the same information above, compute for the increase in identifiable assets of the combined entity immediately after the combination.arrow_forward
- Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $109,200. At that date, the noncontrolling interest had a fair value of $46,800 and Soda reported $71,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: On December 31, 20X2, Soda purchased inventory for $35,000 and sold it to Pop for $50,000. Pop resold $30,000 of the inventory (i.e., $30,000 of the $50,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3. During 20X3, Soda sold inventory purchased for $56,000 to Pop for $80,000, and Pop resold all but $23,000 of its…arrow_forwardServer Corporation is a majority-owned subsidiary of Proxy Corporation. Proxy acquired 75 percent ownership on January 1, 20X3, for $133,500. At that date, Server reported common stock outstanding of $60,000 and retained earnings of $90,000, and the fair value of the noncontrolling interest was $44,500. The differential is assigned to equipment, which had a fair value $28,000 more than book value and a remaining economic life of seven years at the date of the business combination. Server reported net income of $30,000 and paid dividends of $12,000 in 20X3.Required:a. Prepare the journal entries recorded by Proxy during 20X3 on its books if it accounts for its investment in Server using the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) b. Prepare the consolidation entries needed at December 31, 20X3, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No…arrow_forwardRR Corporation acquired 80 percent of the stock of GG Company by issuing shares of its common stock with a fair value of P192,000. At that time, the fair value of non-controlling interest was estimated to be P48,000 and the fair values of its identifiable assets and liabilities were P310,000 and P95,000, respectively. GG’s assets and liabilities had book values of P220,000 and P95,000, respectively. REQUIRED: 1. Compute for the increase in identifiable assets of the combined entity immediately after the combination. 2. Compute for the increase in total liabilities of the combined entity immediately after the combination.arrow_forward
- RR Corporation acquired 80 percent of the stock of GG Company by issuing shares of its common stock with a fair value of P192,000. At that time, the fair value of non-controlling interest was estimated to be P48,000 and the fair values of its identifiable assets and liabilities were P310,000 and P95,000, respectively. GG’s assets and liabilities had book values of P220,000 and P95,000, respectively REQUIRED: 1. Compute for the full-goodwill for the combined entity immediately after the combination. 2. Compute for the non-controlling interest (full-goodwill) reported in the consolidated balance sheet immediately after the combination.arrow_forwardPop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: Pop Corporation Soda Company Item Debit Credit Debit Credit Cash & Accounts Receivable $ 15,400 $ 21,600 Inventory 165,000 35,000 Land 80,000 40,000 Buildings & Equipment 340,000 260,000 Investment in Soda Company…arrow_forwardPop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: Pop Corporation Soda Company Item Debit Credit Debit Credit Cash & Accounts Receivable $ 15,400 $ 21,600 Inventory 165,000 35,000 Land 80,000 40,000 Buildings & Equipment 340,000 260,000 Investment in Soda Company…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
