Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 23AP
a.
To determine
Discuss the business reasons for which a parent corporation like Incorporation PV operates a business through a subsidiary like incorporation SV.
b.
To determine
Calculate Incorporation PV’s realized gain, recognized gain, and basis in its Incorporation SV’s stock.
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Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 35,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred:
Cost
Book Value
Fair Value
Cash
$ 32,000
$ 32,000
$ 32,000
Inventory
83,000
83,000
83,000
Land
69,000
69,000
99,000
Buildings
188,000
147,000
249,000
Equipment
95,000
74,000
123,000
Accounts Payable
58,000
58,000
58,000
Required:
Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon
Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and
liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $6 par value common stock. The following Information is
provided on the assets and accounts payable transferred:
Cash
Inventory
Land
Buildings
Equipment
Accounts Payable
Required:
Cost
$ 30,000
84,000
Book Value
$ 30,000
Fair Value
$ 30,000
84,000
84,000
71,000
71,000
101,000
175,000
141,000
242,000
98,000
71,000
114,000
59,000
59,000
59,000
a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon
b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon.
Note: If no entry is required for a…
A Parent corporation purchased 25% of the outstanding common shares of Subsidiary Limited for $2,500,000 on January 1, 2020.
The following relates to Subsidiary since the acquisition date:
Year
Net Income
Other Comprehensive Income
Dividends Paid
2020
$ 51,800
$11,400
$74,000
2021
148,000
29,600
74,000
Required:
Assume that Parent is a private company. Even though it has significant influence, it chose to use the cost method to account for its investment. Prepare ALL the journal entries that Parent should make regarding this investment in Year 2020 and Year 2021
Chapter 9 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 9 - Prob. 1QPDCh. 9 - Prob. 2QPDCh. 9 - Prob. 3QPDCh. 9 - Prob. 4QPDCh. 9 - Prob. 5QPDCh. 9 - Prob. 6QPDCh. 9 - Prob. 7QPDCh. 9 - Prob. 8QPDCh. 9 - Prob. 9QPDCh. 9 - Explain the difference between a substituted basis...
Ch. 9 - Prob. 11QPDCh. 9 - Prob. 12QPDCh. 9 - Prob. 13QPDCh. 9 - Prob. 14QPDCh. 9 - Prob. 15QPDCh. 9 - Prob. 1APCh. 9 - Prob. 2APCh. 9 - Prob. 3APCh. 9 - Prob. 4APCh. 9 - Prob. 5APCh. 9 - Prob. 6APCh. 9 - This year, Neil Inc. exchanged a business asset...Ch. 9 - Prob. 8APCh. 9 - Prob. 9APCh. 9 - XYZ exchanged an old building for a new like-kind...Ch. 9 - Prob. 11APCh. 9 - Prob. 12APCh. 9 - Prob. 13APCh. 9 - Prob. 14APCh. 9 - Prob. 15APCh. 9 - Prob. 16APCh. 9 - Prob. 17APCh. 9 - Prob. 18APCh. 9 - Prob. 19APCh. 9 - On October 18 of last year, a flood washed away...Ch. 9 - Prob. 21APCh. 9 - Prob. 22APCh. 9 - Prob. 23APCh. 9 - Mr. ZJ owns a sole proprietorship. The business...Ch. 9 - Prob. 25APCh. 9 - Prob. 26APCh. 9 - Prob. 27APCh. 9 - Prob. 28APCh. 9 - Prob. 29APCh. 9 - Prob. 30APCh. 9 - Prob. 31APCh. 9 - Prob. 32APCh. 9 - Prob. 33APCh. 9 - Prob. 34APCh. 9 - Prob. 1IRPCh. 9 - Prob. 2IRPCh. 9 - Prob. 3IRPCh. 9 - Prob. 4IRPCh. 9 - Prob. 5IRPCh. 9 - Prob. 6IRPCh. 9 - Prob. 7IRPCh. 9 - Prob. 8IRPCh. 9 - Prob. 9IRPCh. 9 - Prob. 10IRPCh. 9 - Prob. 1RPCh. 9 - Prob. 2RPCh. 9 - Prob. 3RPCh. 9 - Prob. 1TPCCh. 9 - Prob. 2TPCCh. 9 - Prob. 3TPCCh. 9 - Croyden is a calendar year, accrual basis...
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