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P 14-1 Parent accounting under the equity method Pak purchased a 40 percent interest in Sco...
Equity Method and Eliminating Entries Three Years After Acquisition
Equity Method and Eliminating Entries Three Years After AcquisitionPuffin Industries acquired all of Sunset Coast Digital's stock on January 1, 2014, for $7,000,000, $4,200,000 in excess of book value. At that time, Sunset Coast's inventory (LIFO) was overvalued by $1,000,000 and its plant assets (10-year life) were overvalued by $2,000,000. The remaining excess of cost over book value is attributed to undervalued identifiable intangible assets being amortized over 20 years. Sunset Coast depreciates plant assets and amortizes intangibles by the...
E 4-2 Consolidated statement items with equity method Corporation purchased 80 percent of the outstanding voting...
E 4-2 Consolidated statement items with equity method Corporation purchased 80 percent of the outstanding voting common stock of Son Corporation on January 2, 2016 for $1,200,000 cash. Son's balance sheets on this date and on December 31, 2016. are as follows: SON CORPORATION BALANCE SHEETS January 2 December 31 Inventory $ 200.000 $ 80.000 Other current assets 200,000 320,000 Plant assets-net 800,000 880.000 Total assets $1,200,000 $1.280,000 Liabilities $ 200.000 $ 240.000 Capital stock 600.000 600,000 Retained earnings 400.000...
INVESTMENT ACCOUNTING Equity Method with OCI & Investment > Book Value Exercise A3-1 On January 1,...
INVESTMENT ACCOUNTING Equity Method with OCI & Investment > Book Value Exercise A3-1 On January 1, 2013, Petulant, Inc. purchased 70 percent of the common stock of Sycophant Corp. for $458,920. On January 1, 2013, the book value of Sycophant's net assets equaled $478,000. On the date of acquisition, all of Sycophants net assets had recorded book values that approximated fair value, except for property and equipment that was undervalued by $57,600 and patents that were undervalued by $120,000. On...
Parent purchased Subsidiary on January 1, 2015. The parent uses the equity method to account for...
Parent purchased Subsidiary on January 1, 2015. The parent uses the equity method to account for its investment in its subsidiary. The excess of investment cost over book value was allocated as follows: Equipment (20-yr life) $ 130,000 Customer list (10-yr life) 184,000 Patent (10-yr life) 147,000 Goodwill 139,000 Total $ 600,000 Parent regularly sells merchandise to Subsidiary. In 2017, inter-company sales amounted to $50,100, with $16,300 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $18,900....
(#10) Equity Method On January 1, 2016, Tiger Company purchased 6,720 shares of Eagle Corporation’s common...
(#10) Equity Method On January 1, 2016, Tiger Company purchased 6,720 shares of Eagle Corporation’s common stock when Eagle had 22,400 shares outstanding. On that date, the following information pertained to Eagle: Eagle Corporation Balance Sheet January 1, 2016 1 Book Value Fair Value 2 Depreciable assets (remaining life, 8 years) $600,000.00 $620,000.00 3 Other non-depreciable assets 290,000.00 300,000.00 4 Total $890,000.00 $920,000.00 5 Liabilities $300,000.00 $330,000.00 6 Shareholders’ equity 590,000.00 7 Total $890,000.00 During 2016, Eagle earned net income...
assume prince corporation purchased 100 percent ownership of snow company on January 1, 2015, for $226,000...
assume prince corporation purchased 100 percent ownership of snow company on January 1, 2015, for $226,000 and paid cash. on that date, the book value of items reported net assets was $200,000. the excess over book value paid is attributable to depreciable assets with a remaining useful life of 10 years. net income and dividend payments of snow were 10,000 and 5,000 in 2015, and were 20,000 and 22,000 in 2016. (SHOW WORK) Required: 1. prepare the journal entries that...
Prepare consolidation spreadsheet for intercompany sale of land - Equity method Assume that a parent company acquired i...
Prepare consolidation spreadsheet for intercompany sale of land - Equity method Assume that a parent company acquired its subsidiary on January 1, 2014, at a purchase price that was $300,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acquisition date. Of that excess, $200,000 was assigned to an unrecorded Patent owned by the subsidiary that is being amortized over a 10-year period. The [A] Patent asset has been amortized as part of the parent's equity...
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value...
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value and fair value of the assets and liabilities of S company on that day were: BOOK VALUE FAIR VALUE Current assets $700,000 700,000 Equipment 1,600,000 2,000,000 Land 500,000 700,000 Deferred charge 400,000 400,000 Total Assets 3,200,000 3,800,000 Less: Liabilities (700,000) (700,000) Net Assets: 2,500,000 3,100,000 The equipment had a remaining useful life of 8 years on January 1, 2015 and the deferred...
Recording Entries for Equity Investment: Equity Method On January 1, 2020, Allen Corporation purchased 30% of...
Recording Entries for Equity Investment: Equity Method On January 1, 2020, Allen Corporation purchased 30% of the 24,000 outstanding common shares of Towne Corporation at $15 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $19,200. Towne Corporation declared and paid cash dividends of $6,400 on December 30, 2020, to shareholders on record....
Exercise 13-4 On January 1, 2014, Trenten Systems, a U.S.-based company, purchased a controlling interest in...
Exercise 13-4
On January 1, 2014, Trenten Systems, a U.S.-based company,
purchased a controlling interest in Grant Management Consultants
located in Zurich, Switzerland. The acquisition was treated as a
purchase transaction. The 2014 financial statements stated in Swiss
francs are given below.
GRANT MANAGEMENT CONSULTANTS
Comparative Balance Sheets
January 1 and December 31, 2014
Jan. 1
Dec. 31
Cash and Receivables
19,600
54,000
Net Property, Plant, and Equipment
40,000
36,600
Totals
59,600
90,600
Accounts and Notes Payable
30,100
32,100
Common...
E 4-2 Consolidated statement items with equity method Corporation purchased 80 percent of the outstanding voting common stock of Son Corporation on January 2, 2016 for $1,200,000 cash. Son's balance sheets on this date and on December 31, 2016. are as follows: SON CORPORATION BALANCE SHEETS January 2 December 31 Inventory $ 200.000 $ 80.000 Other current assets 200,000 320,000 Plant assets-net 800,000 880.000 Total assets $1,200,000 $1.280,000 Liabilities $ 200.000 $ 240.000 Capital stock 600.000 600,000 Retained earnings 400.000...
INVESTMENT ACCOUNTING Equity Method with OCI & Investment > Book Value Exercise A3-1 On January 1, 2013, Petulant, Inc. purchased 70 percent of the common stock of Sycophant Corp. for $458,920. On January 1, 2013, the book value of Sycophant's net assets equaled $478,000. On the date of acquisition, all of Sycophants net assets had recorded book values that approximated fair value, except for property and equipment that was undervalued by $57,600 and patents that were undervalued by $120,000. On...
Prepare consolidation spreadsheet for intercompany sale of land - Equity method Assume that a parent company acquired its subsidiary on January 1, 2014, at a purchase price that was $300,000 in excess of the book value of the subsidiary's Stockholders' Equity on the acquisition date. Of that excess, $200,000 was assigned to an unrecorded Patent owned by the subsidiary that is being amortized over a 10-year period. The [A] Patent asset has been amortized as part of the parent's equity...
Recording Entries for Equity Investment: Equity Method On January 1, 2020, Allen Corporation purchased 30% of the 24,000 outstanding common shares of Towne Corporation at $15 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $19,200. Towne Corporation declared and paid cash dividends of $6,400 on December 30, 2020, to shareholders on record....
Exercise 13-4
On January 1, 2014, Trenten Systems, a U.S.-based company,
purchased a controlling interest in Grant Management Consultants
located in Zurich, Switzerland. The acquisition was treated as a
purchase transaction. The 2014 financial statements stated in Swiss
francs are given below.
GRANT MANAGEMENT CONSULTANTS
Comparative Balance Sheets
January 1 and December 31, 2014
Jan. 1
Dec. 31
Cash and Receivables
19,600
54,000
Net Property, Plant, and Equipment
40,000
36,600
Totals
59,600
90,600
Accounts and Notes Payable
30,100
32,100
Common...
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