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Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value...
Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value method to account for this investment. On January 1, 2014, Pesto sold 8 percent bonds payable with a $14.2 million face value (maturing in 20 years) on the open market at a premium of $990,000. On January 1, 2017, Salerno acquired 40 percent of these same bonds from an outside party at 96.6 percent of face value. Both companies use the straight-line method of amortization. For a 2018 consolidation, what adjustment should be made to Pesto's beginning Retained Earnings as a result of this bond acquisition?
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ekkarill92 answered 4 months agoRelated Solutions
Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value...
Pesto Company possesses 80 percent of Salerno Company's
outstanding voting stock. Pesto uses the initial value method to
account for this investment. On January 1, 2014, Pesto sold 6
percent bonds payable with a $14.0 million face value (maturing in
20 years) on the open market at a premium of $1,070,000. On January
1, 2017, Salerno acquired 40 percent of these same bonds from an
outside party at 96.6 percent of face value. Both companies use the
straight-line method of...
Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value...
Pesto Company possesses 80 percent of Salerno Company's
outstanding voting stock. Pesto uses the initial value method to
account for this investment. On January 1, 2014, Pesto sold 10
percent bonds payable with a $18.0 million face value (maturing in
20 years) on the open market at a premium of $760,000. On January
1, 2017, Salerno acquired 40 percent of these same bonds from an
outside party at 96.6 percent of face value. Both companies use the
straight-line method of...
Pesto Company posesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value...
Pesto Company posesses 80 percent of Salerno Company's
outstanding voting stock. Pesto uses the initial value method to
account for this investment. On January 1, 2014, Pesto sold 9
percent bonds payable with a 10 million dollar face value (maturing
in 20 years) on the open market at a premium of 600,000. On January
1 2017, Salerno acquired 40 percent of these same bonds from an
outside party at 96.6 percent of face value. Both companies use the
straight line...
Pesto Company possesses 80% of Salerno Company's outstanding voting stock. Pesto uses the intial value method...
Pesto Company possesses 80% of Salerno Company's outstanding
voting stock. Pesto uses the intial value method to account for
this investment. On January 1, 2014, Pesto sold 9% bonds payable
with a $10 million face value (maturing in 20 years) on the open
market at a premium of $600,000. On January 1, 2017, Salerno
acquired 40% of these same bondsfrom an outside party at 96.6% of
fave value. Both companies use the straigh-line method of
amortization. For a 2018 consolidation,...
On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing,...
On January 1, 2020, Corgan Company acquired 80 percent of the
outstanding voting stock of Smashing, Inc., for a total of
$1,600,000 in cash and other consideration. At the acquisition
date, Smashing had common stock of $910,000, retained earnings of
$460,000, and a noncontrolling interest fair value of $400,000.
Corgan attributed the excess of fair value over Smashing's book
value to various covenants with a 20-year remaining life. Corgan
uses the equity method to account for its investment in
Smashing....
On January 1, 2017, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing,...
On January 1, 2017, Corgan Company acquired 80 percent of the
outstanding voting stock of Smashing, Inc., for a total of
$1,560,000 in cash and other consideration. At the acquisition
date, Smashing had common stock of $900,000, retained earnings of
$450,000, and a noncontrolling interest fair value of $390,000.
Corgan attributed the excess of fair value over Smashing's book
value to various covenants with a 20-year remaining life. Corgan
uses the equity method to account for its investment in
Smashing....
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1,...
Protrade Corporation acquired 80 percent of the outstanding
voting stock of Seacraft Company on January 1, 2017, for $488,000
in cash and other consideration. At the acquisition date, Protrade
assessed Seacraft's identifiable assets and liabilities at a
collective net fair value of $735,000 and the fair value of the 20
percent noncontrolling interest was $122,000. No excess fair value
over book value amortization accompanied the acquisition.
The following selected account balances are from the individual
financial records of these two...
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1,...
Protrade Corporation acquired 80 percent of the outstanding
voting stock of Seacraft Company on January 1, 2017, for $440,000
in cash and other consideration. At the acquisition date, Protrade
assessed Seacraft's identifiable assets and liabilities at a
collective net fair value of $615,000 and the fair value of the 20
percent noncontrolling interest was $110,000. No excess fair value
over book value amortization accompanied the acquisition.
The following selected account balances are from the individual
financial records of these two...
On January 1, 2017, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing,...
On January 1, 2017, Corgan Company acquired 80 percent of the
outstanding voting stock of Smashing, Inc., for a total of
$1,080,000 in cash and other consideration. At the acquisition
date, Smashing had common stock of $780,000, retained earnings of
$330,000, and a noncontrolling interest fair value of $270,000.
Corgan attributed the excess of fair value over Smashing's book
value to various covenants with a 20-year remaining life. Corgan
uses the equity method to account for its investment in
Smashing....
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1,...
Protrade Corporation acquired 80 percent of the outstanding
voting stock of Seacraft Company on January 1, 2017, for $428,000
in cash and other consideration. At the acquisition date, Protrade
assessed Seacraft's identifiable assets and liabilities at a
collective net fair value of $585,000 and the fair value of the 20
percent noncontrolling interest was $107,000. No excess fair value
over book value amortization accompanied the acquisition.
The following selected account balances are from the individual
financial records of these two...
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