Question
In: Accounting
Parent Corporation acquired a 70 percent interest in Subsidiary Corporation’s outstanding voting common stock on January...
Parent Corporation acquired a 70 percent interest in Subsidiary Corporation’s outstanding voting common stock on January 1, 2011, for $735,000 cash. The stockholders’ equity of Subsidiary on this date consisted of $750,000 capital stock and $150,000 retained earnings. The difference between the fair value of Subsidiary and the underlying equity acquired in Subsidiary was assigned $7,500 to Subsidiary’s undervalued inventory, $21,000 to undervalued buildings, $31,500 to undervalued equipment, and remainder assigned to goodwill. The undervalued inventory items were Sold during 2011, and the undervalued buildings and equipment had remaining useful lives of seven years and three years, respectively. Depreciation is straight line. At December 31, 2011, Subsidiary’s accounts payable include $10,000 owed to Parent. This $10,000 account payable is due on January 15, 2012. Parent sold equipment to outsiders with a book value of $15,000 for $25,000 on June 1, 2011. This is not an intercompany sale transaction. Separate financial statements for Par and Subsidiary for 2011 are shown on the consolidated worksheet tab (in thousands): REQUIRED: Prepare consolidation workpapers for Parent Corporation and Subsidiary for the year ended 12/31/2011. (Use the accompanying excel Worksheet for your solution. Show formulas).You must follow these steps in order: 1. Complete in worksheet format
| PRELIMINARY COMPUTATIONS: | |||
| Amt | |||
| [A] | Cost of 70% Interest at January 1st | $0 | |
| Implied Fair Value of Subsidiary (gross up to 100%) | $0 | ||
| Book Value of Subsidiary | $0 | ||
| Excess of FV over BV | $0 | ||
| Non-Controlling Interest Share (30%) | $0 | ||
| [B[ | Allocation of Excess Fair Value over Book Value of Subsidiary: | ||
| Undervalued inventory (Subsidiaryd in 2011) | $0 | ||
| Undervalued Buildings (7 year life) | $0 | ||
| Undervalued equipment (3 year life) | $0 | ||
| Remainder to Goodwill | $0 | ||
| Excess of FV over BV | $0 | ||
| [C] | Calculation of Income from Subsidiary in 2011: | ||
| Sul's Net Income | $0 | ||
| Less: Undervalued inventories Subsidiary in 2011 | $0 | ||
| Less: Additional depreciation on buildings (1 year) | $0 | ||
| Less: Additional depreciation on Equipment (1 year) | $0 | ||
| = Sub's Adjusted Net Income | $0 | ||
| [D] | Income Allocation for 2011: | ||
| Parent's Controlling Interest Share (70%) = | $0 | ||
| Non-controlling Interest Share (30%) = | $0 | ||
Solutions
Expert Solution
IN PART C & D ONLY EFFECT OF GIVEN TRANSACTIONS ON INCOME
ARE SHOWN AS INCOME BEFORE THESE ADJUSTMENTS IS NOT GIVEN
ekkarill92 answered 2 years agoRelated Solutions
Parent Corporation holds 70 percent of Subsidiary Company's voting common stock. On January 1, 2011, Parent...
Parent Corporation holds 70 percent of Subsidiary Company's
voting common stock. On January 1, 2011, Parent paid $500,000 to
acquire a building with a 10-year expected economic life. Parent
uses straight-line depreciation for all depreciable assets. On
December 31, 2016, Subsidiary purchased the building from Parent
for $180,000 and resumed the same remaining useful life.
Prepare Parent’s adjusting journal entries and the
consolidation entries that related to intercompany sale of building
for 2018. (Remember to include all necessary reversal journal...
Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1,...
Protrade Corporation acquired 70 percent of the outstanding
voting stock of Seacraft Company on January 1, 2017, for $441,000
in cash and other consideration. At the acquisition date, Protrade
assessed Seacraft's identifiable assets and liabilities at a
collective net fair value of $775,000 and the fair value of the 30
percent noncontrolling interest was $189,000. 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...
Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 70 percent of the outstanding
voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a
net book value of $410,000. Any excess fair value was assigned to
intangible assets and amortized at a rate of $4,000 per year.
Placid Lake's 2021 net income before consideration of its
relationship with Scenic (and before adjustments for intra-entity
sales) was $310,000. Scenic reported net income of $120,000. Placid
Lake declared $110,000 in dividends during this period;...
On January 1, 2017, Doone Corporation acquired 70 percent of the outstanding voting stock of Rockne...
On January 1, 2017, Doone Corporation acquired 70 percent of the
outstanding voting stock of Rockne Company for $546,000
consideration. At the acquisition date, the fair value of the 30
percent noncontrolling interest was $234,000 and Rockne's assets
and liabilities had a collective net fair value of $780,000. Doone
uses the equity method in its internal records to account for its
investment in Rockne. Rockne reports net income of $280,000 in
2018. Since being acquired, Rockne has regularly supplied inventory...
Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1,...
Protrade Corporation acquired 70 percent of the outstanding
voting stock of Seacraft Company on January 1, 2017, for $420,000
in cash and other consideration. At the acquisition date, Protrade
assessed Seacraft's identifiable assets and liabilities at a
collective net fair value of $715,000 and the fair value of the 30
percent noncontrolling interest was $180,000. 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 70 percent of the outstanding voting stock of Seacraft Company on January 1,...
Protrade Corporation acquired 70 percent of the outstanding
voting stock of Seacraft Company on January 1, 2017, for $367,500
in cash and other consideration. At the acquisition date, Protrade
assessed Seacraft's identifiable assets and liabilities at a
collective net fair value of $565,000 and the fair value of the 30
percent noncontrolling interest was $157,500. 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...
Pizza Corporation acquired 75 percent of Slice Corporation’s voting common stock on January 1, 20X4, for...
Pizza Corporation acquired 75 percent of Slice Corporation’s
voting common stock on January 1, 20X4, for $353,000, when the fair
value of its net identifiable assets was $466,000 and the fair
value of the noncontrolling interest was $113,000. Slice reported
common stock outstanding of $110,000 and retained earnings of
$230,000. The excess of fair value over book value of Slice’s net
assets was attributed to amortizable assets with a remaining life
of 10 years. On December 31, 20X4, Slice sold...
On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing,...
On January 1, 2017, Corgan Company acquired 70 percent of the
outstanding voting stock of Smashing, Inc., for a total of
$1,155,000 in cash and other consideration. At the acquisition
date, Smashing had common stock of $840,000, retained earnings of
$390,000, and a noncontrolling interest fair value of $495,000.
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.Net...
On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing,...
On January 1, 2020, Corgan Company acquired 70 percent of the
outstanding voting stock of Smashing, Inc., for a total of
$1,435,000 in cash and other consideration. At the acquisition
date, Smashing had common stock of $920,000, retained earnings of
$470,000, and a noncontrolling interest fair value of $615,000.
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 70 percent of the outstanding voting stock of Smashing,...
On January 1, 2017, Corgan Company acquired 70 percent of the
outstanding voting stock of Smashing, Inc., for a total of
$1,015,000 in cash and other consideration. At the acquisition
date, Smashing had common stock of $800,000, retained earnings of
$350,000, and a noncontrolling interest fair value of $435,000.
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....
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Young and Company claims that its pressurized diving bell will, on average, maintain its integrity to...
- 1) Alternative compiled code sequence using instructions in classes A, B, C. What is the average...
- An asset is purchased on January 1 for $48,700. It is expected to have a useful...
- Do we have any online or offline tool to convert c and cpp programs into MIPS...
- -what is the pH of HCl 0,1M and NaCl 0,1M mixed together solution? -What is the...
- function X=extractDWT(x_train,startS,endS,wStep,wRange) % x_train = input signal % startS = from second % endS = end...
- Do you agree that Social Loafing is similar to Theory X. Give an example to support...
ADVERTISEMENT