Question

In: Accounting

On January 1, 2012, P Corp acquired 80% of the outstanding common stock of S Corp for $820,000. On January 1, 2018, P Corp sold $120,000 of land to S Corp for cash.

 

On January 1, 2012, P Corp acquired 80% of the outstanding common stock of S Corp for $820,000. On January 1, 2018, P Corp sold $120,000 of land to S Corp for cash. The cost of the land was $50,000 at the date of the transfer. Also on January 1, 2018, P Corp transferred equipment to S Corp for $20,000 cash. The equipment originally cost $26,000 and has a book value of $15,000 (three-year remaining useful life).

During 2019, S Corp sold the land to a third-party for $150,000. The equipment continued to be used by S Corp.

Instructions:

1. Prepare the 2018 journal entries only relating to land and equipment transactions (P Corp and S Corp).

2. Prepare the 2018 consolidation worksheet entries only relating to the land and equipment transactions.

3. Prepare the 2019 journal entries only relating to land sale and equipment transactions (P Corp and S Corp).

4. Prepare the 2019 consolidation worksheet entries only relating to the land and equipment transactions.

Solutions

Expert Solution

Journal Entries

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Problem I. On January 1, 2019, P Corp acquired 80% of the outstanding common stock of...
Problem I. On January 1, 2019, P Corp acquired 80% of the outstanding common stock of S Corp for $820,000 cash. On that date, S Company’s stockholders’ equity consisted of common stock, $150,000; other contributed capital, $200,000; and retained earnings, $350,000. P Corp paid more than the book value of net assets acquired because the recorded cost of S Corp’s equipment (5 year remaining useful life) was $40,000 less than its fair value; the remainder was allocated to goodwill. There...
On January 1, 2012, P Company purchased 95% of the outstanding common stock of S Company...
On January 1, 2012, P Company purchased 95% of the outstanding common stock of S Company for $160,000. At that time, Sessions' stockholders' equity consisted of common stock, $120,000; other contributed capital, $10,000; and retained earnings, $23,000. Any difference between the implied value of the company and the book value is attributable to goodwill. On December 31, 2012, the two companies' trial balances were as follows: P S Cash        62,000        30,000 Accounts Receivable        32,000        29,000 Inventory...
7) P Company owns 80% of the outstanding common stock of S Company. On January 1....
7) P Company owns 80% of the outstanding common stock of S Company. On January 1. 2018, S Company sold land to P Company for OMR 500,000. S Company originally purchased the land for OMR 300,000. On January 1, 2019, P Company Sold the land purchased from S Company to a company outside the affiliated group for OMR 600,000. A. Prepare the journal entry of intercompany sales. B. Prepare in general journal form the workpaper entries necessary because of the...
On January 1, 2018, Deuce Inc. acquired 15% of Wiz Co.’s outstanding common stock for $62,400...
On January 1, 2018, Deuce Inc. acquired 15% of Wiz Co.’s outstanding common stock for $62,400 and did not exercise significant influence. Wiz earned net income of $96,000 in 2018 and paid dividends of $36,000. The fair value of Deuce’s investment was $80,000 at December 31, 2018. On January 3, 2019, Deuce bought an additional 10% of Wiz for $54,000. This second purchase gave Deuce the ability to significantly influence the decision making of Wiz. During 2019, Wiz earned $120,000...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $490,000. Birch reported a $477,500 book value and the fair value of the noncontrolling interest was $122,500 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $192,000 when Cedar had a $141,000 book value and the 20 percent noncontrolling interest was valued at $48,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $504,000. Birch reported a $510,000 book value and the fair value of the noncontrolling interest was $126,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $160,000 when Cedar had a $164,000 book value and the 20 percent noncontrolling interest was valued at $40,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $504,000. Birch reported a $510,000 book value and the fair value of the noncontrolling interest was $126,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $160,000 when Cedar had a $164,000 book value and the 20 percent noncontrolling interest was valued at $40,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $452,000. Birch reported a $505,000 book value and the fair value of the noncontrolling interest was $113,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $112,000 when Cedar had a $104,000 book value and the 20 percent noncontrolling interest was valued at $28,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
On January 1, 20X1, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong...
On January 1, 20X1, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. On this date, equipment (with a five-year life) was undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill. As of December 31, 20X1, the financial statements appeared as follows: Pride Strong Revenues $420,000 $280,000 Cost of Goods Sold 196,000 112,000 Operating Expenses 28,000 14,000 Investment Income 100,800 Net Income $296,800 $154,000 Retained Earnings, 1/1/20X1 $420,000 $210,000 Net...
On January 1, 2019, P Co. acquired 80 percent of S Co. for $400,000 cash. S...
On January 1, 2019, P Co. acquired 80 percent of S Co. for $400,000 cash. S reported net income of $20,000 and dividends of $3,000 for 2019. On the date of acquisition, S reported common stock outstanding of $350,000 and retained earnings of $50,000. It held land with a book value of $180,000 and a market value of $200,000, and equipment with a book value of $80,000 and a market value of $98,000 at the date of combination. The remainder...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT