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EXERCISE 4‐2 Workpaper Eliminating Entries, Cost Method LO 5 Park Company purchased 90% of the stock...
EXERCISE 4‐2 Workpaper Eliminating Entries, Cost Method LO 5 Park Company purchased 90% of the stock of Salt Company on January 1, 2019, for $465,000, an amount equal to $15,000 in excess of the book value of equity acquired. This excess payment relates to an undervaluation of Salt Company's land. On the date of purchase, Salt Company's retained earnings balance was $50,000. The remainder of the stockholders' equity consists of no‐par common stock. During 2023, Salt Company declared dividends in the amount of $10,000, and reported net income of $40,000. The retained earnings balance of Salt Company on December 31, 2022, was $160,000. Park Company uses the cost method to record its investment. Required: Prepare in general journal form the workpaper entries that would be made in the preparation of a consolidated statements workpaper on December 31, 2023.
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EXERCISE 4‐3 Workpaper Eliminating Entries, Equity Method LO 5 At the beginning of 2014, Presidio Company...
EXERCISE 4‐3 Workpaper Eliminating Entries, Equity Method LO 5
At the beginning of 2014, Presidio Company purchased 95% of the
common stock of Succo Company for $494,000. On that date, Succo
Company's stockholders' equity consisted of the following: Common
stock $300,000 Other contributed capital 100,000 Retained earnings
120,000 Total $520,000 During 2022, Succo Company reported net
income of $40,000 and distributed dividends in the amount of
$19,000. Succo Company's retained earnings balance at the end of
2021 amounted to $160,000....
EXERCISE 5-4 Allocation of Cost and Workpaper Entries at Date of Acquisition LO 2 On January...
EXERCISE 5-4
Allocation of Cost and Workpaper Entries at Date of Acquisition
LO 2
On January 1, 2020, Porter Company purchased an 80% interest in
Salem Company for $260,000. On this date, Salem Company had common
stock of $207,000 and retained earnings of $130,500.
An examination of Salem Company’s balance sheet revealed the
following comparisons between book and fair values:
Book Value
Fair Value
Inventory
$ 30,000
$ 35,000
Other current assets
50,000
55,000
Equipment
300,000
350,000
Land
200,000
200,000...
Workpaper Eliminating Entries, Equity Method. At the beginning of 2009, Presidio Company purchased 95% of the...
Workpaper Eliminating Entries, Equity
Method.
At the beginning of 2009, Presidio Company purchased 95% of the
common stock of Succo Company for $494,000. On that date, Succo
Company's stockholders' equity consisted of the following:
Common stock $300,000
Other Contributed Capital $100,000
Retained Earnings $120,000
Total: $520,000
During 2017, Succo Company reported net income of $40,000 and
distributed dividends in the amount of $19,000. Succo Company's
retained earnings balance at the end of 2016 amounted to $160,000.
Presidio Company uses...
EXERCISE 5-2 End of the Year of Acquisition Workpaper Entries LO 1 LO 9 On January...
EXERCISE 5-2 End of the Year of Acquisition Workpaper Entries LO
1 LO 9
On January 1, 2020, Payne Corporation purchased a 75% interest
in Salmon Company for $585,000. A summary of Salmon Company’s
balance sheet on that date revealed the following: Book Value Fair
Value Equipment $525,000 $705,000 Other assets 150,000 150,000
$675,000 $855,000 Liabilities $ 75,000 $ 75,000 Common stock
225,000 Retained earnings 375,000 $675,000 The equipment had
an original life of 15 years and has a remaining...
Workpaper Entries and Consolidated Net Income for Two Years, Cost Method LO 6 LO 3 LO...
Workpaper Entries and Consolidated Net Income for Two Years,
Cost Method LO 6 LO 3 LO 5 On January 1, 2014, Palmero Company
purchased an 80% interest in Santos Company for $2,800,000, at
which time Santos Company had retained earnings of $1,000,000 and
capital stock of $500,000. On the date of acqui- sition, the fair
value of the assets and liabilities of Santos Company was equal to
their book value, except for prop- erty and equipment (net), which
had a...
Workpaper Entries and Consolidated Net Income for Two Years, Cost Method LO 6 LO 3 LO...
Workpaper Entries and Consolidated Net Income for Two Years,
Cost Method LO 6 LO 3 LO 5 On January 1, 2014, Palmero Company
purchased an 80% interest in Santos Company for $2,800,000, at
which time Santos Company had retained earnings of $1,000,000 and
capital stock of $500,000. On the date of acquisition, the fair
value of the assets and liabilities of Santos Company was equal to
their book value, except for property and equipment (net), which
had a fair value...
EXERCISE 4‐1 Parent Company Entries, Liquidating Dividend LO 2 Percy Company purchased 80% of the outstanding...
EXERCISE 4‐1
Parent Company Entries, Liquidating Dividend LO
2
Percy Company purchased 80% of the outstanding voting shares of
Song Company at the beginning of 2019 for $387,000. At the time of
purchase, Song Company's total stockholders' equity amounted to
$475,000. Income and dividend distributions for Song Company from
2019 through 2021 are as follows:
2019
2020
2021
Net income (loss)
$63,500
$52,500
($55,000)
Dividend distribution
25,000
50,000
35,000
Required:
Prepare journal entries on the books of Percy Company from...
EXERCISE 5-3 Allocation of Cost LO 2 Pace Company purchased 20,000 of the 25,000 shares of...
EXERCISE 5-3
Allocation of Cost LO 2
Pace Company purchased 20,000 of the 25,000 shares of Saddler
Corporation for $525,000. On January 3, 2019, the acquisition date,
Saddler Corporation’s capital stock and retained earnings account
balances were $500,000 and $100,000, respectively.
The following values were determined for Saddler Corporation on
the date of purchase:
Book Value
Fair Value
Inventory
$ 50,000
$ 70,000
Other current assets
200,000
200,000
Marketable securities
100,000
125,000
Plant and equipment
300,000
330,000
Required:
Prepare the...
Park Company purchased 90% of the stock of Salt Company on January 1, 2014, for $465,000,...
Park Company purchased 90% of the stock of
Salt Company on January 1, 2014, for $465,000,
an amount equal to $15,000 in excess of the
book value of equity acquired. This excess
payment relates to an undervaluation of Salt
Company’s land. On the date of purchase, Salt
Company’s retained earnings balance was
$50,000. The remainder of the stockholders’
equity consists of no-par common stock. During
2018, Salt Company declared dividends in the
amount of $10,000, and reported net income of...
Acquisition Cost, Equity Method, Eliminating Entries, Second Year Peak Entertainment acquires all of the stock of...
Acquisition Cost, Equity Method, Eliminating Entries,
Second Year
Peak Entertainment acquires all of the stock of Saddlestone Inc.
on January 1, 2020. In preparing to consolidate the trial balances
of Peak and Saddlestone at December 31, 2021 (two years after the
acquisition), you assemble the following information:
Date-of-acquisition information:
• Value of stock given up to acquire Saddlestone:
$20,000,000.
• Direct merger costs: $250,000.
• Saddlestone’s shareholders’ equity: $7,200,000, consisting of
capital stock, $2,000,000; retained earnings, $5,000,000;
accumulated other comprehensive...
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