In: Accounting
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 to a trade name with a 30-year life. |
These companies report the following financial information. Investment income figures are not included. |
2012 |
2013 |
2014 |
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Sales: |
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Aspen Company |
$ 602,500 |
$ |
682,500 |
$ |
787,500 |
|
Birch Company |
297,500 |
306,500 |
454,400 |
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Cedar Company |
Not available |
254,600 |
303,400 |
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Expenses: |
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Aspen Company |
$ 417,500 |
$ |
497,500 |
$ |
670,000 |
|
Birch Company |
240,000 |
234,000 |
372,500 |
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Cedar Company |
Not available |
241,000 |
270,000 |
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Dividends declared: |
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Aspen Company |
$ 15,000 |
$ |
40,000 |
$ |
50,000 |
|
Birch Company |
10,000 |
20,000 |
20,000 |
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Cedar Company |
Not available |
2,000 |
10,000 |
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Assume that each of the following questions is independent: |
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A If all companies use the equity method for internal reporting purposes, what is the December 31, 2013, balance in Aspen's Investment in Birch Company account? B |
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What is the consolidated net income for this business combination for 2014? C What is the net income attributable to the noncontrolling interest in 2014?
D
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