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In: Accounting
Exercise 4-8 On May 1, 2015, Peters Company purchased 80% of the common stock of Smith...
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Solutions
ekkarill92 answered 1 year agoRelated Solutions
Exercise 4-8 On May 1, 2015, Peters Company purchased 80% of the common stock of Smith...
Exercise 4-8
On May 1, 2015, Peters Company purchased 80% of the common stock of
Smith Company for $53,100. Additional data concerning these two
companies for the years 2015 and 2016 are:
2015
2016
Peters
Smith
Peters
Smith
Common stock
$103,300
$27,200
$103,300
$27,200
Other contributed capital
38,900
9,000
38,900
9,000
Retained earnings, 1/1
72,100
10,100
115,800
53,000
Net income (loss)
58,300
44,700
39,400
(5,300
)
Cash dividends (11/30)
14,600
1,800
4,700
—0—
Any difference between book value and the...
On May 1, 2020, Peters Company purchased 80% of the common stock of Smith Company for...
On May 1, 2020, Peters Company purchased 80% of the common stock
of Smith Company for $50,000. Additional data concerning these two
companies for the years 2020 and 2021 are:
2020
2021
Peters
Smith
Peters
Smith
Common stock
$100,000
$25,000
$100,000
$25,000
Other contributed capital
40,000
10,000
40,000
10,000
Retained earnings, 1/1
80,000
10,000
129,000
53,000
Net income (loss)
64,000
45,000
37,500
(5,000)
Cash dividends (11/30)
15,000
2,000
5,000
—0—
Any difference between book value and the value implied by...
On January 1, 2015, Pepper Company purchases 80% of the common stock of Salty Company for...
On January 1, 2015, Pepper Company purchases 80% of the common
stock of Salty Company for $270,000.
On this date, Salty has total owners' equity of $300,000.
The excess of cost over book value is due to goodwill.
For tax purposes, goodwill is amortized over 15 years.
During 2015, Pepper appropriately accounts for its investment in
Salty using the simple equity method.
During 2015, Pepper sells merchandise to Salty for $50,000, of
which $10,000 is held by Salty on December...
On January 1, 2014, Paterson Company purchased 70% of the common stock of Smith Company for...
On January 1, 2014, Paterson Company purchased 70% of the common
stock of Smith Company for $420,000. At that time, Smith’s
stockholders’ equity consisted of $80,000 of Common stock, $60,000
of Other contributed capital, and $240,000 of Retained earnings.
Any difference between implied and book value relates to Smith’s
land. Paterson uses the cost method to record its investment in
Smith. Its fiscal year ends on December 31. Additional information
for both companies for 2020 follows:
Paterson
Smith
Common stock...
Prout Company owns 80% of the common stock of Sexton Company. The stock was purchased for...
Prout Company owns 80% of the common stock of Sexton Company.
The stock was purchased for $1,600,000 on January 1, 2017, when
Sexton Company's retained earnings were $800,000. On January 1,
2019, Prout Company sold fixed assets to Sexton Company for
$360,000. These assets were originally purchased by Prout Company
for $400,000 on January 1, 2009, at which time their estimated
depreciable life was 25 years. The straight‐line method of
depreciation is used.
On December 31, 2020, the trial balances...
On January 1, 2011, Parent Company Purchased 80% of the common stock of Subsidiary Company for...
On January 1, 2011, Parent Company Purchased 80% of the common
stock of Subsidiary Company for $402,000. On this date, Subsidiary
had total owners' equity of $440,000. Land was undervalued by
$20,000, Equipment with a 5-year remaining life was undervalued by
$15,000 and inventory was undervalued by $10,000. Any other excess
of cost over book value is due to goodwill. Parent accounts for its
investment in Subsidiary using the simple equity method.
1) Prepare the Determination and Distribution of Excess...
On January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for...
On January 1, 2020, Parent Company purchased 80% of the common
stock of Subsidiary Company for $320,000.
On this date, Subsidiary had common stock, other paid-in
capital, and retained earnings of $40,000, $120,000, and $190,000,
respectively.
Net income and dividends for Subsidiary Company were $50,000
and $10,000, respectively.
Parent Company has used the simple equity method for recording
the Subsidiary income and dividends.
On January 1, 2020, the only tangible assets of Subsidiary that
were undervalued were inventory and equipment....
36) On January 1, 2017, Pioneer Company purchased 80% of the common stock of Shipley Company...
36) On January 1, 2017, Pioneer Company purchased 80% of the
common stock of Shipley Company for $600,000. At that time,
Shipley’s stockholders’ equity consisted of the following:
Common stock $220,000
Other contributed capital 90,000
Retained earnings 320,000
During 2017, Shipley distributed a dividend in the amount of
$120,000 and at year-end reported a $320,000 net income. Any
difference between implied and book value relates to subsidiary
goodwill. Pioneer Company uses the equity method to record its
investment. No impairment...
On December 31, 2015, Aron Company purchases 80% of the common stock of Shield Company for...
On December 31, 2015, Aron Company purchases 80% of the common
stock of Shield Company for $320,000 cash. On this date, any excess
of cost over book value is attributed to accounts with fair values
that differ from book values. These accounts of Shield Company have
the following fair values:
Cash - $40,000
A/R - 30,000
Inventory - 140,000
Land - 45,000
Buildings & equipment - 225,000
Copyrights - 25,000
Current liabilities - 65,000
Bonds payable - 105,000
The following...
On January 1, 2015, Pack Co. acquired 80% of the common stock of Sack Co. by...
On January 1, 2015, Pack Co. acquired 80% of the common stock of
Sack Co. by paying $80,000. On that date Sack' land was undervalued
$3,800 and its Buildings (7 yr life) were undervalued $4,200 and
its equipment (5 Yr life) were undervalued $2,000. A. Show the
elements making of the cost of the investment. (Hint: Set up a
schedule showing the controlling and non-controlling interest in
the individual elements) B. Prepare consolidation entry S to
eliminate the sub’s equity...
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