Question

In: Accounting

The Nathan Company acquired all of the outstanding stock of Caleb Company on January 1, 2014...

The Nathan Company acquired all of the outstanding stock of Caleb Company on January 1, 2014 for P267,800 cash. Caleb had a book value of only P182,000 on that date. However, equipment (having an eight-year life) is undervalued by P52,000 on Caleb’s financial records. A building with a 20-year life was overvalued by P13,000. Subsequent to the acquisition, Caleb reported the following:

Net Income

Dividends Paid

2014

P 65,000

P 13,000

2015

78,000

52,000

2016

39,000

26,000

In accounting for this investment, Nathan has used the cost method. Selected accounts taken from the financial records of these two companies as of December 31, 2016, are as follows:

Nathan Company

Caleb Company

Revenues – Operating

P403,000

P135,200

Expenses

257,400

96,200

Equipment (net)

416,000

65,000

Building (net)

286,000

88,400

Ordinary share

377,000

65,000

Accumulated profits

533,000

208,000

Required:

Determine the following account balances as of December 31, 2016.

  1. Net Income Attributable to Equity Holders of the Parent
  2. Non-controlling Interest in Net Income of Subsidiary
  3. Consolidated Net Income
  4. Consolidated Equipment (net)
  5. Consolidated Buildings (net)
  6. Consolidated Goodwill (net)
  7. Consolidated Ordinary Shares
  8. Consolidated Accumulated Profits

Solutions

Expert Solution

1. Net income attributable to equity shareholders of parenf are:

Revenues - Operating expenses

P4,03,000 - P2,57,400= P1,45,600

Net Income attributable to equity shareholdera is P1,45,600

2. Non- Controlling interest would be 0 since Nathan has acquired all the outstanding shares of Caleb Company.

3. Considated net income = Net income of Caleb company + Net income of Nathan company

Consolidate net income= P39,000 i.e. ( P1,35,200 - P96,200) + P1,45,600 i.e. (P4,03,000 - P2,57,400)

=P1,84,600

4. Consildated equipment (net) = P4,16,000 + P65,000

= P4,81,000

5. Consolidated Buildings (net) = P2,86,000 + P88,400

= P3,74,400

6. Consolidated Goodwill (net)= Consideration paid by parent + Non controlling interest - fair value of subsidiary net identifiable assets

=P2,67,800 + 0 - P1,53,400

=P1,14,400

7. Consildated ordinary shares = P4,42,000

8. Consolidated accumulated profits= P5,33000 + P2,08000

= P7,41,000

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2014, for $574,000 in...
Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2014, for $574,000 in cash. Annual excess amortization of $12,000 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $400,000, and Rambis reported a $200,000 balance. Herbert reported internal net income of $40,000 in 2014 and $50,000 in 2015 and declared $10,000 in dividends each year. Rambis reported net income of $20,000 in 2014 and $30,000 in 2015 and declared $5,000 in...
On January 1, 2014, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing,...
On January 1, 2014, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,600,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $910,000, retained earnings of $460,000, and a noncontrolling interest fair value of $400,000. Corgan attributed the excess of fair value over Smashing’s book value to various covenants with a 20-year life. Corgan uses the equity method to account for its investment in Smashing.      During...
On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a...
On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $169,200. Ship's net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiary's identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Ship's property, plant, and equipment exceeded its book value by $18,000....
On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a...
On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $153,000. Ship's net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiary's identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Ship's property, plant, and equipment exceeded its book value by $18,000....
On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a...
On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Inc., a Norwegian company, at a cost of $162,000. Ship’s net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the book and fair values of the Norwegian subsidiary’s identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and patents acquired. The fair value of Ship’s property, plant, and equipment exceeded its book value by $18,000....
On January 1, 20X8, Pace Company acquired all of the outstanding stock of Spin PLC, a...
On January 1, 20X8, Pace Company acquired all of the outstanding stock of Spin PLC, a British Company, for $350,000. Spin's net assets on the date of acquisition were 250,000 pounds (£). On January 1, 20X8, the book and fair values of the Spin's identifiable assets and liabilities approximated their fair values except for property, plant, and equipment and trademarks. The fair value of Spin's property, plant, and equipment exceeded its book value by $25,000. The remaining useful life of...
Exceed, a US company, on January 1, 2019 acquired all the outstanding common stock of Silver...
Exceed, a US company, on January 1, 2019 acquired all the outstanding common stock of Silver Company, which is located in a country whose currency is the peso. The peso is the functional currency of Silver. For 2019, exchange rates for the peso were as follows: Peso 1 = Jan. 1 $0.39 Dec. 31 $0.32 Average for the year $0.35          Notes: Read carefully and follow strictly so that Bb can grade you correctly! 1. Use comma in numbers, one...
Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $274,700 in...
Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $274,700 in cash. Jasmine had a book value of only $204,900 on that date. However, equipment (having an eight-year remaining life) was undervalued by $71,200 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $15,400. Subsequent to the acquisition, Jasmine reported the following: Net Income Dividends Declared 2016 $ 73,800 $ 10,000 2017 74,500 40,000 2018 39,000 20,000 In accounting for...
11) Harry Inc. acquired all of the outstanding common stock of Rose Company on January 1,...
11) Harry Inc. acquired all of the outstanding common stock of Rose Company on January 1, 2020. Annual amortization of $25,000 resulted from this transaction. On the date of the acquisition, Harry reported retained earnings of $550,000 while Rose reported a $260,000 balance for retained earnings. Harry reported net income of $105,000 in 2020 and $75,000 in 2021, and paid dividends of $20,000 each year. Rose reported net income of $28,000 in 2020 and $39,000 in 2021, and paid dividends...
Fesler Inc. acquired all of the outstanding common stock of Pickett Company on January 1, 2017....
Fesler Inc. acquired all of the outstanding common stock of Pickett Company on January 1, 2017. Annual amortization of $22,000 resulted from this transaction. On the date of the acquisition, Fesler reported retained earnings of $520,000 while Pickett reported a $240,000 balance for retained earnings. Fesler reported net income of $100,000 in 2017 and $68,000 in 2018, and paid dividends of $25,000 in dividends each year. Pickett reported net income of $24,000 in 2017 and $36,000 in 2018, and paid...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT