Question

In: Accounting

1. P Co. purchased 60% of the S Co. for $720,000 on 1/1/16. S Co. had...

1. P Co. purchased 60% of the S Co. for $720,000 on 1/1/16. S Co. had $600,000 of common stock and $300,000 of retained earning on that date. The following values were determinded for the S Co. on the date of purchase. Inventory (book value) $80,000 . (fair value) $100,000 Land . (bv) $700,000 (fv)$900,000 Equipment (bv) $540,000 . (fv)$550,000 Prepare the 1/16/16 workpaper entries to eliminate the investment account and to allocate the difference between the cost and book value. 2. Referring to the problem above, if the equipment has a remaining life of 5 years, preapre the workpaper entry to allocate the difference between cost and book value for each of 12/31/16 and 12/31/17. Be sure to lable the years.

Solutions

Expert Solution


Related Solutions

On August 1, 2011, Bonnie purchased $21,500 of Huber Co.'s 18%, 16-year bonds at face value....
On August 1, 2011, Bonnie purchased $21,500 of Huber Co.'s 18%, 16-year bonds at face value. Huber Co. has paid the semiannual interest due on the bonds regularly. On August 1, 2019, market rates of interest had fallen to 16%, and Bonnie is considering selling the bonds. Use the present value tables (Table 6-4 and Table 6-5) (Round your PV factors to 4 decimal places.) Required: Calculate the market value of Bonnie’s bonds on August 1, 2019. (Round your answer...
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 $98,000 at the date of combination. The remainder...
P Co and S Co The following are the draft statement of Financial Position of P...
P Co and S Co The following are the draft statement of Financial Position of P Co and its subsidiary S Co as at 31st December 2019 are given below:                                                            P Co S Co Assets ‘$’ ‘$’ Non –current assets Tangible assets 350,000 160,000 Investments: in S Co 154,000 Current assets Inventories 40,000 20,000 Trade receivables 100,000 85,000 Cash and cash equivalents 20,000 15,000 Total Assets 664,000 280,000 Equity and liabilities Share capital: Ordinary $1 shares 350,000 100,000 Retained...
On January 1, 2018, Co. P acquired 90% of Co. S for $550,000, plus $15,000 in...
On January 1, 2018, Co. P acquired 90% of Co. S for $550,000, plus $15,000 in acquisition costs. On the date of acquisition, Co. S had the following balance sheet: Assets Liabilities & Equity Accounts Receivable 150,000 Current Liabilities 260,000 Inventory 180,000 Bonds Payable 250,000 Land 200,000 Common Stock, $1 Par 400,000 Buildings 550,000 PIC In Excess of Par 70,000 Acc. Deprecition (Bldg) (100,000) Retained Earnings 300,000 Equipment 400,000 Acc. Depreciation (Equip) (120,000) Goodwill 20,000 Total Assets 1,280,000 Total Liab....
P acquired 75% of the shares in S on 1 January 20X7 when S had retained...
P acquired 75% of the shares in S on 1 January 20X7 when S had retained earnings of £15,000. The market price of S’s shares at the date of acquisition was £1.60. P values non-controlling interest at fair value at the date of acquisition. Goodwill is not impaired. P S Property, plant and equipment 80,000 60,000 Shares in S 68,000 Total Non Current Assets 148,000 60,000 Current Assets 52,000 35,000 Total Assets 200,000 95,000 Share capital - £1 shares 100,000...
SPY and XIU are ETFs tracking the S&P 500 and S&P/TSX 60 index, which are often...
SPY and XIU are ETFs tracking the S&P 500 and S&P/TSX 60 index, which are often used as proxies for the U.S. and Canadian stock markets, respectively. From a set of their historical data, the annual expected returns and standard deviations of those two ETFs and their covariance are estimated as follows: SPY: E(r)= 0.15 σ=0.28 XIU: E(r)= 0.18 σ=0.32 Covariance between SPY and XIU = 0.0618 Suppose that you have $10 million to invest for one year and you...
Question 8 On January 1, 2019, P Co. acquired 80 percent of S Co. for $400,000...
Question 8 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....
On 1 July 2020 S Ltd acquired 60% of the issued shares of P Ltd. During...
On 1 July 2020 S Ltd acquired 60% of the issued shares of P Ltd. During the year ended 30 June 2021 the following intra group transactions occurred: Sales of inventory: P Ltd to S Ltd $200,000 (Cost to P Ltd $150,000) Intragroup inventory on hand 30 June 2021: S Ltd held 40% of the inventory acquired from P Ltd Intragroup sale of equipment An item of equipment originally acquired by S Ltd on 1 July 2018 at a cost...
Question 16 Day Company purchased a patent on January 1, 2012 for $600,000. The patent had...
Question 16 Day Company purchased a patent on January 1, 2012 for $600,000. The patent had a remaining useful life of 10 years at that date. In January of 2013, Day successfully defends the patent at a cost of $270,000, extending the patent's life to 12/31/24. What amount of amortization expense would Kerr record in 2013? Question 16 options: A. $60,000 B. $67,500 C. $72,500 D. $90,000 Question 17 Riley Co. incurred the following costs during 2013: Significant modification to...
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The...
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value and fair value of the assets and liabilities of S company on that day were:                                                 BOOK VALUE                     FAIR VALUE Current assets                   $700,000                              700,000 Equipment                         1,600,000                             2,000,000 Land                                      500,000                                 700,000 Deferred charge               400,000                                 400,000 Total Assets                       3,200,000                             3,800,000 Less: Liabilities                 (700,000)                             (700,000) Net Assets:                         2,500,000                             3,100,000 The equipment had a remaining useful life of 8 years on January 1, 2015 and the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT