Question

In: Accounting

Assume that Brown Company owns 100% of Schroeder Corporation. Schroeder reports Stockholders’ Equity of $500,000. The...

Assume that Brown Company owns 100% of Schroeder Corporation. Schroeder reports Stockholders’ Equity of $500,000. The Equity investment was acquired at book value (i.e., no AAP). Schroeder sells a 10% interest to outsiders for $115,000. The entry made by Brown as a result of the sale of stock by Schroeder includes:

Solutions

Expert Solution

Difference between the book value and sales proceeds is adjusted to the brown company's owner's equity because control is maintained after the sale transaction.
Schroeder reports Stockholders’ Equity of $500,000 $        500,000
Multiply: Sale of interest 10.00%
Book value of share of investment $          50,000
10% investment sold at value of $        115,000
Less: Book value of share of investment $        (50,000)
Less: 10% Non controlling share in value of sold $        (11,500)
Adjustment to the parent's owners' equity (APIC) $          53,500
Adjustment to the parent's owners' equity (APIC) credited to $          53,500

ekkarill92 answered 6 months ago
Next > < Previous

Related Solutions

At the beginning of 2020, Brown Corporation had the following stockholders’ equity balances in its general...
At the beginning of 2020, Brown Corporation had the following stockholders’ equity balances in its general ledger: Common Stock, $10 Par Value $2,500,000 Paid-In Capital in Excess of Par: Common 1,500,000 Paid-In Capital, Treasury Stock 10,000 Paid-In Capital, Stock Options 40,000 Retained Earnings 3,000,000 Treasury Stock (10,000 shares) (180,000)         Total Stockholders’ Equity $6,870,000 The paid-in capital from stock options relates to options granted on 1/1/18 to the CEO as incentive compensation. As of 1/1/20, the remaining expected benefit period is...
Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:
  Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:   Common stock—$20 par value, 100,000 shares authorized,50,000 shares issued and outstanding $ 1,000,000 Paid-in capital in excess of par value, common stock   80,000 Retained earnings   430,000 Total stockholders' equity $ 1,510,000   In year 2017, the following transactions affected its stockholders’ equity accounts. Jan.   1   Purchased 4,500 shares of its own stock at $20 cash per share. Jan.   5  ...
Assume Dexter Corporation owns 1,000 shares (10%) of the 10,000 outstanding shares of Brown. Now assume...
Assume Dexter Corporation owns 1,000 shares (10%) of the 10,000 outstanding shares of Brown. Now assume Brown Corporation earns $720,000 and pays cash dividends of $240,000 during 2021. What amount should Dexter show in the investment account at December 31, 2021 if the beginning of the year balance in the account was $960,000? $1,176,000 $960,000 $1,104,000 $1,440,000
Kohler Corporation reports the following components of stockholders equity on December 31, 2013: Common Stock- $10...
Kohler Corporation reports the following components of stockholders equity on December 31, 2013: Common Stock- $10 par value, 100,000 shares authorized,            40,000 shares issued and outstanding…………………………….           $400,000 Paid-in capital in excess of par value, common stock …………………..     60,000 Retained Earnings …………………………………………………………..   270,000 Total Stockholders’ Equity ………………………………………………… $730,000 In 2014, the following transactions affected its stockholders’ equity accounts. Jan. 1: Purchased 4,000 shares of its own stock at $20 cash per share. Jan. 5: Directors declared a $2 per share...
At December 31, 20X7, Big Corporation reports the following stockholders' equity on its balance sheet. Big...
At December 31, 20X7, Big Corporation reports the following stockholders' equity on its balance sheet. Big uses the cost method for treasury stock accounting. The company held no stock in treasury at this date. Preferred Stock, 8%, $20 par, cumulative, non-participating $3,000,000 Common Stock, $5 par 10,000,000 Paid-in Capital in Excess of Par-Preferred 200,000 Paid-in Capital in Excess of Par-Common 27,000,000 Retained Earnings 4,500,000 During 20X8, the following transactions affected stockholders' equity: Jan.    1     30,000 shares of preferred stock issued...
A Corporation had the following stock as part of its stockholders equity: -7%, $100 par Cumulative...
A Corporation had the following stock as part of its stockholders equity: -7%, $100 par Cumulative Preferred Stock, 45,000 shares authorized, 12,000 shares issued, 10,000 shares outstanding. - $8 par, Common Stock, 250,000 shares authorized, 140,000 shares issued, 110,000 shares outstanding. No dividends were declared in the past two years. In the current year, $300,000 is declared as dividend. The Dividend received by common shareholders will be: a. $90,000 b. $0 c. $216,000 d. $48,000
Rodger owns 100% of the shares in Trevor Inc., a C corporation. Assume the following for...
Rodger owns 100% of the shares in Trevor Inc., a C corporation. Assume the following for the current year: Trevor Inc.’s pre-tax income = $25,500 Percentage of after-tax earnings retained by Trevor Inc. = 0% (i.e. all after-tax earnings distributed) Rodger’s dividend tax rate = 15% Given these assumptions, how much cash does Rodger have from the dividend after all taxes have been paid? (Round your intermediate calculations and final answer to whole number dollar amount.)
Hylie, a U.S. corporation, owns 100% of Frosan, a French firm. Assume that the dollar is...
Hylie, a U.S. corporation, owns 100% of Frosan, a French firm. Assume that the dollar is the functional currency, although the books are kept in euros. Required: What currency exchange rate would be used to re-measure Frosan's balance sheet into U.S. dollars? Choose from current, simple average, weighted average, or historical. a. Cash _____________________ b. Accounts Receivable _____________________ c. Inventory, carried at cost _____________________ d. Equipment _____________________ e. Accumulated Depreciation _____________________ f. Bonds Payable _____________________ g. Common Stock _____________________ h....
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 600,000 Paid-in capital in excess of par value-Preferred stock 24,000 Paid-in capital in excess of par value-Common stock 360,000 Retained earnings 325,000 Total Stockholders' Equity $1,809,000 The following transactions, among others, occurred during the...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 600,000 Paid-in capital in excess of par value-Preferred stock 24,000 Paid-in capital in excess of par value-Common stock 360,000 Retained earnings 325,000 Total Stockholders' Equity $1,809,000 The following transactions, among others, occurred during the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT