Beta Company acquired 100 percent of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of $150,000. Immediately prior to the acquisition, Beta reported total assets of $500,000, liabilities of $280,000, and stockholders' equity of $220,000. At that date, Standard Video reported total assets of $400,000, liabilities of $250,000, and stockholders' equity of $150,000. Included in Standard's liabilities was an account payable to Beta in the amount of $20,000, which Beta included in its accounts receivable.

12.

Required information

Based on the preceding information, what amount of total assets did Beta report in its balance sheet immediately after the acquisition?

$500,000

$650,000

$750,000

$900,000

13.

Required information

Based on the preceding information, what amount of total assets was reported in the consolidated balance sheet immediately after acquisition?

$650,000

$880,000

$920,000

$750,000

14.

Required information

Based on the preceding information, what amount of total liabilities was reported in the consolidated balance sheet immediately after acquisition?

$500,000

$530,000

$280,000

$660,000

15.

Required information

Based on the preceding information, what amount of stockholders' equity was reported in the consolidated balance sheet immediately after acquisition?

$220,000

$150,000

$370,000

$350,000

1. Pointure Company acquired 80 percent of Souby Company’s outstanding common stock for $664,000 on January 1, 2019, when the book value of Souby’s net assets was equal to $830,000. Pointure uses the equity method to account for investments. Trial Balance items for Pointure and Souby as of December 31, 2019, are as follows:

1. Prepare the journal entries on Pointure’s books for the acquisition of Souby on January 1, 2019, as well as any normal equity method entry(ies) related to the investment in Souby Company during 2019.

2. Give the elimination entry or entries needed to prepare consolidated Financial statements immediately following the business combination

3. Prepare a consolidation worksheet for 2019 in good form.

On January 1, 2016, Monica Company acquired 70 percent of Young Company’s outstanding common stock for $770,000. The fair value of the noncontrolling interest at the acquisition date was $330,000.

Young reported stockholders’ equity accounts on that date as follows:

In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $80,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years.

During the subsequent years, Young sold Monica inventory at a 40 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following:

In addition, Monica sold Young several pieces of fully depreciated equipment on January 1, 2017, for $57,000. The equipment had originally cost Monica $92,000. Young plans to depreciate these assets over a six-year period.

In 2018, Young earns a net income of $190,000 and declares and pays $60,000 in cash dividends. These figures increase the subsidiary's Retained Earnings to a $950,000 balance at the end of 2018. During this same year, Monica reported dividend income of $42,000 and an investment account containing the initial value balance of $770,000. No changes in Young's common stock accounts have occurred since Monica's acquisition.

1. Prepare the 2018 consolidation worksheet entries for Monica and Young.

2. Compute the net income attributable to the noncontrolling interest for 2018.

Tangerine Company acquired P3,000,000 face value 10% bonds as financial asset at amortized cost, on June 30, 2018 for P3,210,000, excluding brokerage of P150,000 and accrued interest. The bonds pay interest semiannually on May 1 and November 1. The remaining life of the bonds on the date of acquisition is 3 years. Straight-line amortization is employed. On December 31, 2018, the bonds were sold for P3,500,000 plus accrued interest. What is the gain on the sale of the bonds? Show a detailed computation.

Month of April

Required:

1. Prepare an adjusted trial balance for the month of April.

2. Prepare an income statement, statement of retained earnings, and balance sheet for April.

The Coca-Cola Company owns 40 percent of the voting stock of Coca-Cola FEMSA, acquired at book value. Assume that Coca-Cola FEMSA reports income of $6 million for 2013. Coca-Cola FEMSA regularly sells canned beverages to Coca-Cola at a markup of 42 percent on cost. During 2013 Coca-Cola FEMSA's sales to Coca-Cola totaled $30 million. Coca-Cola's January 1, 2013, inventories include $1,620,000 purchased from Coca-Cola FEMSA. Coca-Cola's December 31, 2013, inventories include $1,458,000 purchased from Coca-Cola FEMSA. Prepare the 2013 journal entry on Coca-Cola's books to recognize its income from Coca-Cola FEMSA under the equity method.

Play Company acquired 70 percent of Screen Corporation's shares on December 31, 20x5, at underlying book value of $98,000. At the date, fair value of the noncontrolling interest was equal to 30 percent of the book value of Screen Corporation. Screen's balance sheet on January 1, 20x8, contained the following balances:

Cash 50,000

Accounts Receivable 35,000

Inventory 40,000

Building/Equipment 300,000

Less:Accumulated Depreciation (100,000)

Total Assets 325,000

Accounts Payable 40,000

Bonds Payable     100,000

Common Stock 50,000

Additional Paid-In Capital 75,000

Retained Earnings 60,000

Total Liabilities and Equities 325,000

On January 1, 20x8, Screen acquired 5,000 of its own $2 par value common shares from Nonaffiliated Corporation for $6 per share.

1. Based on the preceding information, what is the increase in the book value of the equity attributable to the parent as a result of the repurchase of shares by Screen Corporation?

2. Based on the preceding information, what will the journal entry to be recorded on Play Company's books to recognize the change in the book value of the shares it holds?

On January 1, 2017, Stream Company acquired 27 percent of the outstanding voting shares of Q-Video, Inc., for $716,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.6 million and $800,000, respectively. A customer list compiled by Q-Video had an appraised value of $306,000, although it was not recorded on its books. The expected remaining life of the customer list was 5 years with a straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill.

Q-Video generated net income of $304,000 in 2017 and a net loss of $112,000 in 2018. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders.

During 2017, Q-Video sold inventory that had an original cost of $104,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2017, and the remainder was sold during 2018. In 2018, Q-Video sold inventory to Stream for $170,000. This inventory had cost only $136,000. Stream resold $100,000 of the inventory during 2018 and the rest during 2019.

For 2017 and then for 2018, compute the amount that Stream should report as income from its investment in Q-Video in its external financial statements under the equity method. (Enter your answers in whole dollars and not in millions. Do not round intermediate calculations.)

1. Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $319,500 on January 1, 2019, when the book value of Snoopy’s net assets was equal to $355,000. Peanut uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 2019:

1. Prepare any equity method journal entry(ies) related to the investment in Snoopy Company during 2019.
2. Prepare a consolidation worksheet for 2019 in good form

Peanut Company acquired 75 percent of Snoopy Company's stock at underlying book value on January 1, 20X8. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Snoopy Company. Snoopy Company reported shares outstanding of $350,000 and retained earnings of $100,000. During 20X8, Snoopy Company reported net income of $60,000 and paid dividends of $3,000. In 20X9, Snoopy Company reported net income of $90,000 and paid dividends of $15,000. The following transactions occurred between Peanut Company and Snoopy Company in 20X8 and 20X9:

Snoopy Co. sold equipment to Peanut Co. for a $42,000 gain on December 31, 20X8. Snoopy Co. had originally purchased the equipment for $140,000 and it had a carrying value of $28,000 on December 31, 20X8. At the time of the purchase, Peanut Co. estimated that the equipment still had a seven-year remaining useful life.

Peanut sold land costing $90,000 to Snoopy Company on June 28, 20X9, for $110,000.

Required:

Give all consolidating entries needed to prepare a consolidation worksheet for 20X9 assuming that Peanut Co. uses the cost method to account for its investment in Snoopy Company.