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.

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.)

Identifiable Intangibles and Goodwill, U.S. GAAP

International Foods, a U.S. company, acquired two companies in 2013. As a result, its consolidated financial statements include the following acquired intangibles:

Goodwill was assigned to the following reporting units:

It is now December 31, 2014, the end of International Foods' accounting year. No impairment losses were reported on any intangibles in 2013. Assume that International Foods bypasses step 0 of the goodwill impairment test. The following information is available on December 31, 2014:

Compute 2014 amortization expense and impairment losses on the above intangibles, following U.S. GAAP.

Enter answers in millions, using decimal places when applicable.

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.

On January 1, 2017, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $918,000. The 10 percent noncontrolling interest had an assessed fair value of $102,000 on that date. Any acquisition-date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years.

On the same date, Yarrow acquired an 80 percent interest in Stookey Company for $520,000. At the acquisition date, the 20 percent noncontrolling interest fair value was $130,000. Any excess fair value was attributed to a fully amortized copyright that had a remaining life of 10 years. Although both investments are accounted for using the initial value method, neither Yarrow nor Stookey have distributed dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40 percent of its separate company operating earnings. Reported income totals for 2017 follow:

Following are the 2018 financial statements for these three companies. Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting to $124,000 (2017) and $155,000 (2018). These transactions include the same markup applicable to Stookey's outside sales. In each year, Yarrow carried 20 percent of this inventory into the succeeding year before disposing of it. An effective tax rate of 40 percent is applicable to all companies. All dividend declarations are paid in the same period.

Note: Parentheses indicate a credit balance.

Prepare the business combination's 2018 consolidation worksheet; ignore income tax effects.

Determine the amount of income tax for Travers and Yarrow on a consolidated tax return for 2018.

Determine the amount of Stookey's income tax on a separate tax return for 2018.

Based on the answers to requirements (b) and (c), what journal entry does this combination make to record 2018 income tax?

On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $504,000. Birch reported a $510,000 book value and the fair value of the noncontrolling interest was $126,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $160,000 when Cedar had a $164,000 book value and the 20 percent noncontrolling interest was valued at $40,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned to a trade name with a 30-year life. These companies report the following financial information. Investment income figures are not included.

On January 1, 2016, Monica Company acquired 80 percent of Young Company’s outstanding common stock for $728,000. The fair value of the noncontrolling interest at the acquisition date was $182,000. 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 $70,000. 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 30 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 $38,000. The equipment had originally cost Monica $54,000. Young plans to depreciate these assets over a 5-year period.

In 2018, Young earns a net income of $160,000 and declares and pays $35,000 in cash dividends. These figures increase the subsidiary's Retained Earnings to a $760,000 balance at the end of 2018.

Monica employs the equity method of accounting. Hence, it reports $119,760 investment income for 2018 with an Investment account balance of $921,200. Under these circumstances, prepare the worksheet entries required for the consolidation of Monica Company and Young Company. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Prepare Entry *G to recognize upstream intra-entity inventory gross profit deferred from the previous year.

2. Prepare Entry *TA to return the equipment accounts to beginning book value based on historical cost.

3. Prepare Entry *C to adjust the parent retained earnings for the subsidiary's increase in book value.

4. Prepare Entry S to eliminate the stockholders' equity accounts of the subsidiary and recognize the noncontrolling interest.

5. Prepare Entry A to recognize the amount paid within acquisition price for buildings and the franchise agreement.

6. Prepare Entry I to eliminate the intra-entity income accrual.

7. Prepare Entry D to eliminate the intra-entity dividend transfers.

8. Prepare Entry E to remove the intra-entity inventory transfers made during the current year.

9. Prepare Entry TI to defer the intra-entity gross profit on the 2018 intra-entity inventory transfers.

10. Prepare Entry G to defer the intra-entity gross profit on the 2018 intra-entity inventory transfers.

11. Prepare Entry ED to remove the current year depreciation on the transferred item since its historical cost has been fully depreciated.

On January 1, 20X8, Transport Corporation acquired 75 percent interest in Steamship Company for $300,000. Steamship is a Norwegian company. The local currency is the Norwegian kroner (NKr). The acquisition resulted in an excess of cost-over-book value of $25,000 due solely to a patent having a remaining life of 5 years. Transport uses the fully adjusted equity method to account for its investment. Steamship's December 31, 20X8, trial balance has been translated into U.S. dollars, requiring a translation adjustment debit of $8,000. Steamship's net income translated into U.S. dollars is $35,000. It declared and paid an NKr 20,000 dividend on June 1, 20X8. Relevant exchange rates are as follows:

Assume the kroner is the functional currency.

1. Based on the preceding information, in the journal entry to record the receipt of dividend from Steamship,

A. Investment in Steamship Company will be credited for $3,450.
B. Cash will be debited for $3,300.
C. Investment in Steamship Company will be credited for $4,000.
D. Cash will be debited for $3,600.

2. Based on the preceding information, in the journal entry to record parent's share of subsidiary's translation adjustment:

A. Other Comprehensive Income — Translation Adjustment will be debited for $8,000.
B. Other Comprehensive Income — Translation Adjustment will be credited for $6,000.
C. Investment in Steamship Company will be credited for $6,000.
D. Investment in Steamship Company will be debited for $8,000.

3. Based on the preceding information, what amount of translation adjustment is required for increase in differential?

A. $3,000
B. $5,500
C. $4,500
D. $5,000

4. Based on the preceding information, in the journal entry to record the amortization of the patent for 20X8 on the parent's books, Investment in Steamship Company will be debited for:

A. $5,000
B. $5,500
C. $4,500
D. $3,000

Please provide calculations! Thank you!