14) On October 1, 2012, Peacock Inc. acquired 80% of the outstanding common stock of Shade Co. for $480,000. Both the book value and the fair market value of the subsidiary's net assets on that date were equal to $600,000. During 2012 Shade reports revenue of $125,000 and expenses of $50,000, both of which occur evenly throughout the year. On a consolidated income statement for the year ended December 31, 2012, what should be reported as the non-controlling interest in Shade's net income and as pre-acquisition income? Select one: O a. $56,250 and $18,750 O b. $15,000 and $11,250 O c. $56,250 and $3,750 Od. $15,000 and $5,000
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- . On January 1, 2011, Payne Corp. purchased 70% of Shayne Corp.'s P10 par common stock for P900,000. On this date, the carrying amount of Shayne's net assets was P1,000,000. The fair values of Shayne's identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net), which were P200,000 in excess of the carrying amount. For the year ended December 31, 2011, Shayne had net income of P150,000 and paid cash dividends totaling P90,000. Excess attributable to plant assets is amortized over 10 years. In the December 31, 2011, consolidated balance sheet, non-controlling interest on a full-fair value basis should be reported atOn January 1, 2018, Sledge had common stock of $120,000 and retained earnings of $260,000. During that year, Sledge reported sales of $130,000, cost of goods sold of $70,000, and operating expenses of $40,000.On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge’s outstanding voting stock. At that date, $60,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $20,000 to an undervalued building (with a 10-year remaining life).In 2017, Sledge sold inventory costing $9,000 to Percy for $15,000. Of this merchandise, Percy continued to hold $5,000 at year-end. During 2018, Sledge transferred inventory costing $11,000 to Percy for $20,000. Percy still held half of these items at year-end.On January 1, 2017, Percy sold equipment to Sledge for $12,000. This asset originally cost $16,000 but had a January 1, 2017, book value of $9,000. At the time of transfer, the equipment’s remaining life was estimated to be five years.Percy has…On January 1, 2018, Sledge had common stock of $270,000 and retained earnings of $410,000. During that year, Sledge reported sales of $280,000, cost of goods sold of $145,000, and operating expenses of $55,000. On January 1, 2016, Percy, Inc., acquired 80 percent of Sledge's outstanding voting stock. At that date, $75,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $35,000 to an undervalued building (with a 10-year remaining life). In 2017, Sledge sold inventory costing $15,000 to Percy for $30,000. Of this merchandise, Percy continued to hold $9,000 at year-end. During 2018, Sledge transferred inventory costing $15,750 to Percy for $35,000. Percy still held half of these items at year-end. On January 1, 2017, Percy sold equipment to Sledge for $19,500. This asset originally cost $31,000 but had a January 1, 2017, book value of $12,000. At the time of transfer, the equipment's remaining life was estimated to be five years.…
- At the beginning of the current year, Occidental Company purchased 40% of the outstanding ordinary shares of Manapla Company for ₱3,500,000 when the net assets of Manapla amounted to ₱7,000,000. At acquisition date, the carrying amount of the identifiable assets and liabilities of Manapla were equal to their fair value, except for equipment for which the fair value was ₱1,500,000 greater than carrying amount and inventory whose fair value was ₱500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. Manapla Company reported net income of ₱4,000,000 and paid no dividends during the year. What is the maximum amount of the “equity in earnings of the investee”. a. 1,350,000b. 1,250,000c. 1,600,000d. 1,700,000 What is the solution for the option A?On January 1, 2024, Sledge had common stock of $130,000 and retained earnings of $270,000. During that year, Sledge reported sales of $140,000, cost of goods sold of $75,000, and operating expenses of $41,000. On January 1, 2022, Percy, Incorporated, acquired 70 percent of Sledge's outstanding voting stock. At that date, $61,000 of the acquisition-date fair value was assigned to unrecorded contracts (with a 20-year life) and $21,000 to an undervalued building (with a 10-year remaining life). In 2023, Sledge sold inventory costing $11,200 to Percy for $16,000. Of this merchandise, Percy continued to hold $6,000 at year-end. During 2024, Sledge transferred inventory costing $12,600 to Percy for $21,000. Percy still held half of these items at year-end. On January 1, 2023, Percy sold equipment to Sledge for $12,500. This asset originally cost $17,000 but had a January 1, 2023, book value of $9,200. At the time of transfer, the equipment's remaining life was estimated to be five years.…At the beginning of current year, Cynosure Company purchased 30% of the ordinary shares of another entity for P3,500,000 when the net assets acquired amounted to P7,000,000 At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost. The equipment has a remaining life of 4 years and the inventory was all sold during the current year. The investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year. Required: 1. Prepare journal entries for the current year. 2. Compute the investment income for the current year.
- At the beginning of current year, Cinnamon Company purchased 40% of the ordinary shares of another entity for P3,000,000 when the net assets acquired amounted to P6,000,000.At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for the equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost.The equipment has a remaining life of 4 years and the inventory was all sold during the current year.The investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year.Required;1. Prepare journal entries for the current year2. compute the investment income for the current year.On January 3, 2016, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc. in exchange for $6,000,000 in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 fiscal year-ends. At the acquisition date, Sea Cliff’s stockholders’ equity was $2,500,000 including retained earnings of $1,700,000. Persoff pursued the acquisition, in part, to utilize Sea Cliff’s technology and computer software. These items had fair values that differed from their values on Sea Cliff’s books as follows: Asset Book Value Fair Value RemainingUseful Life Patented technology $ 140,000 $ 2,240,000 7 years Computer software 60,000 1,260,000 12 years Sea Cliff’s remaining identifiable assets and liabilities had acquisition-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Sea Cliff…On January 3, 2016, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc. in exchange for $6,000,000 in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 fiscal year-ends. At the acquisition date, Sea Cliff’s stockholders’ equity was $2,500,000 including retained earnings of $1,700,000. Persoff pursued the acquisition, in part, to utilize Sea Cliff’s technology and computer software. These items had fair values that differed from their values on Sea Cliff’s books as follows: Asset Book Value Fair Value RemainingUseful Life Patented technology $ 140,000 $ 2,240,000 7 years Computer software 60,000 1,260,000 12 years Sea Cliff’s remaining identifiable assets and liabilities had acquisition-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Sea Cliff…
- On January 3, 2016, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc. in exchange for $6,000,000 in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 fiscal year-ends. At the acquisition date, Sea Cliff’s stockholders’ equity was $2,500,000 including retained earnings of $1,700,000. Persoff pursued the acquisition, in part, to utilize Sea Cliff’s technology and computer software. These items had fair values that differed from their values on Sea Cliff’s books as follows: Asset Book Value Fair Value RemainingUseful Life Patented technology $ 140,000 $ 2,240,000 7 years Computer software 60,000 1,260,000 12 years Sea Cliff’s remaining identifiable assets and liabilities had acquisition-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Sea Cliff…On January 1, 2018, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Companyfor $300 million cash. At the date of acquisition of the stock, Lake’s net assets had a fair value of $900 million.Their book value was $800 million. The difference was attributable to the fair value of Lake’s buildings and itsland exceeding book value, each accounting for one-half of the difference. Lake’s net income for the year endedDecember 31, 2018, was $150 million. During 2018, Lake declared and paid cash dividends of $30 million. Thebuildings have a remaining life of 10 years.Required:1. Prepare all appropriate journal entries related to the investment during 2018, assuming Cameron accounts forthis investment by the equity method.2. Determine the amounts to be reported by Cameron:a. As an investment in Cameron’s 2018 balance sheetOn January 1, Barnyard Corporation acquired common stock of Fresh Hay Corporation. At the time of acquisition, the book value and the fair value of Fresh Hay Corporation's net assets were $1 billion. During the year, Fresh Hay Corporation reported net income of $480 million and declared dividends of $160 million. The fair value of the shares increased by 10 percent during the year. How much income would Barnyard Corporation report for the year related to its investment under the assumption that it: A. Paid $150 million for 15 percent of the common stock and uses the fair value method to account for its investment in Fresh Hay Corporation. (Pay attention to the "fair value method" mention, others who attempted to answer this question got it wrong because they missed that). B. Paid $300 million for 30 percent of the common stock and uses the equity method to account for its investment in Fresh Hay Corporation. Please show all your steps so we can follow what…