The following separate income statements are for Burks Company and its 80 percent-owned subsidiary, Foreman Company:Foreman$ (332,000)241,000(31,000)RevenuesExpensesGain on sale of equipmentEquity earnings of subsidiaryNet incomeOutstanding common sharesAdditional InformationBurks$ (400,000)286,000BasicDiluted0(65,000)$ (179,000)63,000• Amortization expense resulting from Foreman's excess acquisition-date fair value is $35,000 per year.• Burks has convertible preferred stock outstanding. Each of these 9,000 shares is paid a dividend of $5 per year. Each share can beconverted into five shares of common stock.• Stock warrants to buy 10,000 shares of Foreman are also outstanding. For $16, each warrant can be converted into a share ofForeman's common stock. The fair value of this stock is $20 throughout the year. Burks owns none of these warrants.• Foreman has convertible bonds payable that paid interest of $46,000 (after taxes) during the year. These bonds can be exchangedfor 14,500 shares of common stock. Burks holds 20 percent of these bonds, which it bought at book value directly from Foreman.Earnings Per Share$ (122,000)38,000Compute basic and diluted EPS for Burks Company. (Round your intermediate percentage value and final answer to 2 decimalplaces.)

Answer : Earning per share (Basic EPS) = (Net Income - preferred dividends )/ Average number of…

enues enses n on sale of equipment ity earnings of subsidiary Net income standing common shares tional Information portization Burks $ (400,000) 286,000 (65,000) $ (179,000) 63,000 Fore $ (332 241 (31 $ (122 38 resulting from Foroman's Oxcoco acquisition da

enues enses n on sale of equipment ity earnings of subsidiary Net income standing common shares tional Information portization Burks $ (400,000) 286,000 (65,000) $ (179,000) 63,000 Fore $ (332 241 (31 $ (122 38 resulting from Foroman's Oxcoco acquisition da

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company: Burks Foreman Revenues $ (446,000 ) $ (346,000 ) Expenses 274,000 248,000 Gain on sale of equipment 0 (38,000 ) Equity earnings of subsidiary (72,000 ) 0 Net income $ (244,000 ) $ (136,000 ) Outstanding common shares 60,000 40,000 Additional Information Amortization expense resulting from Foreman’s excess acquisition-date fair value is $45,000 per year. Burks has convertible preferred stock outstanding. Each of these 15,000 shares is paid a dividend of $4 per year. Each share can be converted into four shares of common stock. Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $20, each warrant can be converted into a share of Foreman’s common stock. The fair value of this stock is $25 throughout the year. Burks owns none of these warrants. Foreman has convertible bonds payable…
The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company: Burks ForemanRevenues . . . . $(430,000) $(330,000)Expenses . . . . . 280,000 240,000Gain on sale –0– (30,000) of equipment Equity earnings of (64,000) -0-subsidiaryNet income . . $(214,000) $(120,000)Outstanding . . . 65000 40000 Common stock Additional Information∙ Amortization expense resulting from Foreman’s excess acquisition-date fair value is $40,000 per year.∙ Burks has convertible preferred stock outstanding. Each of these 8,000 shares is paid a dividend of $4 per year. Each share can be converted into four shares of common stock.∙ Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $15, each warrant can be converted into a share of Foreman’s common stock. The fair value of this stock is $20 throughout the year. Burks owns none of these…
Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 35,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cost Book Value Fair Value Cash $ 32,000 $ 32,000 $ 32,000 Inventory 83,000 83,000 83,000 Land 69,000 69,000 99,000 Buildings 188,000 147,000 249,000 Equipment 95,000 74,000 123,000 Accounts Payable 58,000 58,000 58,000 Required: Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
The following information pertains to the following 2 Questions. Assume the following facts relating to an 80% owned subsidiary company: BOY Stockholders’ Equity $1,000,000 BOY unamortized AAP 125,000 Net income of subsidiary (not including AAP amortization) 210,000 AAP amortization expense 40,000 Dividends declared and paid to noncontrolling shareholders 10,000 22. What is the net income attributable to noncontrolling interests for the year? a. $128,000 b. $136,000 c. $160,000 d. $168,000 23. What is the amount reported as noncontrolling equity at the end of the year? a. $895,200 b. $996,000 c. $1,026,000 d. $1,028,000
Parent and its 80% owned Subsidiary report the following at December 31 of the current year: Parent Net Income, P100,000; Parent Dividends, P20,000, Parent Land, P500,000. Subsidiary Net Income, P80,000; Subsidiary Dividends, P10,000; Subsidiary Land, P300,000. On June 1, of the current year, Subsidiary sold land to Parent reporting a gain on sale of P10,000. The gain is included in the net income reported by the Subsidiary. 1. Determine the equity holders of parent’s net income and the non-controlling interest net income. 2. Determine the non-controlling interest net income.
ardner Corp. owns 80% of the voting common stock of Lockhart Co. Lockhart owns 70% of Canning Co. Gardner and Lockhart both use the initial value method to account for their investments. The following information is available from the financial statements and records of the three companies: GardnerCorp. LockhartCo. CanningCo. Separate company net income before investment income $900,000 $650,000 $150,000 Dividend income from investment in subsidiary 250,000 120,000 Deferral of intra-entity gains 110,000 80,000 20,000 Amortization expense related to excess fair value over book value of investment 40,000 25,000 Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary. The accrual-based net income of Gardner Corp. is calculated to be
Parent Corporation acquired 80% of the outstanding shares of Subsidiary Company on June 1, 2021 for P3,517,500. Subsidiary Company’s stockholder’s equity components at the end of this year are as follows: Ordinary shares, P100 par, P1,500,000, Share premium P675,000 and Retained Earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of Subsidiary Company were fairly valued, except for inventories, which are overstated by P66,000, and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of Parent Corporation on January 1, 2021 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year end. Net Income for the first year of parent is P450,000 and the net income of Subsidiary Company from the date of acquisition is P255,000. Dividends declared at the end of the year…
PARENT Corporation acquired 80% of the outstanding shares of SUBSIDIARY Company on June 1, 2022 for P3,517,500. SUBSIDIARY Company’s stockholder’s equity components at the end of this year are as follows; Ordinary shares, P100 par, P1,500,000. Share premium P675,000 and Retained Earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of SUBSIDIARY were fairly valued, except for inventories, which are overstated by P66,000 and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of PARENT on January 1, 2022 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year-end. Net Income for the first year of parent is P450,000 and the net income of subsidiary from the date of acquisition is P255,000. Dividends declared at the end of the year amounted to P120,000 and P90,000 for…
From the given data, determine the NON-CONTROLLING INTEREST on December 31, 20x8. On January 1, 20x8,Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary’s Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 20x8 is P210,000. During the year, Parent sold goods to Subsidiary for P150,000 at a 25% mark-up and in turn purchased P200,000 of Subsidiary’s goods which Subsidiary sold at a 20% mark-up. From the goods purchased, P50,000 remain in Parent’s books at the end of the year, while P20,000 remain in Subsidiary’s books at the end of the year. 30% of the undervalued…
Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending December 31, 2018. Down paid dividends of $30,000 during this period. UP DOWN Sales $(600000) $(300000) Cost of goods sold 300000 140000 Operating expenses 174000 60000 Dividend Income (24000) -0- Net income $(150000) $(100000) In 2017, intra-entity gross profits of $30,000 on upstream transfers of $90,000 were deferred into 2018. In 2018, intra-entity gross profits of $40,000 on upstream transfers of $110,000 were deferred into 2019.a. What amounts appear for each line in a consolidated income statement? Explain your computations.b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent.
The following six accounts appear in the 2018 financial statements of Poplar and its 100%-owned subsidiary, Spruce (created in 2011), at the end of 2018. Poplar Spruce Common stock, 12/31/18 $ 80,000 $ 50,000 Additional paid-in capital, 12/31/18 240,000 160,000 Retained earnings, 12/31/18 490,000 170,000 Dividends declared, 2018 120,000 40,000 Equity in net income of Spruce, 2018 50,000 Investment in subsidiary, 12/31/18 380,000 In addition, Poplar’s Retained Earnings account showed $325,000 on 1/1/18. Required: Did Poplar use the cost method or the equity method to record its investment in Spruce? How do you know? Give two reasons. Provide the following figures: (Show calculations!) a) Spruce’s retained earnings at 1/1/18:…
On January 1, 20x8, Parent Company purchased 80% of the outstanding shares of Subsidiary Company for P800,000. On the date of acquisition, Subsidiary Company reported Ordinary Shares of P800,000 and Retained Earnings of P200,000. Subsidiary’s Inventory was understated by P20,000; Equipment with a 5-year life was understated by P20,000, Building with an 8-year life was understated by P80,000 and land was understated by P40,000. The non-controlling interest is to be stated at fair value and the fair value of the non-controlling interest on January 1, 20x8 is P210,000. During the year, Parent sold goods to Subsidiary for P150,000 at a 25% mark-up and in turn purchased P200,000 of Subsidiary’s goods which Subsidiary sold at a 20% mark-up. From the goods purchased, P50,000 remain in Parent’s books at the end of the year, while P20,000 remain in Subsidiary’s books at the end of the year. 30% of the undervalued inventory of Subsidiary still remain unsold by the end of 20x8. The following are…