On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent recognised the interest paid as an expense. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent.
Q: Parent Company acquired 100% of Subsidiary Company prior to 2020. During 2020, the individual…
A: Parent company acquired subsidiary company prior to 2020 = 100% During 2020, Individual expenses are…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SUBSIDIARY BOOKS- DATE PARTICULARS DEBIT $ CREDIT $ 20-DEC-1. Cash…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS THE ACT OF KEEPING OR MAKING RECORDS OF ANY TRANSACTIONS EITHER ECONOMIC…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: H plc is a holding company with a 74% interest in its subsidiary S plc. The following is an extract…
A: Note: Since you have asked multiple question, we will solve the first question for you. If you want…
Q: Parent owns 100% of subsidiary. Subsidiary has bonds payable to third parties of $5,500,000., plus…
A: Introduction When bonds of affiliates are purchased from non-affiliates, from the viewpoint of…
Q: Parent Company has a 90% controlling interest in Subsidiary Company. On December 31, 20x8, the…
A: The dispose of shares owned by the holding corporation reduces its controlling power over the…
Q: Dane, Inc., owns Carlton Corporation. For the current year, Dane reports net income (without…
A: The consolidated net income is calculated as below: Net income of D (parent) $208,000 Net…
Q: On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary…
A: Journal entry is a primary entry that records the financial transactions initially. A journal entry…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: Intragroup transactions are transactions that occur between entities in the group. They can be…
Q: Which one of the following statements is correct with regards to a 70%-owned subsidiary? 100% of…
A: Merger & Acquisition refers to the process of gaining ownership in the other organization by…
Q: On January 1, 20X5, Potter Corporation started using a wholly owned subsidiary to deliver all its…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: West, Inc. holds 80% of the common stock of Coast Company, an investment acquired for $680,000.…
A: At the time of acquisition of shares or business of another company, if net assets value is less…
Q: A parent acquires the outstanding bonds of a subsidiary company directly from an outside third…
A: Describe whether the gain should be allocated to the parent or the subsidiary: The gain of $45,000…
Q: The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and…
A: a. Particulars Debit Credit Investment in S Ltd. $ 2,200,000 Cash $1,000,000…
Q: Intra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a…
A: The question is related to Consolidated Financial Statements. Kent is a parent company of Lodh…
Q: Intra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a…
A: The question is related to Consolidated Financial Statements. Kent is a parent company of Lodh Ltd.…
Q: Which of the following transactions will affect both the consolidated net income attributable to the…
A: The question is related to the Consolidation.
Q: On January 1, 20x1, DIAPHANOUS Co. acquired all of the identifiable assets and assumed all of the…
A: The negative goodwill arises when the assets are sold for a price lesser than their market value.…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS USED TO RECORD A BUSINESS TRANSACTION IN THE ACCOUNTING RECORD OF A…
Q: The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and…
A: Goodwill: It refers to an intangible asset that arises as a result of the acquisition of one company…
Q: ydney Ltd owns all of the shares of Mel Ltd. In relation to the following intragroup transactions,…
A: Consolidation accounting seems to be the procedure of integrating the financial results from…
Q: On July 01, 2021, Parent, Inc. acquired most of the outstanding common stock of Subsidiary Company…
A: Goodwill is an intangible asset for a company. It can either be build overtime or can be purchased…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: Sydney Ltd owns all of the shares of Mel Ltd. In relation to the following intragroup transactions,…
A: Cost of sales = $18000, 1/3 rd of Unsold inventory doesn't have any impact in books of Sydney Ltd.
Q: Parent Company purchases 80% of the outstanding shares of Subsidiary Company for P9,000,000. The…
A: Goodwill: It is an intangible asset that is related with the purchase of one company by another.
Q: prepare the consolidation worksheet adjusting entries for preparation of the consolidated financial…
A: Adjusting Entries: Particulars Dr. Cr. Dividend Income 5000 Retained Earnings…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS USED TO RECORD A BUSINESS TRANSACTION IN THE ACCOUNTING RECORD OF A…
Q: etermine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase…
A: Partnership: This is the form of business entity which is formed by an agreement, owned and managed…
Q: Parent Company purchases 80% of the outstanding shares of Subsidiary Company for P9,000,000. The…
A: A non-controlling interest also referred to as a minority interest, is an ownership position wherein…
Q: The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and…
A: Solution:- Given information: - Fair Value of Assets: $2,640,000 Fair Value of Liabilities:…
Q: (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the…
A: Introduction: Acquisition: Acquisition can be defined as situation where all or more than 50% of…
Q: Parent Ltd (Parent) controls a subsidiary Sub Ltd (Sub), in which it owns 70 per cent of the issued…
A: Consolidation- Consolidation is a statutory process in which different business entities join forces…
Q: P Inc. owns S Corp. For the current year, P reports net income (without consideration of its…
A:
Q: ABC Co. acquired 60% interest in DEF Co. On January 1,2021. Information on the combining entities'…
A: Consolidated total assets means total assets of both acquirer and acquiree company just after the…
Q: (b) On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The…
A: You have submitted two questions under a single question and you have not provided full data for the…
Q: Sydney Ltd owns all of the shares of Mel Ltd. In relation to the following intragroup transactions,…
A: The question is related to Consolidated Financial Statements. The MEL Ltd. is wholly owned…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS THE COMPANY'S OFFICIAL BOOK IN WHICH ALL TRANSACTIONS ARE RECORDED IN…
Q: Parent corporation purchased 25% of the outstanding common shares of Subsidiary Limited for…
A: Journal entry is the act of keeping or making records of any transaction either economic or non…
Q: (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass…
A: c. b.
Q: Parent Company acquires a subsidiary by issuing 100,000 common shares with a market value of $25 per…
A: The consolidated balance sheet refers to the statement that represents the position of the assets,…
Q: The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and…
A: The consolidation of financial statements is a combination of parents' and subsidiary company's…
Q: Choose the correct. Dane, Inc., owns Carlton Corporation. For the current year, Dane reports net…
A: Consolidated net income is the aggregate net income of the parent company excluding any income from…
Q: Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own subsidiary of…
A: GIVEN DATA Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a wholly own…
Q: How does joint control differ from control as applied on consolidation? Oceania Limited acquired…
A: Oceania Limited Acquired 100% of the share capital of the broadwater. Total shareholder's equity=…
Q: Which transaction would affect the calculation of the non-controlling interest in the consolidated…
A: Answer - Transaction 4: On 1 November 20X6, Parent borrowed $50 000 from Sub at an interest rate of…
Q: Interest income from bond investment b. Interest expense on bond payable c. Gain (loss) on…
A: a. Interest income from bond investment is intercompany transactions gains or losses are eliminated…
On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent recognised the interest paid as an expense.
(i) Prepare all the relevant
(ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent.
Step by step
Solved in 2 steps
- Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (b) On 20 December 20x1, a 70%-owned Subsidiary sold a piece of inventory Y which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date.Parent Company acquires a subsidiary by issuing 100,000 common shares with a market value of $25 per share for all of the subsidiary's common stock. The subsidiary's assets and liabilities were recorded at fair values with the exception of equipment undervalued by $225,000. In addition, there were two unrecorded assets: a trademark valued at $175,000 and a customer list valued by the subsidiary at $60,000. The balance sheets of the parent and subsidiary immediately after the acquisition are presented below: Parent Subsidiary Cash $740,000 $420,000 Accounts Receivable 900,000 625,000 Inventory 440,000 750,000 Equity Investment 2,500,000 Property, plant and equipment (net) 3,190,000 1,205,000 $7,770,000 $3,000,000 Accounts payable $125,000 $145,000 Salaries payable 60,000 35,400 Long-Term Notes Payable 700,000 850,000 Common Stock 200,000 150,000 Additional paid-in capital 5,000,000…On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent properly capitalised the interest paid as part of the cost of its construction work-in-progress Given that both parent and subsidy adopt 31 December as their financial year-end, prepare the (i) journal entries of parent and subsidy, and (ii) the consolidated journal entries
- On 31 December 20x1, AAA Ltd acquired 70% equity interest in BBB Ltd by paying a consideration of $120,000 to the shareholders when the fair value of BBB Ltd's identifiable net assets was ascertained to be $100,000. a) What is the amount of goodwill if any? b) What is the amount of non-controlling interest (NCI) at acqusition assuming AAA measures any NCI in the subsidiary at the proportionate share of the subsidiary's identifiable net assets?On June 30, 20X1, Naeder Corporation purchased for cash at $10 per share all 100,000 shares of the outstanding common stock of the Tedd Company. The total fair value of all identifiable net assets of Tedd was $1,400,000. The only noncurrent asset is property with a fair value of $350,000. The consolidated balance sheet of Naeder and its wholly owned subsidiary on June 30, 20X1, should report a. a retained earnings balance that is inclusive of a gain of $400,000. b. goodwill of $400,000. c. a retained earnings balance that is inclusive of a gain of $350,000. d. a gain of $400,000Parent Ltd (Parent) controls a subsidiary Sub Ltd (Sub), in which it owns 70 per cent of the issued capital since 30 June 20X3. The following transactions are relevant for the preparation of the consolidated financial statements for the financial year ending 30 June 20X7. Transaction 1: During the financial year ending 30 June 20X4, Sub sold an item of plant to Parent at a loss. Parent is still using the plant at 30 June 20X7. Transaction 2: Sub paid an interim dividend in August 20X5. Parent is exempt from income tax on dividends received from the subsidiary. Transaction 3: During the financial year ending 30 June 20X7, Parent sold inventory to Sub for a price greater than its cost to Parent. One-third of this inventory is still on hand at 30 June 20X7. Transaction 4: On 1 November 20X6, Parent borrowed $50 000 from Sub at an interest rate of 10 per cent per annum. The interest on the loan is payable every six months starting 1 May 20X7. The loan is still outstanding at 30 June…
- 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 relates to Adele Ltd. Since the date of acquisition, Adele Ltd has held interests in multiple subsidiaries totalling DNCI of 25%, and INCI of 15%. The following summarised financial information is provided: Retained earnings at DOA $236,000 Retained earnings at 1/7/2020 $476,000 Current period profit for year ended 30/6/2021 $117,000 a) Based on the financial information you have available, prepare the journal entries to record the allocation to NCI upon consolidation on 30 June, 2021.A Parent Company owns 100 percent of its Subsidiary. During 2021, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,840,000 and the subsidiary reports net income of $736,000. The parent had a bond payable outstanding on December 31, 2021, with a carrying value equal to $1,545,600. The Subsidiary acquired the bond on December 31, 2021, for $1,453,600. During 2021, the Parent reported interest expense (related to the bond) of $128,800 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2021? b. $2,668,000 d. $2,796,800
- Parent Company acquired 80% of the ordinary shares of Subsidiary Company at a time when Subsidiary’s book values and fair values were equal. Selected financial data are available for 2022 (see image below).Intercompany sales are as follows (see image below).How much is the Consolidated Net Income? please explain.P Inc. owns S Corp. For the current year, P reports net income (without consideration of its investment in S) of $185,000, and the subsidiary reports $105,000. The parent had a bond payable outstanding on January 1 with a carrying amount of $209,000. The subsidiary acquired the bond on that date for $196,000. During the current year, P reported interest expense of $18,000 while S reported interest income of $19,000 both related to the intra-entity bond payable. What is consolidated net income?Pretzel Corporation acquired 100 percent of Stick Company’s outstanding shares on January 1, 20X7. Balance sheet data for the two companies immediately after the purchase follow: As indicated in the parent company balance sheet, Pretzel purchased $59,000 of Stick’s bonds from the subsidiary at par value immediately after it acquired the stock. An analysis of intercompany receivables and payables also indicates that the subsidiary owes the parent $8,000. On the date of combination, the book values and fair values of Stick’s assets and liabilities were the same. Record the basic consolidation entry