On January 2, 2022 Parent Co, acquired 60% of Subsidiary Inc. for $ 690,000. On that date, Subsidiary reported common stock $ 190,000, retained earnings of $82,000. A building (with 10-year remaining life) was undervalued in the company's financial records by $14,000. Trademarks of $ 50,000 were to be recognized and amortured over 8 years Subsidiary earned income and paid dividends as follows Net income Dividends Paid 2022 40,000 15,000 2023 $7,000 21,000 Required: If the equity method had been applied by Parent for this acquisition, Activate Windows Go to Settings to activate V Prepare entries "C needed for 2023 consolidation of Parent Co, applied the initial value method

On January 2, 2022 Parent Co, acquired 60% of Subsidiary Inc. for $ 690,000. On that date, Subsidiary reported common stock $ 190,000, retained earnings of $82,000. A building (with 10-year remaining life) was undervalued in the company's financial records by $14,000. Trademarks of $ 50,000 were to be recognized and amortured over 8 years Subsidiary earned income and paid dividends as follows Net income Dividends Paid 2022 40,000 15,000 2023 $7,000 21,000 Required: If the equity method had been applied by Parent for this acquisition, Activate Windows Go to Settings to activate V Prepare entries "C needed for 2023 consolidation of Parent Co, applied the initial value method

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter8: Consolidated Tax Returns

Section: Chapter Questions

Problem 36P

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On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shares with a market price of P45 per share. The book value of Luna Corp.’s identifiable net assets approximate its fair value, except for the following: Merchandise inventory’s fair value is lower than the book balance by 150,000. Equipment-A, with 2 years remaining useful life, costing P300,000 is understated by P50,000. Land with a fair value of P500,000 is recognized in the books amounting to P350,000. The following events happened to Luna Corp. Equipment-A was sold in June 30, 2023 for P320,000. 60% of merchandise inventory were sold in There is no movement as to the ordinary shares of Luna Corp during the The unadjusted trial balance as of December 31, 2022 were as follows: Lucas Company Luna Corp Cash 2,240,000 1,800,000 Trade Receivables 1,000,000 960,000 Merchandise…
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