on the 28/02/x2 a parent acquires 100 of the share capital of a subsidiary entity.at the groups year end date of 30/06/x2. the subsidairy recognized profits totaling R 1 485 000 for the financial year. calculate the subsidiary post - acquisition profits to the included in the groups retained earnings upon consolidation - 459 000 - 540 000 - 450 000 - 495 000

on the 28/02/x2 a parent acquires 100 of the share capital of a subsidiary entity.at the groups year end date of 30/06/x2. the subsidairy recognized profits totaling R 1 485 000 for the financial year. calculate the subsidiary post - acquisition profits to the included in the groups retained earnings upon consolidation - 459 000 - 540 000 - 450 000 - 495 000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 15MCQ

See similar textbooks

Similar questions

On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 parcommon stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1,were as follows: Using the proportionate basis or partial goodwill method, compute the following:1. The amount of goodwill on January 1:A. P 2,600 C. P 14,400B. P 3,800 D. P 25,2002. The equity holders of parent (or controlling interest) retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,0003. The consolidated retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000
On January 1, 20X4, Parent Company purchased 90% of the common stock of Subsidiary Company for $360,000. On this date, Subsidiary had common stock, other paid in capital, and retained earnings of $20,000, $130,000, and $200,000 respectively. Any excess of cost over book value is due to goodwill. Parent account for the Investment in Subsidiary using the simple equity method. On July 1, 20X4, Subsidiary sold $100,000 par value of 9%, ten-year bonds for $106,755, which resulted in an effective interest rate of 8%. The bonds pay interest semi-annually on January 1 and July 1 of each year. Subsidiary uses the effective-interest method of amortizing the premium. An amortization table for 20X4 and 20X5 is presented below: Date Cash Int Interest Exp Premium Amort Premium Bal Carrying Value 7/1/X4 6,755 106,755 12/31/X4 4,500 4,270 230 6,525 106,525 7/1/X5 4,500 4,261 239 6,286 106,286 12/31/X5 4,500 4,251 249 6,037…
On the 1/01/x3, J Group acquired 2 025 000 of the 4 500 000 ordinary R1 shares in Entity PA for R5 695 000. At acquisition, PA had retained earnings of R1 400 000. When preparing the J Group’s consolidated financial statements for the year end date of 31/12/x3, accountants at the group entity are working with the following information: In the x3 financial year, Entity PA made a profit after tax of R 1 230 000; In the x3 financial year, PA paid a dividend totaling R45 000 to its shareholders; At the end of the x3 financial year, the group’s investment in PA is found to have impaired by R94 000. Based on this information, calculate the group’s investment in associate figure, in its consolidated financial statements dated 31/12/x3.
A Parent corporation purchased 25% of the outstanding common shares of Subsidiary Limited for $2,500,000 on January 1, 2020. The following relates to Subsidiary since the acquisition date: Year Net Income Other Comprehensive Income Dividends Paid 2020 $ 51,800 $11,400 $74,000 2021 148,000 29,600 74,000 Required: Assume that Parent is a private company. Even though it has significant influence, it chose to use the cost method to account for its investment. Prepare ALL the journal entries that Parent should make regarding this investment in Year 2020 and Year 2021
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…
On October 26, 20x1, Entity A acquired 100% interest in Entity B for P2,800,000. On this date, Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P1,600,000, respectively. Included in Entity B's liabilities are cash dividends of P280,000 declared on October 1, 20x1, to shareholders of record on November 1, 20x1, and payable on December 1, 20x1. Requirement: Compute for the goodwill.
Entity A acquired 60% of the ordinary shares of Business B on the 1st January 20x6. At acquisition, the book value of the subsidiary’s net assets was R400 000. The following information also relates to the subsidiary’s net assets: The fair value of PPE is found to be R100 000 higher than its book value; the fair value of inventory is 80% of the existing book value of R50 000; B discloses a contingent liability with a fair value considered to be R40 000; The non-controlling interest (NCI) was valued using the proportionate share of net assets method at acquisition. Based on this information, calculate the value of the NCI at the date of acquisition. Select one: a. R180 000 b. R160 000 c. R170 000 d. R150 000
The PTCL Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired $2,640,000 Fair value of liabilities acquired $720,000 Total shareholders’ equity of the subsidiary company $800,000 Retained earnings of the subsidiary company $1,120,000 Required: (a) Pass the necessary journal entry to record the acquisition (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50.Thanks
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 Company issued 50,000 shares of P100 par ordinary share for all outstanding shares of Subsidiary Company in a business combination consummated in July 1, 2020. Parent Company’s ordinary shares was selling at P102 per share at the time of the consummation of the combination. Subsidiary Company’s net asset on the date of acquisition has a carrying amount of P3,800,000. Out of pocket expenses of the combination were as follows:Legal fees 50,000Finder’s fees 25,000CPA audit fees 50,000Printing of stock certificates 65,000 Determine the amount charged to expense:
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…
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. The following are taken from the books of Parent and Subsidiary for 20x8: Determine the Non-Controlling Interest as of December 31, 20x8. Your answer