Pepper owns 70% of Spray. Where is the noncontrolling interest in Spray's positive net income reported on the consolidated incom As an addition to consolidated net income As a deduction from consolidated net income As an addition to Spray's dividends As a deduction from Spray's dividends
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- Smart owns 80% of Simple. Where is the noncontrolling interest in Simple’s positive net income reported on the consolidated income statement (under the acquisition method)?Choose the correct. James Company acquired 85 percent of Mark-Right Company on April 1. On its December 31 consolidated income statement, how should James account for Mark Right’s revenues and expenses that occurred before April 1?a. Include 100 percent of Mark-Right’s revenues and expenses and deduct the preacquisition portion as noncontrolling interest in net income.b. Exclude 100 percent of the preacquisition revenues and 100 percent of the preacquisition expenses from their respective consolidated totals.c. Exclude 15 percent of the preacquisition revenues and 15 percent of the preacquisition expenses from consolidated expenses.d. Deduct 15 percent of the net combined revenues and expenses relating to the preacquisition period from consolidated net income.Assume that P acquires controlling interest in S and there is a Differential at the acquisition date. Puses the fully adjusted equity method to account for its investment. At year-end, when the parent's Income from S account is eliminated in the consolidation process, what replaces this item on the consolidated financial statements? A) The details of S's reported ('book') net income, with S's expenses based on acquisition date book (G/L) values. B) The details of S's 'true/adjusted' net income, with S's expenses based on acquisition date fair values due to amortization of any Differential. C) NCI in Net lIncome. D) The amortization of the acquisition-date excess cost details only.
- Highpoint owns a 95 percent majority voting interest in Middlebury. In turn, Middlebury owns an 80 percent majority voting interest in Lowton. In the current year, each firm reports the following income and dividends. Separate Company income figures do not include any investment or dividend income.In addition, in computing its income on a full accrual basis, Middlebury's acquisition of Lowton necessitates excess acquisition-date fair value over book value amortizations of $25,000 per year. Similarly, Highpoint's acquisition of Middlebury requires $20,000 of excess fair-value amortizations. Required Prepare an Excel spreadsheet that computes the following: 1. Middlebury's net income including its equity in Lowton earnings. 2. Highpoint's net income including its equity in Middlebury's total earnings. 3. Total entity net income for the three companies. 4. Net income attributable to the noncontrolling interests. 5. Difference between these elements: • Highpoint's net income. • Total…Jones acquires Wilson, in part because the new subsidiary has an unused net operating loss carryforward for tax purposes. How does this carryforward affect the consolidated figures at the acquisition date?Firm J sold marketable securities to Company B. Firm J's tax basis in the securities was $51,750. Compute Firm J's recognized gain or loss if: Required: a. The selling price was $70,250, and Firm J and Company B are unrelated parties. b. The selling price was $70,250, and Firm J and Company B are related parties. c. The selling price was $48,600, and Firm J and Company B are unrelated parties. d. The selling price was $48,600, and Firm J and Company B are related parties. Note: For all requirements, if the results of a transaction do not result in a gain or loss, select 'No gain/loss'. Amount a. Recognized gain b. Recognized gain c. Recognized loss d. Recognized loss
- On January 1, 20X1 Bullock, Inc. sells land to its 80%-owned subsidiary, Humphrey Corporation, at a $20,000 gain. The land is sold by Humphrey to an outside party in 20X3. What is the effect of the intercompany sale of land on 20X3 consolidated net income? a. Consolidated net income will be the same as it would have been had the intercompany sale not occurred. b. Consolidated net income will be $20,000 less than it would have been had the intercompany sale not occurred. c. Consolidated net income will be $16,000 less than it would have been had the intercompany sale not occurred. d. Consolidated net income will be $20,000 greater than it would have been had the intercompany sale not occurred.Company Aero is about to acquire 100% of company Berry. Company Berry has identifiable net assets with book value of $300,000 and $500,000 respectively. As payment Company Aero will issue common stock with a fair value of $75,000. How should the transaction be recorded if the acquisition is:a) An acquisition of net assets?b) An acquisition of Company B’s common stock and Company B remains a separate legal entity?1.Fred Corporation is a 90% owned subsidiary of John Corporation acquired several years ago at book value (which is equal to fair value). For the years 2020 and 2021, John and Fred report the following: John's separate income Fred's net income 2020. 2021 P300,000 P400,000 80,000 60,000 The only intercompany transaction between John and Fred during 2020 and 2021 was the January 8, 2020 sale of land. The land had a book value of P20,000 and was sold intercompany for P30,000, its appraised value at the time of sale. a. The Consolidated net income for 2020 and 2021: 2020 2021 a.P372,000 P460,000 b.P370,000 P460,000 c.P362,000 P454,000 d.P380,000 P460,000
- Panther Company is about to acquire a 100% interest in Snake Company. Snake has identifiable net assets with book and fair values of $300,000 and $500,000, respectively. As payment, Panther will issue common stock with a fair value of $750,000. How would the transaction be recorded if the acquisition is: a. An acquisition of net assets? b. An acquisition of Snake’s common stock and Snake remains a separate legal entity?Choose the correct. A parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in the next year. In a step acquisition of this type, the original 32 percent acquisition should bea. Maintained at its initial value.b. Adjusted to its equity method balance at the date of the second acquisition.c. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss recorded.d. Adjusted to fair value at the date of the second acquisition with a resulting adjustment to additional paid-in capital.Fred Corporation is a 90% owned subsidiary of John Corporation acquired several years ago at book value (which is equal to fair value). For the years 2020 and 2021, John and Fred report the following: John's separate income Fred's net income 2020. 2021 P300,000 P400,000 80,000 60,000 The only intercompany transaction between John and Fred during 2020 and 2021 was the January 8, 2020 sale of land. The land had a book value of P20,000 and was sold intercompany for P30,000, its appraised value at the time of sale. 1.)Assuming that it was Fred who sold the land to John (Upstream sale) on 2020 and subsequently sold it to third party on 2021, how much is the non-controlling interest in net income of subsidiary for 2021? a. P7,000 b. P6,000 c. P5,000 d. P6,100