Perry acquired 70% of Salt on 1/1/2009 for $420 when Salt's equity consisted of $200 capital stock and S200 retained earnings. Salt's inventory was understated by $50 and building, with a 20 year life, was understated by $100. Any excess is goodwill. T 2009 2010 Perry Salt Perry Salt Separate income $1,250 S705 $1,500 $745 Dividends $600 S280 $600 $300 During 2009, Salt sold goods costing $700 to Perry at a 20% markup. $240 of these goods were in Perry's ending inventory. In 2010, Salt sold goods costing $900 to Perry at a 25% markup and Perry still had $100 on hand at the end of the year.
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- On January 1, 2010, Peter Company purchased 80% of the common stock of Pan Company for P316,000. On this date, Pan Company had common stock, other paid-in capital, and retained earnings of P40,000, P120,000, and P190,000, respectively. Peter Company’s common stock amounted to P500,000 and retained earnings of P200,000. On January 1, 2010, the only tangible assets of Pan that were undervalued were inventory and building. Inventory, for which the FIFO method is used, was worth P5,000 more than cost. Building which was worth P15,000 more than book value, has a remaining life of 8 years, and a straight line depreciation is used. Any remaining excess is full goodwill with an impairment for 2010 amounting to P3,000. Pan Company reported net income of P50,000 and paid dividends of P10,000 in 2010, while the parent’s reported net income amounted to P100,000 and paid dividends of P20,000. 10.)Determine the Consolidated Net Income Attributable to Controlling…Santo, Inc. acquired 30% of Nino Corp.'s voting stock on January 1, 2008 for P360,000. During 2008, Nino earned P150,000 and paid dividends of P90,000. Santo's 30% interest in Nino gives Santo the ability to exercise significant influence over Nino's operating and financial policies. During 2009, Nino earned P180,000 and paid dividends of P60,000 on April 1 and P60,000 on October 1. On July 1, 2009, Santo sold half of its stock in Nino for P237,000 cash. What should be the gain on sale of this investment in Santo's 2009 income statement? a. P57,000 c. P52,500 b. P43,500 d. P34,500Roland acquires 70% of Felix on January 1, 2011. The terms of purchase are that Roland pays to Felix shareholders 70,000 shares of Roland common stock with a market value of $20 per share. The remaining 30,000 shares of Felix were traded at $15 both just before the acquisition date and right after the acquisition date. a. How much is the control premium per share b. How much is the total control premium paid by Roland c. Calculate business fair value d. Assume that 100% of the fair value of net assets acquired was S1,200,000. How much is goodwill e. How much goodwill is allocated to the controlling interest f. How much goodwill is allocated to the non-controlling interest
- Roland acquires 70% of Felix on January 1, 2011. The terms of purchase are that Roland pays to Felix shareholders 70,000 shares of Roland common stock with a market value of $20 per share. The remaining 30,000 shares of Felix were traded at $15 both just before the acquisition date and right after the acquisition date. d. Assume that 100% of the fair value of net assets acquired was S1,200,000. How much is goodwill e. How much goodwill is allocated to the controlling interest f. How much goodwill is allocated to the non-controlling interestBaker Corporation purchases a 60% interest in Hardee Company on January 1, 2015, for $135,000. On that date,Hardee Company has the following stockholders’ equity:Common stock ($10 par). . . . . . . . . . . . . . . $100,000Retained earnings . . . . . . . . . . . . . . . . . . . . . 20,000 $120,000Any excess of cost over fair value is due to equipment with a 10-year life.Baker Corporation purchases another 20% interest in Hardee Company for $40,000 onJanuary 1, 2017, when Hardee Company has the following stockholders’ equity:Common stock ($10 par). . . . . . . . . . . . . . . . $100,000Retained earnings . . . . . . . . . . . . . . . . . . . . . .50,000 $150,000On December 31, 2019, Baker Corporation and Hardee Company have the following balance sheets: (attached)Prepare a determination and distribution of excess schedule for the January 1, 2015,…Washington Corp. acquired 70% of the voting common stock of George Co. at the time when George Corp's book values and fair values were equal. Separate income of Washington and George Co. for 2020 are as follos: Washington Corp George Co. Sales 700,000 400,000 COGS 400,000 200,000 OPEX 120,000 100,000 Separate Income 180,000 100,000 Intercompany Sales from Washington to George for 2019 and 2020 summarized as follows: Selling Unsold at year End Cost Price Intercompany Sales-19 250,000 390,000 40% Intercompany Sales-20 175,000 275,000 50% The…
- Jeter Corporation purchases 80% of the outstanding stock of Super Company for $275,000 on July 1, 2015. Super Company has the following stockholders’ equity on July 1, 2015:Common stock ($5 par). . . . . . . . . . . . . . . . . . . . . . . . . $150,000Retained earnings, July 1, 2015 . . . . . . . . . . . . . . . . . . 50,000Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000The fair values of Super’s assets and liabilities agree with the book values, except for the equipment and the building. The equipment is undervalued by $10,000 and is thought to have a 5-year life; the building is undervalued by $50,000 and is thought to have a 20-year life. The remaining excess of cost over book value is attributable to goodwill. Jeter Corporation uses the simple equity method to record its investments. Since the purchase date, both firms have operated separately, and no intercompany transactions have occurred. Super Company closes its books on the date of…The stock in Ivory Corporation is owned by Gold Corporation (80%) and Imelda (20%). Gold Corporation purchased its shares in Ivory nine years ago at a cost of $650,000, and Imelda purchased her shares in Ivory four years ago at a cost of $175,000. Ivory Corporation has the following assets that are distributed in complete liquidation: Adjusted Basis Fair Market ValueCash $600,000 $600,000Inventory 80,000 200,000Equipment 350,000 200,000a. Assume that Ivory Corporation distributes the cash and inventory to Gold Corporation and the equipment to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?b. Assume that Ivory Corporation distributes the cash and equipment to Gold Corporation and the inventory to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?Pew Corporation acquired 80% ownership of Sordid Incorporated, at a time when Pew's investment cost was equal to 80% of Sordid's book value. At the time of acquisition, the book values and fair values of Sordid's assets and liabilities were equal. Pew uses the equity method. During 2014, Pew sold goods to Sordid for $160,000 making a gross profit percentage of 20%. Half of these goods remained unsold in Sordid's inventory at the end of the year. Income statement information for Pew and Sordid for 2014 were as follows: Pew Sordid Sales Revenue $800,000 $300,000 Cost of Goods Sold 500,000 160,000 Operating Expenses 200,000 80,000 Separate incomes $100,000 $60,000 The 2014 consolidated income statement showed cost of goods sold of…
- Pew Corporation acquired 80% ownership of Sordid Incorporated, at a time when Pew's investment cost was equal to 80% of Sordid's book value. At the time of acquisition, the book values and fair values of Sordid's assets and liabilities were equal. Pew uses the equity method. During 2014, Pew sold goods to Sordid for $160,000 making a gross profit percentage of 20%. Half of these goods remained unsold in Sordid's inventory at the end of the year. Income statement information for Pew and Sordid for 2014 were as follows: Pew Sordid Sales Revenue $800,000 $300,000 Cost of Goods Sold 500,000 160,000 Operating Expenses 200,000 80,000 Separate incomes $100,000 $60,000 What is Pew's income from Sordid for 2014? A. $32,000…Peter acquired 80% of the outstanding ordinary shares of Simon on January 2, 20x1. During 20x1, Peter sold inventory to Simon for P125,000 with 25% gross profit based on cost, 20% of this inventory remained unsold at the end of the year. On the other hand Simon sold inventory to Peter for P50,000 with 40% gross profit rate base on sales, 90% of this inventory were sold to outsiders. The remaining inventories of Peter and Simon were sold in year 20x2. On January 5, 20x2, Peter sold inventory to Simon for P150,000 with gross profit rate of 20% based on sales. 70% of this inventories were sold to outsiders while the remaining were sold in 20x3. On the other hand, Simon sold inventory to Peter for P30,000 with gross profit based on cost of 20%, ¾ of this remained unsold at the end of the year. On December 31, 20x2, Peter and Simon reported the following: Peter Simon Sales 800,000 500,000 Cost of Sales (350,000) (200,000) Gross Profit 450,000 300,000…Claire Corporation owns 80% of Jerald, Inc. ordinary stock. During 2020, Claire sold Jerald for P150,000 of inventory on the same terms as sales made to third parties. Jerald sold 60% of the inventory purchased from Claire in 2020.The following information pertains to Claire and Jerald's sales for 2020: Claire JeraldSales P1,000,000 P700,000Cost of Sales 400,000 350,000What amount should Claire report as sales in its 2020 consolidated income statement