Answer both a and b.if answered within 45mins,it would be a great help!! Problem #1 Calculation of Consolidated Net Income & NCI share (Based on P4-14):Drago company acquired 60% of Sago's for $300,000 when Sago's book value was $400,000. The Non-controllinginterest had an assessed fair value of $200,000. At the acquisition date, Sago had a trademark (with 10-year remaininglife) that was undervalued in the financial records by $60,000. Also, patented technology with a 5-year remaining lifewas undervalued by $40,000. Two years later, the following figures are reported by the two companies.Dago Company BookSago CompanySago CompanyValueBook ValueFair ValueCurrent Assets$620,000$260,000$410,000($390,000)($900,000)$500,000$300,000$200,000$320,000$280,000TrademarkPatented Technology$150,000$150,000($120,000)($120,000)($400,000)$300,000LiabilitiesRevenuesExpensesRequired:a) Calculate the consolidated net income before allocation to the controlling and non-controlling interest (note:you must deduct the amortization for the current year)b) Calculate the non-controlling interest's share of the subsidiary's incomeProblem #2 Calculation of annual amortization and investment balances (Based on P5-17)

Definition: Consolidated financial statements: When an investor company holds above 50% in the…

Problem #1 Calculation of Consolidated Net Income & NCI share (Based on P4-14): Drago company acquired 60% of Sago's for $300,000 when Sago's book value was $400,000. The Non-controlling interest had an assessed fair value of $200,000. At the acquisition date, Sago had a trademark (with 10-year remaining life) that was undervalued in the financial records by $60,000. Also, patented technology with a 5-year remaining life was undervalued by $40,000. Two years later, the following figures are reported by the two companies. Dago Company Book Sago Company Book Value $300,000 $200,000 $150,000 ($120,000) ($400,000) $300,000 Sago Company Fair Value $320,000 $280,000 $150,000 ($120,000) Value Current Assets Trademark Patented Technology $620,000 $260,000 $410,000 Liabilities Revenues Expenses |($390,000) |($900,000) $500,000 Required: a) Calculate the consolidated net income before allocation to the controlling and non-controlling interest (note: you must deduct the amortization for the current year) b) Calculate the non-controlling interest's share of the subsidiary's income

Problem #1 Calculation of Consolidated Net Income & NCI share (Based on P4-14): Drago company acquired 60% of Sago's for $300,000 when Sago's book value was $400,000. The Non-controlling interest had an assessed fair value of $200,000. At the acquisition date, Sago had a trademark (with 10-year remaining life) that was undervalued in the financial records by $60,000. Also, patented technology with a 5-year remaining life was undervalued by $40,000. Two years later, the following figures are reported by the two companies. Dago Company Book Sago Company Book Value $300,000 $200,000 $150,000 ($120,000) ($400,000) $300,000 Sago Company Fair Value $320,000 $280,000 $150,000 ($120,000) Value Current Assets Trademark Patented Technology $620,000 $260,000 $410,000 Liabilities Revenues Expenses |($390,000) |($900,000) $500,000 Required: a) Calculate the consolidated net income before allocation to the controlling and non-controlling interest (note: you must deduct the amortization for the current year) b) Calculate the non-controlling interest's share of the subsidiary's income

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 23PC

See similar textbooks

Similar questions

Problem 3On January 1, 20x9, Maykaya Corporation acquired 80 percent of Galisod Company's common stock for P160,000 cash. The fair value of the non-controlling interest at that date was determined to be P40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:At the date of the business combination, the book values of Galisod’s net assets and liabilities approximated fair value except for inventory, which had a fair value of P45,000, and land, which had a fair value of P60,000 (using the full-goodwill approach). 1.What amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?a. P130,000 b. P135,000c. P90,000d. P45,000 2. What amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?a. P0b. P40,000c. P20,000d. P15,000 3. What amount of total assets will be reported in the consolidated…
Problem 3On January 1, 20x9, Maykaya Corporation acquired 80 percent of Galisod Company's common stock for P160,000 cash. The fair value of the non-controlling interest at that date was determined to be P40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:At the date of the business combination, the book values of Galisod’s net assets and liabilities approximated fair value except for inventory, which had a fair value of P45,000, and land, which had a fair value of P60,000 (using the full-goodwill approach). 1. What amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?a. P395,000b. P280,000c. P275,000d. P195,000 2. What amount will be reported as non-controlling interest in the consolidated balance sheet prepared immediately after the business combination?a. P0b. P15,000c. P40,000d. P46,000 3. What amount of consolidated retained earnings…
E 1-5 Journal entries to record an acquisition with direct costs and fair value/book value differences On January 1, Pop Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a market value of $660,000 for all the outstanding common shares of Son Corporation. In addition, Pop pays $60,000 for registering and issuing the 36,000 shares and $140,000 for the other direct costs of the business combination, in which Son Corporation is dissolved. Summary balance sheet information for the companies immediately before the merger is as follows (in thousands): Pop Book Value Son Book Value Son Fair Value Cash $ 700 $ 80 $ 80 Inventories 240 160 200 Other current assets 60 40 40 Plant assets—net 520 360 560 Total assets $1,520 $640 $880 Current liabilities $ 320 $ 60 $ 60 Other liabilities 160 100 80 Common stock, $10 par 840 400…
10. Phantom acquired 70% of the $100,000 equity share capital of Ghost, its only subsidiary, for $200,000 on 1 January 20X9 when the retained earnings of Ghost were $156,000. At 31 December 20X9 retained earnings are as follows. Phantom Ghost $ 275,000 177,000 Phantom considers that goodwill on acquisition is impaired by 50%. Non- controlling interest is measured at fair value, estimated at $82,800. What are group retained earnings at 31 December 20X9? a) $276,300 b) $289,700 c) $280,320 d) $269,200
Compute for the consolidated expenses to be reported for the year. On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000.XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows:
Question: A Company own 90% of the outstanding shares of B Company and 80% of the outstanding shares of C Company. The companies sell goods to each other. For the current year, A sold goods to C for P250,000 at a 40% mark-up. C sold 70% of the goods to B for P250,000. B in turn sold 65% of the goods to outside parties for P300,000. 1 . Compute for the consolidated cost of sales. a) 274,120 b) 50,120 c) 59,528 d) 283,528 2 . Compute the consolidated gross profit. a) 149,880 b) 240,472 c) 249,880 d) 140,472
Enron Corporation acquired by Walt Corporation. Walt acquired 75 percent ownership on January 1, 2018, for $200,250. At that date, Enron reported common stock outstanding of $90,000 and retained earnings of $135,000, and the fair value of the non-controlling interest was $66,750. The differential is assigned to equipment, which had a fair value $42,000 more than book value and a remaining economic life of seven years at the date of the business combination. Enron reported net income of $45,000 and paid dividends of $18,000 in 2018. Prepare and explain the journal entries recorded by Walt during 2018 on its books if it accounts for its investment in Enron using the equity method.
PROBLEM ON INTERCOMPANY SALES Timmy Co. acquired 80% interest in Princess Bubblegum Company on January 2, 2018 for $2,520,000. On this date, the share capital and retained earnings of the two companies are: Timmy Co. Princess Bubblegum Co. Share Capital $6,000,000 $2,250,000 Retained Earnings 3,000,000 450,000 On January 2, 2018: the assets and liabilities of Princess Bubblegum Co. were stated at their fair values except for machinery (remaining life 3 years) which is $225,000 lower than its fair value. On September 30, 2018: Princess Bubblegum sold merchandise to Timmy Co. at an inter-company profit of $150,000; 25% was still unsold at year-end. On October 1, 2019: Princess Bubblegum purchased merchandise from Timmy for $3,600,000. The selling affiliate included a 20% mark-up cost on this date. Only 75% of these purchases had been sold to unrelated parties as of December 31, 2019. As of December 31, 2019, goodwill was determined to be impaired by $60,000. The…
Determine the consolidated assets as of December 31. On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000.XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows:
8. ABC Corporation acquired 70 percent of XYZ Corporation on August 1 for P420,000. On that date, XYZ Corporation had the following book values and market values. What is the amount of purchase differential recognized on the acquisition date consolidated balance sheet with respect to plant assets.
(i) On 01 January 2013, Gordon Plc acquired 75% of Brown Ltd for $300,000 when Brown`s share capital and reserves were $252,000. Prior to the acquisition, the net book value of Brown`s non-current assets was $90,000. Brown revalued its non-current assets immediately prior to the acquisition to fair value and included the revaluation in its statement of financial position. (ii) On 01 January 2015, Gordon acquired 20% of Boris Ltd for $72,000 when the fair value of Boris`s net assets were $42,000. (iii) Goodwill has been impaired in Brown by $77,700 and in Boris by $31,800 (iv) At the year end, Gordon Plc has inventory acquired from Brown and Boris. Brown had invoiced the inventory to Garden for $6,000 – the cost to Brown had been $1,200 and Boris had invoiced Gordon for $3,000 – the cost to Boris had been $1,800. REQUIRED (a) Prepare Gordon Plc`s Consolidated Statement of Financial Position as at 31 December 2019.
Prob 1: On January 1, 2018, WONG NOODLES Corporation acquired the net assets of Natasha, Inc., by issuing 600,000 shares of its P10 par value common stock. Subsequently, Natasha was liquidated and its assets and liabilities merged into WONG NOODLES Corporation. WONG NOODLES’ stock was selling for P50 per share on January 1, 2018. The amount of goodwill recorded by WONG NOODLES in connection with the combination was P6,120,000. WONG NOODLES incurred P300,000 of legal and broker’s fees associated with the combination and P30,000 of stock issuance costs. What is the (1) fair value of Natasha’s net assets and (2) the amount of the increase in WONG NOODLES’ stockholders equity as a result of the combination? (1) 23,880,000; (2) 29,970,000 (1) 24,180,000; (2) 29,970,000 (1) 23,880,000; (2) 30,000,000 (1) 24,180,000; (2) 30,000,000