On January 1, 2022, P Co acquired 75% of S Cocommon stock for $344,000 in cash, At the acquisitiondate the book values and fair values of S assets andliabilities were equal. and the fair value of thenoncontrolling interest was equal to 25% of the totalbook value of S, The stockholders' equity accounts ofthe two companies at the acquisition date are:PScommon stock(5@par200,000additional paid-in capital80,000retained earning150,000Noncontrolling interest was assigned income of$11,000 in the consolidated income statement for2022Select one:500,000OBased on the preceding information, what will be theamount of net income reported by S Co in 2022?a. 55,000b. 44,000c. 66,000d. 36,000300,000350,000

Non-controlling Interest : A Non-controlling interest , also known as a minority interest, is an…

Answered: uary 1, ommon stock for $344,000 in ate…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 19E

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On 1/1/2019, P Co acquired 75% of S Co's outstanding common stock for cash. The fair value of the noncontrolling interest was equal to a proportionate Share of the book value of S Co net assets, at the acquisition date the balance sheet data are as follows:- S total assets 108,000 liabilities 36,000 common stock 30,000 retained earning 42,000 Select one: O P a. 45,000 b. 18,000 c. 9,000 d. 27,000 504,000 144,000 Based on the preceding information, what amount should be reported as noncontrolling interest in net assets in the 1/1/2019 consolidated balance sheet? 120,000 240,000
P Co. acquired 80% of the 300,000 $1 equity shares of S Co. on 1 April 2021 when the retained earnings of S were $150,000. Consideration comprised X1 by cash, and X2 payable on 31 March 2022. The book values of S's net assets at acquisition date were equal to their fair values except a loan which had a book value of $400,000 and a fair value of $500,000. P measures non-controlling interest at fair value, based on share price. The market value of S's shares on 1 April 2021 was $1.5. P has a cost on capital of 10%. Required: 1/Provide relevant X1, X2 so that the goodwill at the acquisition date is positive. 2/Calculate the goodwill arising on acquisition.
P Company acquired all the outstanding shares of S Company by issuing 50,000 shares with a par value of P100 on July 1, 2021. P's ordinary shares were selling at P102 per share at the date of acquisition. On the same date, the net asset of S had a carrying value and fair value of P3,800,000 and P4,500,000 respectively. Out of pocket expenses of the business combination were as follows (see image below). How much is the amount charged to expense? Legal fees for contract of business combination Audit fees for SEC registration of share issue Brokerage fee Accountant fee for pre-acquisition audit Printing and registration of stock certificates Other direct costs of acquisition 41,200 50,000 22,500 35,000 10,000 16,800 General administrative costs 25,000 12,100 Listing fees in issuing new shares
DEF company acquired the assets and assumed liabilities of GHI Company on January 1, 2022 by paying P3,000,000 and issuing its own ordinary shares. The comparison of the acquirer’s balance sheet before and after business combination transaction is as follows: Balance sheet before Acquisition Balance Sheet after Acquisition Total Assets 13,545,000 17,595,000 Total Liabilities 3,760,000 ? Total SHE 9,785,000 ? The fair value of the identifiable net asset of the acquiree is P4,835,000 and the book value of acquiree’s liabilities amounting to P1,300,000 is lower compared to its fair value by P350,000. DEF company paid acquisition related costs amounting to P50,000. What is the fair market value of the ordinary shares issued by the acquirer? a. 2,500,000 b. 2,400,000 c. 2,480,000 d. 2,450,000
LGM Motors acquired 80% of NS Service Center outstanding shares on January 1, 2022 by payingcash. The consolidated statement of financial position showed the following balances at thedate of acquisition.Consolidated Balances AmountTotal Assets 15,670,000Total Liabilities 4,575,000Total Shareholder’s Equity ?The book value of the net assets of NS Services Center is P4,500,000. The assets of NS ServiceCenter are fairly valued except for the following:• Patent on the product that is deemed worthless, P50,000.• Goodwill of P150,000.• Unrecognized identifiable R&D of P75,000.The fair value of the non-controlling interest is 705,000 and the book value of LGM’s equitybalance is P9,500,000.On December 31, 2022 the following information were provided by NS Services Center:• Net income of 400,000 was recognized.• Patents remaining useful life is 4 years.• Pre-existing goodwill presented above was impaired with a current value of 120,000.• Dividends were declared amounting to P100,000.LGM…
On 1 July 2021, James Ltd acquired all the issued shares of Dean Ltd for $350,000. At this date, the financial statements of Dean Ltd showed the following: $ Share capital 270,000 Retained earnings 26,500 General Reserve 8,800 Total equity 305,300 Goodwill 25,000 At acquisition date, all the net identifiable assets and liabilities in Dean Ltd were recorded at amounts equal to their fair value except for: Asset Carrying amount ($) Fair Value ($) Inventories 15,000 18,000 Plant (cost $400,000) 210,000 220,000 The Plant was calculated to have a further life of 5 years, and was depreciated on a straight-line basis. All inventory was sold by 30 June 2020. Assume 30% tax rate Required: Prepare the acquisition analysis at 1 July 2021. Prepare the consolidation entries at acquisition date, 1 July 2021. Include narrations for each entry. Prepare the consolidation worksheet as at 1 July 2021. Prepare a Balance sheet for the reporting Group, James Ltd as at 1 July 2021 in narrative format.
On 1/1/2020, ABC Corporation balance sheet included the following accounts: Patents $100,000, Bonds Payable $40,000. Common Stock $10,000, Retained Earnings $50,000. Book values of assets and liabilities were equal to their fair values. XYZ Corporation acquired 100% of the common stock of ABC Corporation on 1/1/2020 for $120.000 Cash. Which of the following entries was prepared to record the acquisition on XYZ's books? Patents Bonds Payable Cash Investment in Subsidiary Goodwill Gain on Acquisition of Business Debit $100,000 Credit $40,000 Credit $120,000 Debit $60.000
On 1/1/2020, ABC Corporation balance sheet included the following accounts: Patents $100,000, Bonds Payable $40,000, Common Stock $10,000, Retained Earnings $50,000. Book values of assets and liabilities were equal to their fair values. XYZ Corporation acquired 100% of the common stock of ABC Corporation on 1/1/2020 for $120,000 Cash. Which of the following entries was prepared to record the acquisition on XYZ's books? Patents? [Debit or credit by what amount] Bonds Payable? [Debit or credit by what amount] Cash? [Debit or credit by what amount] Investment in Subsidiary? [Debit or credit by what amount] Goodwill? [Debit or credit by what amount] Gain on Acquisition of Business? [Debit or credit by what amount]
On 1 July 2020 P Ltd purchased 100% of the issued capital of S Ltd for a purchase price of $859,000. At that date the shareholders’ equity of S Ltd disclosed: Share capital $121,000 General reserve $50,000 Retained earnings $260,000 Additional information: At the date of acquisition, all net identifiable assets of Sub Ltd were recorded at fair value Sales by S to P Ltd were $67,000. P Ltd sold inventory of $109,000 to S Ltd on 1 July 2021. The original cost of this inventory to P Ltd was $53,000. S Ltd has 47% of this inventory on hand at 30 June 2022 Company tax rate is 30% Requirements: Provide all consolidation journal entries (including workings) in next part of this question Compute the amount of 'realised profit' of the inventory transaction above in the form of 'cost of goods sold' and enter the amount in the answer space below
On 1 July 2020, Sky Ltd acquired 70% of the share capital (ex. div.) of Jim Ltd for $500,000. At that date, the relevant balances in the records of Jim Ltd were: Share capital General reserve Retained earnings Dividend payable S 434,000 35,000 126,000 14,000 At the date of acquisition all assets and liabilities of Jim Ltd were recorded in the accounting records at amounts equal to their fair values with the exception of the following assets: Carrying amount Fair value Land Machine 56,000 30,800 Land was sold on 1 May 2023 for $77,000. $ 67,200 49,000 The cost of the Machine was $58,800 and had a further 5-year life as at the date of acquisition. Jim Ltd had reported a Contingent liability at 1 July 2020 in relation to claims by customers for damaged goods. Sky Ltd placed a fair value of $12,600 on these claims at acquisition date. This claim was settled on 1 April 2023 for $7,000. Additional information: a) On 1 March 2023, Jim Ltd purchased inventory from Sky Ltd for $25,200,…
On January 1, 2023, Tamarisk Company issued 1,450 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Sheffield Company in a purchase transaction. Registration costs amounted to $2,500, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Cash Accounts receivable (net) Inventory Plant and equipment (net) Land Total assets Accounts payable Notes payable Common stock, $20 par value Other contributed capital Retained earnings Total equities Tamarisk Company $83,000 103,000 56,000 95,000 23,500 $360,500 $63,000 89,500 100,000 60,000 48,000 $360,500 Sheffield Company $12,600 18,000 25,000 46,500 22,000 $124,100 $19,500 30,000 40,000 27,500 7,100 $124,100 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.
A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…

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uary 1, ommon stock for $344,000 in ate the book values and fair iabilities were equal. and the oncontrolling interest was eq ook value of S, The stockhold