wned Subsidiary report the following at December 31 of the current year: Parent Net Income, P100,000; Parent Dividends, P20,000, Parent Land, P500,000. Subsidiary Net Income, P80,000; Subsidiary Dividends, P10,000; Subsidiary Land, P300,000. On June 1, of the current year, Subsidiary sold land to Parent reporting a gain on sale of P

wned Subsidiary report the following at December 31 of the current year: Parent Net Income, P100,000; Parent Dividends, P20,000, Parent Land, P500,000. Subsidiary Net Income, P80,000; Subsidiary Dividends, P10,000; Subsidiary Land, P300,000. On June 1, of the current year, Subsidiary sold land to Parent reporting a gain on sale of P

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 29E

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Parent and its 70% owned Subsidiary report the following at December 31 of the current year: Parent Net Income, P300,000; Parent Dividends, P20,000. Subsidiary Net Income, P250,000; Subsidiary Dividends, P20,000. On January 3, of the current year, Parent sold equipment to Subsidiary with a remaining 5-year life reporting a gain on sale of P20,000. The gain is included in the net income reported by the Parent. 1. Determine the equity holders of parent’s net income and the non-controlling interest net income. 2. Determine the equity holders of parent's net income.
The following separate income statements are for Burks Company and its 80 percent–owned subsidiary, Foreman Company: Burks Foreman Revenues $ (446,000 ) $ (346,000 ) Expenses 274,000 248,000 Gain on sale of equipment 0 (38,000 ) Equity earnings of subsidiary (72,000 ) 0 Net income $ (244,000 ) $ (136,000 ) Outstanding common shares 60,000 40,000 Additional Information Amortization expense resulting from Foreman’s excess acquisition-date fair value is $45,000 per year. Burks has convertible preferred stock outstanding. Each of these 15,000 shares is paid a dividend of $4 per year. Each share can be converted into four shares of common stock. Stock warrants to buy 20,000 shares of Foreman are also outstanding. For $20, each warrant can be converted into a share of Foreman’s common stock. The fair value of this stock is $25 throughout the year. Burks owns none of these warrants. Foreman has convertible bonds payable…
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…
1. Parent and its 80% owned Subsidiary report the following at December 31 of the current year: Parent Net Income, P100,000; Parent Dividends, P20,000, Parent Land, P500,000. Subsidiary Net Income, P80,000; Subsidiary Dividends, P10,000; Subsidiary Land, P300,000. On June 1, of the current year, Subsidiary sold land to Parent reporting a gain on sale of P10,000. The gain is included in the net income reported by the Subsidiary. Determine the valuation of Land in the consolidated balance sheet. 2. Parent and its 80% owned Subsidiary report the following at December 31 of the current year: Parent Net Income, P100,000; Parent Dividends, P20,000, Parent Land, P500,000. Subsidiary Net Income, P80,000; Subsidiary Dividends, P10,000; Subsidiary Land, P300,000. On June 1, of the current year, Subsidiary sold land to Parent reporting a gain on sale of P10,000. The gain is included in the net income reported by the Subsidiary. Determine the equity holders of parent’s net income. 3. Parent and…
On January 1, 20x6, Parent Corporation purchased 80% of Subsidiary Company's outstanding stock for P620,000. At that date, all of Subsidiary's assets and liabilities had market valu. approximately equal to their book valu. and no goodwill was includ. in the purchase price. The following information was available for 20x6: income from own operations of Parent, P150,000, operating loss of Subsidiary, P20,000. Dividends paid in 20x6 by Parent, P75,000; by Subsidiary to Parent, P12,000.1 On July 1, 20x6, there was a downstream sale of equipment at a gain of P25,000. The equipment is expected to have a remaining useful life of 10 years from the date of sale. Also, on January 1, 20x6, there was an upstream sale of furniture at a loss of P7,500. The furniture is expected to have a useful life of five years from the date of sale. Non-controlling interest is measured at fair value. How much is the consolidated net income attributable to the parent shareholders' equity?
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
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. 1. Determine the Non-Controlling Interest as of December 31, 20x8. 2.
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. 1) From the given data, determine the total assets as of December 31, 20x1. 2) From the given data, assuming the retained earning of Subsidiary on December 31, 20x11 is P350,000, determine the non-controlling interest to be reported in the consolidated financial statements on December 31, 20x11 assuming no changes to Subsidiary company’s ordinary…
On January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for $320,000. · On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. · Net income and dividends for Subsidiary Company were $50,000 and $10,000, respectively. · Parent Company has used the simple equity method for recording the Subsidiary income and dividends. · On January 1, 2020, the only tangible assets of Subsidiary that were undervalued were inventory and equipment. Inventory was worth $5,000 more than cost. Equipment, which was worth $15,000 more than book value, has a remaining life of 5 years, and straight-line depreciation is used. Any remaining excess is goodwill. The following trial balances of the two companies are prepared on December 31, 2020. a. Prepare the Value Analysis table and the Determination and Distribution of Excess schedule table. b. Prepare all the eliminations…
On January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for $320,000. · On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. · Net income and dividends for Subsidiary Company were $50,000 and $10,000, respectively. · Parent Company has used the simple equity method for recording the Subsidiary income and dividends. · On January 1, 2020, the only tangible assets of Subsidiary that were undervalued were inventory and equipment. Inventory was worth $5,000 more than cost. Equipment, which was worth $15,000 more than book value, has a remaining life of 5 years, and straight-line depreciation is used. Any remaining excess is goodwill. The following trial balances of the two companies are prepared on December 31, 2020. d. Prepare the consolidated worksheet. e. Prepare the 2020 consolidated income statement and balance sheet.
On January 2, 2022, Parent Company purchased 90% of the outstanding shares of Subsidiary Company by paying P300,000. On this date, Subsidiary had Share Capital and Retained Earnings amounting to P150,000 and P230,000 respectively. Also, on this date, an equipment was undervalued by P20,000 with remaining useful life of 10 years. On the same date, Parent had P1,000,000 of Share Capital and P700,000 of Retained Earnings. The parent opted to measure the NCI using proportionate share. Parent and Subsidiary reported the following for the year ended December 31, 2022 (see image below).On July 31, 2022, Parent sold a machinery with a 5-year remaining useful life costing P1,500,000 with accumulated depreciation of P1,000,000 for P530,000 to Subsidiary. Questions:a. How much is the Consolidated Retained Earnings at December 31, 2022? b. How much is the Consolidated Net Income? .....