Concept explainers
a.
Concept Introduction: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary
To Calculate: Number of shares that were issued, assuming that P Company’s common stock market value of
b.
Concept Introduction: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Calculate: The par value per share of P Company’s common stock.
c.
Concept Introduction: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Calculate: Amount of
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Loose Leaf For Advanced Financial Accounting
- On 30 June 20X1, Buyer plc obtained control of Target plc by purchased 60% of Target plc’s ordinary shares. The revenue reported by Buyer plc and Target plc in their separate income statements for the financial year ending 31 December 20X1 are £10,000 and £2,000 respectively. Assume no intra-group transactions and revenues are spread evenly throughout the year. Revenue reported in Buyer plc’s consolidated income statement for the year ending 31 December 20X1 is: a. £12,000 b. £11,200 c. £11,000 d. £10,600 e. £6,000arrow_forwardAssume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (b) On 20 December 20x1, a 70%-owned Subsidiary sold a piece of inventory Y which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date.arrow_forwardkayend Corporation purchases 85% of Subil Products' common stock. Assume that Kayend already recorded the acquisition on January 1, 20X1. During the year, Kayend reports operating earnings of $450,000, excluding its income from investing in Subil, and declares dividends of $70,000. Subil reports 20X1 net income of $50,000 and declares dividends of $30,000. Which of the following is Kayend's journal entry to record its share of Subil's income? Debit Noncontrolling Interest for $42,500; Credit Cash for $42,500 Debit Investment in Subil Products for $42,500; Credit Cash for $42,500 Debit Cash for $42,500; Credit Noncontrolling Interest for $42,500 Debit Investment in Subil Products for $42,500; Credit Income from Subil Products for $42,500arrow_forward
- 2. ABC Corporation holds ordinary shares of XYZ Inc. acquired as follows: Date of Acquisition Shares Total Cost September 19, Year 2 750 60,000 July 16, Year 1 1,250 110,000 The shares above were classified as equity investments at fair value through other comprehensive income. Fair values on December 31, Year 1 and Year 2 were P 85 and P 90 respectively. In Year 3, ABC Corp. Received 2,000 rights to purchase XYZ Inc. ordinary shares at P 80 per share. Five rights are required to purchase one share. ABC Corp. used rights to purchase additional 300 shares of XYZ Inc when each shares sells at P 100. Subsequently ABC sold the remaining rights at 4.50 each. At December 31, Year 3. XYZ Inc ordinary shares sell at P 98. Required:a) Determine the amount of the equity account Unrealized Gains or Losses on Equity Investments at Fair Value through Other Comprehensive Income at the end of the Years 1 and 2.b) Determine the amount taken to other comprehensive income as a result of the…arrow_forward1. Matray acquired 16,000 ordinary shares of Petros on 1 April 20X9. On 31 December 20X8Petros’s accounts showed a share premium of $4,000 and retained earnings of $15,000. The fairmarket value of non-controlling interest at acquisition was $7,000.Below are the statements of financial position for the two companies as at 31 December 20X9:Matray PetrosNon-current assets:Property, plant and equipment 39,000 33,000Investment in Petros 50,000Current assets 78,000 40,000Total assets 167,000 73,000Equity and liabilitiesEquityOrdinary shares of: $1 each 100,000: 50c each 10,000Share premium 7,000 4,000Retained earnings 40,000 39,000Current liabilities 20,000 20,000Total equity and liabilities 167,000 73,000Required:Prepare the consolidated statement of financial position of Matray as at 31 December 20X9. Assumeprofits have accrued evenly throughout the yeararrow_forwardOn 1 January 20X3 Westbridge acquired all of Brookfield's 100,000 $1 shares for $300,000. The goodwill acquired in the business combination was $40,000, of which 50% had been written off as impaired by 31 December 20X5. On 31 December 20X5 Westbridge sold all of Brookfield's shares for $450,000 when Brookfield had retained earnings of $185,000. What is the profit on disposal that should be included in the individual entity financial statements of Westbridge?arrow_forward
- On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1, were as follows: REQUIREMENTS: USING THE ADDITIONAL INFORMATION WHAT IS THE AMOUNT OF THE: a. The investment balance on December 31 b. Dividend Income for the year c. Non-controlling interest in net income on December 31arrow_forwardOn February 1, 20x1, Paco Corp. acquired outstanding ordinary shares of School Inc. for cash. The incomplete working paper elimination entries on that date for the consolidated of statement of financial position of Paco Corp. and School Inc. are shown below: WPEE 1 Shareholders' equity - School Inc. 1,453,500 Investment in School Inc. 1,235,475 Non-controlling interest 218,025 WPEE 2 Inventories 33,150 Equipment 280,500 Goodwill ? Investment in School Inc. 349,775 Non-controlling interest ? Assuming NCI is measured at fair value, the cash consideration includes control premium of P20,000, what is the amount of goodwill?arrow_forward9. On February 1, 20x21, Paco Corp. acquired outstanding ordinary shares of School Inc. for cash. The incomplete working paper elimination entries on that date for the consolidated of statement of financial position of Paco Corp. and School Inc. are shown below: WPEE 1 Shareholders’ equity – School Inc. 1,453,500 Investment in School Inc. 1,235,475 Non-controlling interest 218,025 WPEE 2 Inventories 33,150 Equipment 280,500 Goodwill…arrow_forward
- On January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1, were as follows: REQUIREMENTS:Using the proportionate basis or partial goodwill method, compute the following: 1. The amount of goodwill on January 1:A. P 2,600 C. P 14,400B. P 3,800 D. P 25,200 2. The equity holders of parent (or controlling interest) retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000 3. The consolidated retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000arrow_forwardOn January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 parcommon stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1,were as follows: Using the proportionate basis or partial goodwill method, compute the following:1. The amount of goodwill on January 1:A. P 2,600 C. P 14,400B. P 3,800 D. P 25,2002. The equity holders of parent (or controlling interest) retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,0003. The consolidated retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000arrow_forward
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning