ADVANCED FINANCIAL ACCOUNTING-ACCESS
12th Edition
ISBN: 9781260518740
Author: Christensen
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 1, Problem 1.7E
a.
To determine
Holding company
Holding company is a company that purchases majority of shares of some other company and gains the control over that company by paying an amount which is known as purchase consideration.
The
2
To determine
Subsidiary company
Subsidiary company is a company which is controlled and managed by some other company. The company that controls the operation of subsidiary company is known as its parent company.
The journal entry that will be recorded by company S when it will receive assets from company P.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The December 31, 20x8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the
following summarized amounts:
Assets
Cash and Receivables
Inventory
Buildings and Equipment (net)
Investment in Saloon Company
Total Assets
Liabilities and Equity
Accounts Payable
Common Stock
Retained Earnings
Total Liabilities and Equity
PINT CORPORATION AND SALOON COMPANY
Balance Sheets
December 31, 20x8
view transaction list
Consolidation
Worksheet Entries
A B
<
Pint acquired the shares of Saloon Company on January 1, 20X7. On December 31, 20X8, assume Pint sold Inventory to Saloon during
20X8 for $105,000 and Saloon sold Inventory to Pint for $309,000. Pint's balance sheet contains Inventory Items purchased from
Saloon for $100,000. The Items cost Saloon $60,000 to produce. In addition, Saloon's Inventory contains goods it purchased from Pint
for $27,000 that Pint had produced for $16,200. Assume Saloon reported net Income of $72,000 and dividends of $14,400.…
During a fiscal year, the balance of a parent company's Investment in Subsidiary ledger account for a wholly owned subsidiary, for which the parent company uses the equity method of accounting, increases the amount of the sibsidiary's
A. Adjusted net income.
B. Dividends.
C. Adjusted net income plus dividends.
D. Undistributed earnings.
Asset acquisition vs. stock acquisition (fair value is different from book value)
The following financial statement information is for an investor company and an investee company on January 1, 2013. On January 1, 2013, the investor company's common stock had a traded market value of $17.5 per share, and the
investee company's common stock had a traded market value of $15.5 per share.
Book Values
Fair Values
Investor Investee Investor Investee
Receivables & inventories $50,000 $25,000 $45,000 $22,500
100.000 50,000 150,000 75.000
112,500 50,000 125,000 65,000
75.000 40,000
$262,500 $125,000 $395,000 $202,500
$75,000 $40,000 $90,000 $47,500
10.000 5,000
140,000
75,000
37.500
5,000
$262,500 $125,000
$187,500 $85,000 $305,000 $155,000
Land
Property & equipment
Trademarks & patents
Total assets
Liabilities
Common stock ($1 par)
Additional paid-in capital
Retained earnings
Total liabilities & equity
Net assets
Required (Parts a. and b. are independent of each other.)
Chapter 1 Solutions
ADVANCED FINANCIAL ACCOUNTING-ACCESS
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Bean Corporation purchased 17% of the outstanding shares of common stock of Williams Corporation as a long-term investment. Subsequently, Williams Corporation reported net income and declared and paid cash dividends. What journal entry would Bean Corporation use to record the purchase of Williams Corporation common stock? debit Investment--Williams Corporation; credit Income of Williams Corporation debit Cash; credit Investment--Williams Corporation debit Cash: credit Dividend Revenue Odebit Investment--Williams Corporation; credit Casharrow_forwardThe trial balances for Wallace Corporation and Au Inc. at December 31, Year 4, just before the transaction described below, were as follows: Current assets Land Other tangible assets Liabilities Common shares Retained earnings, 1/1/Year 4 Revenues Expenses Land Other tangible assets Liabilities On December 31, Year 4, Wallace purchased all of the outstanding shares of Au Inc. by issuing 39,000 common shares with a market value of $25 per share. The carrying amounts of Au Inc.'s assets and liabilities were equal to fair value except for the following: Fair Value $527,000 354,000 339,000 Walla $307,000 627,000 527,000 427,000 227,000 627,000 827,000 647,000 Required: What are the balances for the land, other tangible assets, goodwill, investment in common shares, liabilities, common shares, and revenues after the transaction noted above on: (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.) (a) Wallace's separate entity financial statements…arrow_forwardPhelps Corporation owns all of the common stock of Stern Company. Each company maintains its own accounting records and prepares separate financial statements. Balance sheets for each company as of December 31, 20Y8, are as follows: Line Item Description PhelpsCorporation SternCompany Assets Cash 30,500 20,500 Accounts Receivable 29,100 20,000 Inventory 80,000 35,250 Investment in Stern Company 85,750 — Other assets 300,000 40,000 Total assets 525,350 115,750 Liabilities and Stockholders’ Equity Accounts Payable 80,000 30,000 Common Stock 300,000 50,000 Retained Earnings 145,350 35,750 Total liabilities and stockholders’ equity 525,350 115,750 Prepare a December 31, 20Y8, consolidated balance for Phelps Corporation and Subsidiary.arrow_forward
- The separate condensed balance sheets of Patrick Corporation and its wholly-owned subsidiary, Sean Corporation, are as follows: Cash Accounts receivable (net) Inventories BALANCE SHEETS December 31, 2020 Plant and equipment (net) Investment in Sean Total assets Accounts payable Long-term debt Common stock ($10 par) Additional paid-in capital Retained earnings Total liabilities and shareholders' equity Additional Information: Patrick 76,000 148,000 96,000 632,000 462,000 $1,414,000 $ Sean $ 56,000 24,000 80,000 270,000 $430,000 98,000 22,000 66,000 8,000 832,000 236,000 $1,414,000 $ 430,000 142,000 110,000 330,000 • On December 31, 2020, Patrick acquired 100 percent of Sean's voting stock in exchange for $462,000. • At the acquisition date, the fair values of Sean's assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean's inventory were $20,000 more than their carrying amounts. In the December 31, 2020, consolidated…arrow_forwardThe balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows: Cash and receivables Inventory Plant assets (net) Intangible assets Current liabilities Long-term debt Common shares Retained earnings (deficit) Costs of arranging the acquisition Costs of issuing shares. On December 31, Year 6, E Ltd. issued 497 shares, with a fair value of $26 each, for 70% of the outstanding shares of J Ltd. Costs involved in the acquisition, paid in cash, were as follows: Plant assets Long-term debt The carrying amounts of J Ltd.'s net assets were equal to fair values on this date except for the following: Assets Liabilities and Equity J Ltd. $ 20,900 9,700 71,900 7,400 $ 109,900 $ 64,400 $ 30,100 98,900 45,200 155,800 46,600 91,500 (12,000) $ 410,600 $ 109,900 Fair value $ 65,700 42,800 E Ltd. was identified as the acquirer in the combination. Required: (a) Prepare the consolidated balance sheet of E Ltd. on December 31, Year 6, under the identifiable net assets method. Assets E Ltd.…arrow_forwardBean Corporation purchased 35% of the outstanding shares of common stock of Williams Corporation as a long-term investment. Subsequently, Williams Corporation reported net income. What journal entry would Bean Corporation use to record its share of the earnings of Williams Corporation? debit Cash: credit Dividend Revenue debit Investment in Williams Corporation Stock: credit Cash debit Cash: credit Investment in Williams Corporation debit Investment in Williams Corporation; credit Income of Williams Corporationarrow_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_forwardRim Ltd purchased assets of 8,00,000 from Ant Ltd. It issued equity shares of 100 each full paid up in satisfaction of their claim. Make Journal entries to record these transactions.arrow_forwardOn January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,000 and (XYZ) P925,000 Net income-six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,000 Dividends paid-3/25/Y2 by ABC was P750,000 What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet? The answer is 3,250,000. How is this solved?arrow_forward
- North Ltd acquired $100,000 of shares in South Ltd for trading purposes on 1 January 20X3. Transaction costs of $2,000 were incurred. The fair value of the shares at 31 December 20X3 was $120, 500. Choose the account names and calculate the amount that correctly account for this investment on 31 December 20X3 (amount for the credit entry is not required).arrow_forwardOn January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,00 and (XYZ) P925,000; Net income - six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,000; Dividends paid-3/25/Y2 by ABC was P750,000. What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet?arrow_forwardOn January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows: Retained earnings-12/31/Y1 (ABC) P3,200,00 and (XYZ) P925,000; Net income - six months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,00O; Dividends paid-3/25/Y2 by ABC was P750,000. What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet? * Your answerarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you