Consolidation following acquisition: when a company purchases another company’s common stock, the subsidiary is viewed as being part of the consolidated entity only from the time stock acquired. When a subsidiary is acquired during a fiscal period rather than at the beginning or at the end, the results of the subsidiary’s operations are included in the consolidated statements only for the portion of the year that the parent owned the stock. The subsidiary’s revenues, expenses, gains and losses for the portion of the fiscal period prior to acquisition is excluded from the consolidated financial statements.
the consolidated
b.
Consolidation following acquisition: when a company purchases another company’s common stock, the subsidiary is viewed as being part of the consolidated entity only from the time stock acquired. When a subsidiary is acquired during a fiscal period rather than at the beginning or at the end, the results of the subsidiary’s operations are included in the consolidated statements only for the portion of the year that the parent owned the stock. The subsidiary’s revenues, expenses, gains and losses for the portion of the fiscal period prior to acquisition is excluded from the consolidated financial statements.
The computation of consolidated net income and income to the controlling interest for 20X1
c.
Consolidation following acquisition: when a company purchases another company’s common stock, the subsidiary is viewed as being part of the consolidated entity only from the time stock acquired. When a subsidiary is acquired during a fiscal period rather than at the beginning or at the end, the results of the subsidiary’s operations are included in the consolidated statements only for the portion of the year that the parent owned the stock. The subsidiary’s revenues, expenses, gains and losses for the portion of the fiscal period prior to acquisition is excluded from the consolidated financial statements.
The amount of consolidated retained earnings as of December 31, 20X1.
d.
Consolidation following acquisition: when a company purchases another company’s common stock, the subsidiary is viewed as being part of the consolidated entity only from the time stock acquired. When a subsidiary is acquired during a fiscal period rather than at the beginning or at the end, the results of the subsidiary’s operations are included in the consolidated statements only for the portion of the year that the parent owned the stock. The subsidiary’s revenues, expenses, gains and losses for the portion of the fiscal period prior to acquisition is excluded from the consolidated financial statements.
P’s investment in S corporation.
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ADVANCED FINANCIAL ACCOUNTING IA
- On January 2, Matthews Corporation acquired 20% of the outstanding common stock of Dennehy Company for $450,000. For the year ended December 31, Dennehy reported net income of $90,000 and paid cash dividends of $30,000 on its common stock. On December 31, the carrying value of Matthews' investment in Dennehy under the equity method is O $450,000. O $456,000. O $444,000. O $462,000. eTextbook and Media Save for Later Attempts: 0 of 2 used Submit Answerarrow_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_forwardOn July 1, 20X1, Pushway Corporation issued 100,000 shares of common stock in exchange for all of Stroker Company’s common stock. The Pushway stock issued had a market value of $500,000 on the date of the exchange. Following are the July 1, 20X1, pre-acquisition balance sheets of Pushway and Stroker, plus fair value information for Stroker’s assets and liabilities. Stroker Pushway Book Value Fair Value Assets Current assets $ 300,000 $ 100,000 $ 100,000 Long-term assets 600,000 400,000 470,000 Total assets $ 900,000 $ 500,000 $ 570,000 Liabilities Current liabilities $ 200,000 $ 50,000 $ 50,000 Long-term liabilities 250,000 100,000 120,000 Total liabilities 450,000 150,000 $ 170,000 Stockholders' equity Common stock 300,000 250,000 Retained earnings 150,000 100,000 Total stockholders' equity 450,000 350,000…arrow_forward
- On January 1, 20X4, ABC Company acquired 100,000 ordinary shares of XYZ Company for P5,000,000. At the time of purchase, XYZ Company had 500,000 outstanding shares with a fair value and book value of P25 million. For the year ended December 31, 20X4, the following events took place: • XYZ reported net income of P1,800,000 for the calendar year 20X4. • ABC received from XYZ a dividend of P2.50 per ordinary share. • XYZ recognized unrealized gains of P600,000 on its financial assets at fair value thru other comprehensive income. • The market value of XYZ Company’s shares had temporarily decreased to P45 per share. ABC does have significant influence over XYZ. What is the carrying amount of the investment on December 31, 20X4? a. P4,500,000 b. P5,000,000 c. P5,230,000 d. P5,110,000arrow_forwardOn January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to the acquisition, XYZ had 100,000 shares of stock outstanding. On the date of acquisition, XYZ's stock had fair value of P52 per share. During the year, XYZ reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on ABC's balance sheet on December 31, year 1?arrow_forwardOn January 1, year 1, ABC Company purchased 80% of the stock of XYZ for P4,000,000 cash. Prior to the acquisition, XYZ had 100,000 shares of stock outstanding. On the date of acquisition, XYZ's stock had fair value of P52 per share. During the year, XYZ reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on ABC's balance sheet on December 31, year 1? In good accounting form pls. Ty!arrow_forward
- unc.4 On January 1, Allen Corporation purchased 30% of the 30,000 outstanding common shares of Towne Corporation at $17 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported net income of $24,000 and declared and paid dividends of $8,000. As of December 31, common shares of Towne Corporation were trading at $20 per share. Please Indicate the amount of income that would be reported on the income statement and the investment balance on the year-end balance sheet under requirement (a) and requirement (b).arrow_forwardOn January 2, 20Y7, Mikedes Company acquired 30% of the outstanding stock of Violet Company for $720,000. For the year ended December 31, 20Y7, Violet Company earned income of $190,000 and paid dividends of $40,000. On January 31, 20Y8, Mikedes Company sold all of its investment in Violet Company stock for $770,000. Required: Journalize the entries for Mikedes Company for the purchase of the stock, the share of Violet income, the dividends received from Violet Company, and the sale of the Violet Company stock. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.arrow_forwardOn January 1, 2021, ABC Co. acquired 80% interest in XYZ, Inc. by issuing 5,000 shares with fair value of P30 per share and par value of P20 per share. The financial statements of ABC Co. and XYZ, Inc. immediately after the acquisition are shown below: Jan. 1, 2021 XYZ, Inc. 10,000 АВССо. Cash 20,000 Accounts receivable 60,000 24,000 80,000 150,000 46,000 Inventory Investment in subsidiary Equipment Accumulated depreciation Total assets 400,000 100,000 (40,000) 670,000 (20,000) 160,000 Accounts payable Bonds payable Share capital 40,000 12,000 60,000 340,000 100,000 Share premium 130,000 Retained earnings Total liabilities and equity 100,000 48,000 670,000 160,000 On January 1, 2021, the fair value of the assets and liabilities of XYZ, Inc. were determined by appraisal, as follows: Carrying Fair Fair value XYZ, Inc. amounts values increment Cash 10,000 10,000 Accounts receivable 24,000 24,000 Inventory 46,000 62,000 16,000 Equipment Accumulated depreciation Accounts payable Net assets…arrow_forward
- Peace Company issued common shares with a par value of $59,000 and a market value of $159,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment SYMBOL CORPORATION Balance Sheet January 1, 20X2 Book Value Fair Value $ 57,000 86,000 137,000 $ 57,000 86,000 167,000 59,000 74,000 505,000 328,000 (245,000) 33,000 Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 599,000 $ 745,000 $ 22,000 192,000 137,000 11,000 237,000 $ 599,000 $ 22,000 192,000 The estimated economic life of the patents held by Symbol is 4 years. The buildings and equipment are expected to last 6 more years on average. Symbol paid dividends of $15,000 during 20X2 and reported net income of $87,000 for the year. Required:…arrow_forwardOn June 10, 20X8, Private Corporation acquired 60 percent of Secret Company’s common stock. The fair value of the noncontrolling interest was $32,800 on that date. Summarized balance sheet data for the two companies immediately after the stock purchase are as follows: Item Private Corporation Secret Company Book Value Book Value Fair Value Cash $ 25,800 $ 5,000 $ 5,000 Accounts Receivable 30,000 10,000 10,000 Inventory 80,000 20,000 25,000 Buildings and Equipment (net) 120,000 50,000 70,000 Investment in Secret Company 49,200 Total $ 305,000 $ 85,000 $ 110,000 Accounts Payable $ 25,000 $ 3,000 $ 3,000 Bonds Payable 150,000 25,000 25,000 Common Stock 55,000 20,000 Retained Earnings 75,000 37,000 Total $ 305,000 $ 85,000 $ 28,000 Required: a. Record the consolidation entries required to prepare a consolidated balance sheet immediately after the purchase of Secret Company shares.arrow_forwardOn January 1, year 1, DEF Company purchased 80% of the stock of UVW for P4,000,000 cash. Prior to the acquisition, UVW had 100,000 shares of stock outstanding. On the date of acquisition, UVW's stock had fair value of P52 per share. During the year, UVW reported P280,000 in net income and paid dividends of P50,000. What is the balance in the noncontrolling interest account on DEF's balance sheet on December 31, year 1?arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning