GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
13th Edition
ISBN: 9781260087383
Author: Joe Ben Hoyle
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 34P
a.
To determine
Provide entry to record the acquisition of the shares of Company W.
b.
To determine
Provide entries at the end of 2017 and 2018 to adjust its contingent performance obligation for changes in fair value and the December 31, 2018, payment.
c.
To determine
Provide consolidation worksheet entries as of December 31, 2018, assuming that B has applied the equity method.
d.
To determine
Provide consolidation worksheet entries as of December 31, 2018, assuming that B has applied the initial value method.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Branson paid $537,100 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2017. On that date, the subsidiary had a book value of $353,000 (common stock of $200,000 and retained earnings of $153,000), although various unrecorded royalty agreements (10-year remaining life) were assessed at a $153,000 fair value. Any remaining excess fair value was considered goodwill.
In negotiating the acquisition price, Branson also promised to pay Wolfpack’s former owners an additional $57,000 if Wolfpack’s income exceeded $120,000 total over the first two years after the acquisition. At the acquisition date, Branson estimated the probability-adjusted present value of this contingent consideration at $39,900. On December 31, 2017, based on Wolfpack’s earnings to date, Branson increased the value of the contingency to $45,600.
During the subsequent two years, Wolfpack reported the following amounts for income and dividends:
Net Income
Dividends Declared
2017
$
66,400…
Branson paid $543,800 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2020. On that
date, the subsidiary had a book value of $401,000 (common stock of $200,000 and retained earnings of $201,000).
although various unrecorded royalty agreements (10-year remaining life) were assessed at a $124.000 fair value. Any
remaining excess fair value was considered goodwill.
In negotiating the acquisition price, Branson also promised to pay Wolfpack's former owners an additional $56,000 if
Wolfpack's income exceeded $130,000 total over the first two years after the acquisition. At the acquisition date,
Branson estimated the probability-adjusted present value of this contingent consideration at $39,200. On December 31,
2020, based on Wolfpack's earnings to date, Branson increased the value of the contingency to $44,800.
During the subsequent two years, Wolfpack reported the following amounts for income and dividends:
Net
Income
2020 $72,400
2021
82,400
Dividends…
Branson paid $573,200 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2020. On that date, the
subsidiary had a book value of $430,000 (common stock of $200,000 and retained earnings of $230,000), although various
unrecorded royalty agreements (10-year remaining life) were assessed at a $133,000 fair value. Any remaining excess fair value was
considered goodwill.
In negotiating the acquisition price, Branson also promised to pay Wolfpack's former owners an additional $44,000 if Wolfpack's
income exceeded $150,000 total over the first two years after the acquisition. At the acquisition date, Branson estimated the
probability-adjusted present value of this contingent consideration at $30,800. On December 31, 2020, based on Wolfpack's earnings
to date, Branson increased the value of the contingency to $35,200.
During the subsequent two years, Wolfpack reported the following amounts for income and dividends:
Dividends Declared
$ 15,000
25,000
Net Income
$…
Chapter 3 Solutions
GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10Q
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Paar Corporation bought 100 percent of Kimmel,...Ch. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - If no legal, regulatory, contractual, competitive,...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - What is Phoenixs consolidated retained earnings...Ch. 3 - On its December 31, 2018, consolidated balance...Ch. 3 - Prob. 13PCh. 3 - Herbert, Inc., acquired all of Rambis Companys...Ch. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Following are selected account balances from...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - On January 1, 2017, Pinnacle Corporation exchanged...Ch. 3 - Following are selected accounts for Mergaronite...Ch. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39APCh. 3 - Prob. 40APCh. 3 - Prob. 1DYSCh. 3 - FASB ASC AND IASB RESEARCH CASE A vice president...Ch. 3 - Prob. 4DYSCh. 3 - Prob. 5DYS
Knowledge Booster
Similar questions
- Branson paid $540,800 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2020. On that date, the subsidiary had a book value of $390,000 (common stock of $200,000 and retained earnings of $190,000), although various unrecorded royalty agreements (10-year remaining life) were assessed at a $126,000 fair value. Any remaining excess fair value was considered goodwill. In negotiating the acquisition price, Branson also promised to pay Wolfpack’s former owners an additional $36,000 if Wolfpack’s income exceeded $140,000 total over the first two years after the acquisition. At the acquisition date, Branson estimated the probability-adjusted present value of this contingent consideration at $25,200. On December 31, 2020, based on Wolfpack’s earnings to date, Branson increased the value of the contingency to $28,800. During the subsequent two years, Wolfpack reported the following amounts for income and dividends: Net Income Dividends Declared 2020 $…arrow_forwardBranson paid $607,500 cash for all of the outstanding common stock of Wolfpack, Inc., on January 1, 2020. On that date, the subsidiary had a book value of $373,000 (common stock of $200,000 and retained earnings of $173, 000), although various unrecorded royalty agreements (10-year remaining life) were assessed at a $199, 000 fair value. Any remaining excess fair value was considered goodwill. In negotiating the acquisition price, Branson also promised to pay Wolfpack's former owners an additional $45,000 if Wolfpack's income exceeded $150,000 total over the first two years after the acquisition. At the acquisition date, Branson estimated the probability - adjusted present value of this contingent consideration at $ 31,500. On December 31, 2020, based on Wolfpack's earnings to date, Branson increased the value of the contingency to $36,000. During the subsequent two years, Wolfpack reported the following amounts for income and dividends: Net Income Dividends Declared 2020 $ 80,500 $…arrow_forwardOn December 31, 2017, X Company paid $3,600,000 for 100% of the stock of Y Company when Y's underlying net assets had a fair value of $2,800,000. Almost immediately after the acquisition, X paid $240,000 for an advertising campaign that was designed to maintain goodwill. How much will be reported as goodwill on X Company's December 31, 2018 balance sheet?arrow_forward
- On January 1, 2017, Harrison, Inc., acquired 90 percent of Starr Company in exchange for $1,125,000 fair-value consideration. The total fair value of Starr Company was assessed at $1,200,000. Harrison computed annual excess fair-value amortization of $8,000 based on the difference between Starr’s total fair value and its underlying book value. The subsidiary reported net page 194income of $70,000 in 2017 and $90,000 in 2018 with dividend declarations of $30,000 each year. Apart from its investment in Starr, Harrison had net income of $220,000 in 2017 and $260,000 in 2018. What is the consolidated net income in each of these two years? What is the balance of the noncontrolling interest in Starr at December 31, 2018?arrow_forwardOn January 1, 2017, Harrison, Inc., acquired 90 percent of Starr Company in exchange for $1,125,000 fair-value consideration. The total fair value of Starr Company was assessed at $1,200,000. Harrison computed annual excess fair-value amortization of $8,000 based on the difference between Starr’s total fair value and its underlying book value. The subsidiary reported net income of $70,000 in 2017 and $90,000 in 2018 with dividend declarations of $30,000 each year. Apart from its investment in Starr, Harrison had net income of $220,000 in 2017 and $260,000 in 2018.a. What is the consolidated net income in each of these two years?b. What is the balance of the noncontrolling interest in Starr at December 31, 2018?arrow_forwardOn January 1, 2017, Harrison, Inc., acquired 90 percent of Starr Company in exchange for $1,125,000 fair-value consideration. The total fair value of Starr Company was assessed at $1,200,000. Harrison computed annual excess fair-value amortization of $8,000 based on the difference between Starr’s total fair value and its underlying book value. The subsidiary reported net income of $70,000 in 2017 and $90,000 in 2018 with dividend declarations of $30,000 each year. Apart from its investment in Starr, Harrison had net income of $220,000 in 2017 and $260,000 in 2018. What is the consolidated net income in each of these two years? What is the balance of the noncontrolling interest in Starr at December 31, 2018?arrow_forward
- On January 1, 2017, Harrison, Inc., acquired 90 percent of Starr Company in exchange for$1,125,000 fair-value consideration. The total fair value of Starr Company was assessed at $1,200,000. Harrison computed annual excess fair-value amortization of $8,000 based on the difference between Starr’s total fair value and its underlying book value. The subsidiary reported net income of $70,000 in 2017 and $90,000 in 2018 with dividend declarations of $30,000 each year. Apart from its investment in Starr, Harrison had net income of $220,000 in 2017 and $260,000 in 2018. What is the balance of the non controlling interest in Starr at December 31, 2018?arrow_forwardOn January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,141,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,380,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $240,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $415,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.During the two years following the acquisition, Sellinger reported the following net income and dividends:Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.Prepare a schedule showing Palka’s December 31, 2018, equity…arrow_forwardOn July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $720,000 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $290,000 both before and after Truman’s acquisition.In reviewing its acquisition, Truman assigned a $100,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years.The following financial information is available for these two companies for 2018. In addition, the subsidiary’s income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.Answer each of the following:a. How did Truman allocate Atlanta’s acquisition-date fair value to the various assets acquired and liabilities assumed in the combination?b. How did Truman allocate the goodwill from the acquisition across…arrow_forward
- On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,666,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,070,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $300,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $656,250 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2017 2018 $525,000 $701,000 Net…arrow_forwardOn May 1, Freeman Company agreed to sell the assets of its Footwear Division to Albanese Incorporated for $97 million. The sale was completed on December 31, 2024. The following additional facts pertain to the transaction: • The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. • The book value of Footwear's assets totaled $65 million on the date of the sale. • Footwear's operating income was a pre-tax loss of $14 million in 2024. . Freeman's income tax rate is 25%. In the income statement for the year ended December 31, 2024, Freeman Company would report income from discontinued operations of:arrow_forwardPlacid Lake Corporation acquired 90 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $610,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $4,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $510,000. Scenic reported net income of $320,000. Placid Lake declared $200,000 in dividends during this period; Scenic paid $61,000. At the end of 2018, selected figures from the two companies' balance sheets were as follows: Placid Lake Scenic Inventory $ 350,000 $ 111,000 Land 810,000 410,000 Equipment (net) 610,000 510,000 During 2017, intra-entity sales of $180,000 (original cost of $84,000) were made. Only 30 percent of this inventory was still held within the consolidated entity at the end of 2017. In 2018, $300,000 in intra-entity sales were made…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education