Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 3, Problem 3.9E
To determine
Introduction:
Consolidated financial statements are financial statements maintained by an entity with multiple subsidiary and division.
To Prepare:
The consolidated
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Peace Computer Corporation acquired 90 percent of Symbol Software Company’s common stock on January 2, 20X3, by issuing preferred stock with a par value of $6 per share and a market value of $8.10 per share. A total of 10,000 shares of preferred stock was issued. Balance sheet data for the two companies immediately before the business combination are as follows:
Peace Computer Corporation
Symbol Software Company
Book Value
Fair Value
Book Value
Fair Value
Cash
$ 200,000
$ 200,000
$ 50,000
$ 50,000
Other Assets
400,000
400,000
120,000
120,000
Total Debits
$ 600,000
$ 170,000
Current Liabilities
$ 100,000
100,000
$ 80,000
80,000
Common Stock
300,000
50,000
Retained Earnings
200,000
40,000
Total Credits
$ 600,000
$ 170,000
Required:
Prepare a consolidated balance sheet for the companies immediately after Peace obtains ownership of Symbol by issuing the preferred stock.
Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2. Balance sheet datafor the two companies immediately following acquisition follow:
7. What amount of consolidated retained earnings will be reported? A.P 295,000 C. P 232,000B. P 268,000 D. P 205,0008. What amount of stockholders; equity will be reported?A. P 355,000 C. P 419,500B. P 397,000
Price Company issued 8,740 shares of its $20 par value common stock for the net assets of Sims Company in a business combination under which Sims Company will be merged into Price Company. On the date of the combination, Price Company common stock had a fair value of $30 per share. Balance sheets for Price Company and Sims Company immediately prior to the combination were:
Price
Sims
Current assets
$460,540
$61,810
Plant and equipment (net)
529,190
140,940
Total
$989,730
$202,750
Liabilities
$274,100
$53,300
Common stock, $20 par value
558,200
88,000
Other contributed capital
72,870
20,750
Retained earnings
84,560
40,700
Total
$989,730
$202,750
(a)
If the business combination is treated as a purchase and Sims Company’s net assets have a fair value of $209,574, Price Company’s balance sheet immediately after the combination will include goodwill of…
Chapter 3 Solutions
Advanced Financial Accounting
Ch. 3 - What is the basic idea underlying the preparation...Ch. 3 - How might consolidated statements help an investor...Ch. 3 - Prob. 3.3QCh. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Prob. 3.6QCh. 3 - Prob. 3.7QCh. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Prob. 3.10Q
Ch. 3 - Prob. 3.11QCh. 3 - Prob. 3.12QCh. 3 - What is meant by indirect control? Give an...Ch. 3 - Prob. 3.14QCh. 3 - Prob. 3.15QCh. 3 - Prob. 3.16QCh. 3 - Prob. 3.17QCh. 3 - Prob. 3.18QCh. 3 - Prob. 3.1CCh. 3 - Prob. 3.2CCh. 3 - Prob. 3.1.1ECh. 3 - Prob. 3.1.2ECh. 3 - Prob. 3.1.3ECh. 3 - Prob. 3.1.4ECh. 3 - Multiple-Choice Question on Variable Interest...Ch. 3 - Multiple-Choice Question on Variable Interest...Ch. 3 - Prob. 3.2.3ECh. 3 - Prob. 3.2.4ECh. 3 - Prob. 3.3.1ECh. 3 - Prob. 3.3.2ECh. 3 - Prob. 3.3.3ECh. 3 - Prob. 3.4.1ECh. 3 - Prob. 3.4.2ECh. 3 - Prob. 3.4.3ECh. 3 - Prob. 3.4.4ECh. 3 - Balance Sheet Consolidation On January 1, 20X3,...Ch. 3 - Prob. 3.6ECh. 3 - Prob. 3.7ECh. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Reporting for a Variable Interest Entity Gamble...Ch. 3 - Prob. 3.11ECh. 3 - Prob. 3.12ECh. 3 - Prob. 3.13ECh. 3 - Prob. 3.14ECh. 3 - Prob. 3.15ECh. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19.1PCh. 3 - Prob. 3.19.2PCh. 3 - Prob. 3.20PCh. 3 - Prob. 3.21PCh. 3 - Prob. 3.22PCh. 3 - Prob. 3.23PCh. 3 - Prob. 3.24PCh. 3 - Prob. 3.25PCh. 3 - Prob. 3.26PCh. 3 - Prob. 3.27PCh. 3 - Prob. 3.28PCh. 3 - Prob. 3.29PCh. 3 - Consolidated Worksheet at End of the First Year of...Ch. 3 - Prob. 3.31P
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
- 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_forwardParent Company, an SME issued 60,000 shares of P100 par value ordinary shares for all the outstanding stock of Sub Company in business combination consummated on January 2, 2022. Parent's ordinary shares were selling at P160/sh at the time of acquisition. The book value of Sub's net assets was P7,600,000. Out of pocket costs of combination were as follows: Legal fees for business combination, P24,000; printing cost for stock certificate, P18,800; finder's fee, P54,000; and CPA audit fee for business combination, P38,000. A contingent consideration that is probable and can be reasonably estimated amounted to P36,400.The total amount to be capitalized as cost of investment in Sub Company is: 9,636,400 9,752,400 9,600,000 9,716,000arrow_forwardParent Company, an SME issued 60,000 shares of P100 par value ordinary shares for all the outstanding stock of Sub Company in business combination consummated on January 2, 2022. Parent's ordinary shares were selling at P160/sh at the time of acquisition. The book value of Sub's net assets was P7,600,000. Out of pocket costs of combination were as follows: Legal fees for business combination, P24,000; printing cost for stock certificate, P18,800; finder's fee, P54,000; and CPA audit fee for business combination, P38,000. A contingent consideration that is probable and can be reasonably estimated amounted to P36,400.The total amount to be capitalized as cost of investment in Sub Company is: A. 9,752,400 B. 9,600,000 C. 9,636,400 D. 9,716,000arrow_forward
- Puzzle Corporation acquired 100 percent of the common stock of Solver Company by issuing 10,000 shares of $10 par common stock with a market value of $60 per share. Summarized balance sheet data for the two companies immediately preceding the acquisition are as follows: Puzzle Corporation Solver Corporation Book Value Fair Value Book Value Fair Value Total Assets $ 1,200,000 $ 1,500,000 $ 900,000 $ 1,300,000 Total Liabilities $ 800,000 $ 700,000 $ 600,000 $ 750,000 Total Stockholders Equity 400,000 300,000 $ 1,200,000 $ 900,000 Required: Determine the dollar amounts to be presented in the consolidated balance sheet for (1) total assets, (2) total liabilities, and (3) total stockholders' equity.arrow_forwardOn January 1, 20X4, Pony Company acquired 25% of Stallion Company’s common stock at underlying book value of $200,000. Stallion has 80,000 shares of $10 par value, 6 percent cumulative preferred stock outstanding. No dividends are in arrears. Stallion reported net income of $270,000 for 20X4 and paid total dividends of $140,000. Pony uses the equity method to account for this investment. Based on the preceding information, what amount would be reported by Pony Company as the balance in its investment account on December 31, 20X4? Multiple Choice A. $200,000 B. $232,500 C. $220,500 D. $255,500arrow_forwardOn January 1, 20x1 Pinup Corp acquired 34,560 outstanding ordinary shares of Slug corp. for a cash consideration pf P5,158,400. The shareholder’s equity of Slug Corp. on the date of business combination is presented below: Ordinary shares P100 par value 5,760,000 Share premium 1,600,000 Retained Earnings 960,000 Pinup Corp agreed to issue additional 1,000 shares to former owners of Slug Corp if the market price per share of Pinup Corp shares increase to P120 pe share. On the acquisition date, the contingent consideration was estimated at P80,000. What is the amount of non-controlling interest if it is measured at its proportionate share in the identifiable net assets of Slug Corp? 3,328,000 3,492,267 4,992,000 3,200,000arrow_forward
- On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Peery Company Standard Company Debit Credit Debit Credit Current Assets $ 238,000 $ 95,000 Depreciable Assets 300,000 170,000 Investment in Standard Company 100,000 Other Expenses 90,000 70,000 Depreciation Expense 30,000 17,000 Dividends Declared 32,000 10,000 Accumulated Depreciation $ 120,000 $ 85,000 Current Liabilities 50,000 30,000 Long-Term Debt 120,000 50,000 Common Stock 100,000 50,000 Retained Earnings 175,000 35,000 Sales 200,000 112,000 Income from Standard Company 25,000 $ 790,000 $ 790,000 $ 362,000 $ 362,000 Required: Prepare the consolidation entries needed as of December 31, 20X5, to complete a…arrow_forwardE 1-4 Journal entries to record an acquisition Pam Company issued 480,000 shares of $10 par common stock with a fair value of $10,200,000 for all the voting common stock of Sun Company. In addition, Pam incurred the following costs: Legal fees to arrange the business combination $100,000 Cost of SEC registration, including accounting and legal fees 48,000 Cost of printing and issuing net stock certificates 12,000 Indirect costs of combining, including allocated overhead and executive salaries 80,000 Immediately before the acquisition in which Sun Company was dissolved, Sun’s assets and equities were as follows (in thousands): Book Value Fair Value Current assets $ 4,000 $ 4,400 Plant assets 6,000 8,800 Liabilities 1,200 1,200 Common stock 8,000 Retained earnings 800 Required: Prepare all journal entries on Pam’s books to record the acquisition.arrow_forwardOn December 31, year 1, Saxe Corporation was acquired by Poe Corporation. In the business combination, Poe issued 200,000 shares of its $10 par common stock, with a market price of $18 a share, for all of Saxe’s common stock. The stockholders’ equity section of each company’s balance sheet immediately before the combination was Accounts Poe Saxe Common stock $3,000,000 $1,500,000 Additional paidin capital 1,300,000 150,000 Retained earnings 2,500,000 850,000 Total $6,800,000 $2,500,000 In the December 31, year 1 consolidated balance sheet, common stock should be reported atarrow_forward
- On December 31, year 1, Saxe Corporation was acquired by Poe Corporation. In the business combination, Poe issued 200,000 shares of its $10 par common stock, with a market price of $18 a share, for all of Saxe’s common stock. The stockholders’ equity section of each company’s balance sheet immediately before the combination was Accounts Poe Saxe Common stock $3,000,000 $1,500,000 Additional paidin capital 1,300,000 150,000 Retained earnings 2,500,000 850,000 Total $6,800,000 $2,500,000 In the December 31, year 1 consolidated balance sheet, additional paid in capital should be reported atarrow_forwardPeal Corportion issues 4,000 shares of its $10 par value stock with a market value of $85,000 to acquire 85 percent of the common stock of Seed Company on August 31, 20X3. Seed's fair value was determined to be $100,000 on that date. Peal had previously purchased 15% of Seed's common stock for $9,000 on January 31, 20X1, and had carried this investment at fair value on its balance. Peal reported this investment at $15,000 on its balance sheet at August 31, 20X3, immediately prior to acquiring the remaining 85 percent of Seed's shares. On August 31, 20X3, Peal also paid appraisal fees of $3,500 and stock issue costs of $2,000 incurred in completing the acquisition of the additional shares. Prepare the journal entries to be recorded by Peal in completing the acquisition of the additional shares. a) Record the acquisition of ownership in Seed Company by the issuance of shares. Record the payment of appraisal fee incurred in completing the acquisition of the additional shares. b) Record…arrow_forward26. On January 1, B company paid $2,295,000 to acquire 90,000 shares of O company's voting common stock, which represents a 30 percent investment. No allocations to goodwill or other specific accounts were made. Significant influence over O company is achieved by this acquisition, and so B company applies the equity method. O company declared a $1 per share dividend during the year and reported net income of $750,000. What is the balance in the Investment in O company account found in B company's financial records as of December 31?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning