Connect Online Access for International Accounting
5th Edition
ISBN: 9781260248463
Author: Doupnik, Timothy
Publisher: Mcgraw-hill Higher Education (us)
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 35EP
a.
To determine
Calculate the amount of non-controlling interest and
b.
To determine
Calculate the amount of non-controlling asset and goodwill from U.S. GAAP (Generally Accepted Accounting Principles).
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Kochin Corporation (KC) owns an 85% stake in Doha Corporation (DC). On 1 January 20XX, KC decided to sell its 50% interest in DC to a third party in exchange for € 600,000 in cash. On the disposal date, DC's fair value amounted to € 1,000,000. Furthermore, in KC's consolidated financial statements, the carrying amount of DC's net assets is € 1,000,000 and the carrying value of non-controlling interests in DC (including non-controlling interests' share of accumulated other comprehensive income) is € 100,000. As a result of this transaction, KC lost control of DC but retained 35% interest in the previous subsidiary, amounting to € 350,000 as of that date.
Instructions:
1. Discuss and determine the accounting treatment for recording the transaction in accordance with IFRS 10
2.Calculate how much profit or loss from the transaction (if any)
3. Discuss and determine how the accounting treatment would have been different if it had been assumed that KC had not lost control after the…
Boldklub Ltd pays $89 million to acquire Nomme Pty Ltd. At the date of acquisition, the directors of
Boldklub Ltd determined Nomme Pty Ltd's net assets had a fair value of $75 million.
State, in $ millions, the goodwill that Boldklub Ltd would recognise from this event.
On January 1, 2018, Morey, Inc., exchanged $178,000 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values.On June 30, 2018, Morey paid $560,000 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill.Amsterdam reports the following amounts at December 31, 2018 (credit balances shown in parentheses):Amsterdam’s revenue and expenses were distributed evenly throughout the year and no changes in Amsterdam’s stock have occurred.Using the acquisition method, compute the following:a. The acquisition-date fair value of Amsterdam to be included in…
Chapter 4 Solutions
Connect Online Access for International Accounting
Ch. 4 - Prob. 1QCh. 4 - How do IFRS and U.S. GAAP differ in their approach...Ch. 4 - Prob. 3QCh. 4 - Prob. 4QCh. 4 - Prob. 5QCh. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Prob. 9QCh. 4 - Where in the food products value chain are...
Ch. 4 - Prob. 11QCh. 4 - Prob. 12QCh. 4 - Prob. 13QCh. 4 - Prob. 14QCh. 4 - Prob. 15QCh. 4 - Prob. 16QCh. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 21QCh. 4 - How does the two-step model traditionally used for...Ch. 4 - How are borrowing costs accounted for under IFRS?Ch. 4 - Prob. 24QCh. 4 - 1. A company incurred the following costs related...Ch. 4 - 2. A company determined the following values for...Ch. 4 - Prob. 3EPCh. 4 - 4. On January 1, Year 1, an entity acquires a new...Ch. 4 - Prob. 5EPCh. 4 - 6. Under IFRS, an entity that acquires an...Ch. 4 - Prob. 7EPCh. 4 - Prob. 8EPCh. 4 - Prob. 9EPCh. 4 - Prob. 10EPCh. 4 - Prob. 11EPCh. 4 - Changsha Corporation purchased an asset during the...Ch. 4 - Prob. 13EPCh. 4 - Prob. 14EPCh. 4 - In the fourth quarter of Year 1, Beech Corporation...Ch. 4 - 16. This is a continuation of problem 15. At...Ch. 4 - 17. Steffen-Zweig Company exchanges two used...Ch. 4 - 18. Stevenson Corporation acquires a one-year-old...Ch. 4 - 19. Quick Company acquired a piece of equipment in...Ch. 4 - Prob. 20EPCh. 4 - 21. Jefferson Company acquired equipment on...Ch. 4 - 22. Madison Company acquired a depreciable asset...Ch. 4 - 29. Stratosphere Company acquires its only...Ch. 4 - QualCore Company began operations on January 1,...Ch. 4 - 26. Buch Corporation purchased Machine Z at the...Ch. 4 - Prob. 26EPCh. 4 - Prob. 27EPCh. 4 - Prob. 28EPCh. 4 - Prob. 29EPCh. 4 - Prob. 31EPCh. 4 - Prob. 33EPCh. 4 - Prob. 34EPCh. 4 - Prob. 35EPCh. 4 - Prob. 36EPCh. 4 - Prob. 37EP
Knowledge Booster
Similar questions
- On January 1, 2016, Cayce Corporation acquired 100 percent of Simbel Company for consideration transferred with a fair value of $126,000. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the initial value method. Any excess of fair value of consideration transferred over book value is attributable to undervalued land on Simbel’s books. Simbel had no retained earnings at the date of acquisition. Following are the 2017 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars ($) and Egyptian pounds ($E), respectively.Additional Information• During 2016, the first year of joint operation, Simbel reported income of $E 163,000 earned evenly throughout the year. Simbel declared a dividend of $E 30,000 to Cayce on June 1 of that year. Simbel also declared the 2017 dividend on June 1.• On December 9, 2017, Simbel classified a $E 10,000 expenditure as a…arrow_forwardOn January 1, 2018, Morey, Inc., exchanged $167,900 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values. On June 30, 2018, Morey paid $602,000 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill. Amsterdam reports the following amounts at December 31, 2018 (credit balances shown in parentheses): Revenues $ (381,000 ) Expenses 221,000 Retained earnings, January 1 (212,400 ) Dividends declared, October 1 20,000 Common stock (500,000 ) Amsterdam’s revenue and expenses were distributed evenly…arrow_forwardKochin Corporation (KC) owns an 85% stake in Doha Corporation (DC). On January 1, 20XX, KC decided to sell the 50% interest in DC to a third party in exchange for € cash 600,000. On the disposal date, DC's fair value amounted to € 1,000,000. Furthermore, in the report In KC's consolidated financial statements, the carrying amount of DC's net assets is € 1,000,000 and the carrying amount of the interest non-controlling interest in DC (including non-controlling interest's share of accumulated income another comprehensive) is € 100,000. As a result of this transaction, KC lost control of DC however retains 35% interest in the previous subsidiary, amounting to € 350,000 as of that date. Instructions: 1. Discuss and determine the accounting treatment for recording the transaction accordingly with IFRS 10 (PSAK 65) 2.Calculate how much profit or loss from the transaction (if any) 3. Discuss and determine how the accounting treatment would have been different if it assumed that KC didn't lose…arrow_forward
- On January 1, 2018, Brooks Corporation exchanged $1,183,000 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,105,000. Chandler’s individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $204,000 with an estimated remaining life of six years. The Chandler acquisition was Brooks’s only business combination for the year. In case expected synergies did not materialize, Brooks Corporation wished to prepare for a potential future spin-off of Chandler, Inc. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2018, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Parentheses indicated credit balances. a. Show…arrow_forwardOn January 1, 2024, Morey, Incorporated, exchanged $180,575 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values. On June 30, 2024, Morey paid $605,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill. Amsterdam reports the following amounts at December 31, 2024 (credit balances shown in parentheses): Revenues $ (291,000) Expenses 186,000 Retained earnings, January 1 (237,300) Dividends declared, October 1 10,000 Common stock (500,000) Amsterdam’s revenue and expenses were distributed evenly throughout the year, and no…arrow_forwardS acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the “Investment in F” account on S’s financial records at the acquisition date?arrow_forward
- On 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_forwardNorthwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2021, for $410 million.At the date of purchase, the book value of Vancouver's net assets was $780 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value exceeded book value by $10 million for the inventory and by $15 million for the plant facilities.The estimated useful life of the plant facilities is 15 years. All inventory acquired was sold during 2021.Vancouver reported net income of $150 million for the year ended December 31, 2021. Vancouver paid a cash dividend of $20 million.Required:1. Prepare all appropriate journal entries related to the investment during 2021.2. What amount should Northwest report as its income from its investment in Vancouver for the…arrow_forwardOn December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.006 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and fair values of the subsidiary's assets and liabilities were as follows: Cash CHF Inventory Property, plant, and equipment Notes payable 806,000 1,306,000 4,006,000 (2,112,000) Stephanie prepares consolidated financial statements on December 31, 2020. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation. a. Determine the translation adjustment to be reported on Stephanie's December 31, 2020, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary's functional currency. What is the economic relevance of this translation adjustment? b. Determine the remeasurement gain or loss to be reported in Stephanie's 2020…arrow_forward
- Northwest Paperboard Company, a paper and allied products manufacturer, was seeking to gain a foothold in Canada. Toward that end, the company bought 40% of the outstanding common shares of Vancouver Timber and Milling, Inc., on January 2, 2021, for $400 million. At the date of purchase, the book value of Vancouver’s net assets was $775 million. The book values and fair values for all balance sheet items were the same except for inventory and plant facilities. The fair value exceeded book value by $5 million for the inventory and by $20 million for the plant facilities. The estimated useful life of the plant facilities is 16 years. All inventory acquired was sold during 2021. Vancouver reported net income of $140 million for the year ended December 31, 2021. Vancouver paid a cash dividend of $30 million.Required:1. Prepare all appropriate journal entries related to the investment during 2021.2. What amount should Northwest report as its income from its investment in Vancouver for the…arrow_forwardOn January 1, 20X8, Plum Company acquired all of the outstanding stock of Snap PLC, a British Company, for $300,000. Snap's net assets on the date of acquisition were 220,000 pounds ( £ ). On January 1,2018, the book and fair values of the Snap's identifiable assets and liabilities approximated their fair values except for equipment. The remaining useful life of Snap's equipment at January 1,20×8, was 10 years. During 20X8, Snap earned 80,000 pounds in income and declared and paid 10,000 pounds in dividends. The dividends were declared and paid in pounds on November 1,20×8. Plum's income from its own operations was $160,000 for 20X8. Plum's total stockholders' equity on January 1,20×8 was $1,100,000. It declared $90,000 of dividends during 20X8. Assume Plum uses the fully adjusted equity method to account for its investment in Snap. Management has determined that the pound is Snap's appropriate functional currency. Relevant exchange rates were as follows: January 1,20×8,$1.20=1£…arrow_forwardOn October 1, 20X8, FLORIDA INC. acquired 100% of FLOUR CORP. for P280,000. On that date, the carrying values of FLOUR's assets and liabilities were P450,000 and P200,000, respectively. The fair values of FLOUR's assets and liabilities were P550,000 and P200,000, respectively. Additionally, FLOUR had identifiable intangible assets at the time of acquisition with a fair value of P60,000. What is the gain to be reported on FLORIDA's December 31, 20X8 consolidated income statement?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:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial 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