Concept explainers
a.
Introduction: Consolidation
To calculate: Value of inventory to be reported in consolidated balance sheet.
b.
Introduction: Consolidation balance sheet is a financial statement which shows the combined liabilities & assets of subsidiary company & parent company in one single statement.
To calculate: Value of building & equipment to be reported in consolidated balance sheet.
c.
Introduction: Consolidation balance sheet is a financial statement which shows the combined liabilities & assets of subsidiary company & parent company in one single statement.
To calculate: Value of investment in S’s stock to be reported in consolidated balance sheet.
d.
Introduction: Consolidation balance sheet is a financial statement which shows the combined liabilities & assets of subsidiary company & parent company in one single statement.
To calculate: Value of
e.
Introduction: Consolidation balance sheet is a financial statement which shows the combined liabilities & assets of subsidiary company & parent company in one single statement.
To calculate: Value of common stock to be reported in consolidated balance sheet.
f.
Introduction: Consolidation balance sheet is a financial statement which shows the combined liabilities & assets of subsidiary company & parent company in one single statement.
To calculate: Value of
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Advanced Financial Accounting
- RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books. Compute the balance of Investment in DD Stock to be reported in the consolidated balance sheet immediately after the acquisition.arrow_forwardRR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books. Compute the balance of Inventory to be reported in the consolidated balance sheet immediately after the acquisition. a. compute the balance of Buildings and Equipment, net to be reported in the consolidated balance sheet immediately after the acquisition b. compute the balance of Investment in DD Stock to be reported in the consolidated balance sheet immediately after the acquisition c. compute the balance of…arrow_forwardRR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books. Compute the balance of Retained Earnings to be reported in the consolidated balance sheet immediately after the acquisition.arrow_forward
- Enron Corporation acquired by Walt Corporation. Walt acquired 75 percent ownership on January 1, 2018, for $200,250. At that date, Enron reported common stock outstanding of $90,000 and retained earnings of $135,000, and the fair value of the non-controlling interest was $66,750. The differential is assigned to equipment, which had a fair value $42,000 more than book value and a remaining economic life of seven years at the date of the business combination. Enron reported net income of $45,000 and paid dividends of $18,000 in 2018. Prepare and explain the journal entries recorded by Walt during 2018 on its books if it accounts for its investment in Enron using the equity method.arrow_forwardDetermine the consolidated assets as of December 31. On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000.XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As of December 31, the financial statements appeared as follows:arrow_forward9. RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books. 12. Using the same information in #9, compute the balance of Goodwill to be reported in the consolidated balance sheet immediately after the acquisition 13. Using the same information in #9, compute the balance of Common Stock to be reported in the consolidated balance sheet immediately after the acquisition 14. Using the same information in #9, compute the balance of Retained Earnings to be reported in the…arrow_forward
- 9. RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books. Compute the balance of Inventory to be reported in the consolidated balance sheet immediately after the acquisition. 10. Using the same information in #9, compute the balance of Buildings and Equipment, net to be reported in the consolidated balance sheet immediately after the acquisition. 11.Using the same information in #9, compute the balance of Investment in DD Stock to be reported in the consolidated balance…arrow_forwardOn 1 January 20X3 Westbridge acquired all of Brookfield's 100,000 $1 shares for $300,000. The goodwill acquired in the business combination was $40,000, of which 50% had been written off as impaired by 31 December 20X5. On 31 December 20X5 Westbridge sold all of Brookfield's shares for $450,000 when Brookfield had retained earnings of $185,000. What is the profit on disposal that should be included in the individual entity financial statements of Westbridge?arrow_forwardE 1-5 Journal entries to record an acquisition with direct costs and fair value/book value differences On January 1, Pop Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a market value of $660,000 for all the outstanding common shares of Son Corporation. In addition, Pop pays $60,000 for registering and issuing the 36,000 shares and $140,000 for the other direct costs of the business combination, in which Son Corporation is dissolved. Summary balance sheet information for the companies immediately before the merger is as follows (in thousands): Pop Book Value Son Book Value Son Fair Value Cash $ 700 $ 80 $ 80 Inventories 240 160 200 Other current assets 60 40 40 Plant assets—net 520 360 560 Total assets $1,520 $640 $880 Current liabilities $ 320 $ 60 $ 60 Other liabilities 160 100 80 Common stock, $10 par 840 400…arrow_forward
- On 1 January 20X1 Tall plc acquired 80% of ordinary shares of Small plc for a price of £30,000, when Small plc’s net assets had fair value of £12,000. The non-controlling interest (NCI) in Small plc was consolidated at its fair value of £6,000. At 31 December 20X1, Tall plc’s directors decided to take a goodwill impairment of £1,000. Tall plc’s IFRS consolidated statement of financial position at 31 December 20X1 reports goodwill (related to the investment in Small plc) for an amount of: a. £14,000 b. £13,000 c. £15,000 d. £7,000arrow_forwardOn June 30, 20x1, Cockroach Co. acquired 75,000 of Nymph Co.'s 100,000 outstanding equity shares with par value per share of ₱4 for₱16 per share. At the time of acquisition, the retained earnings of Nymph were ₱320,000. The quoted price of Nymph's shares was ₱14per share at acquisition date. How much is the goodwill to be presented in the June 30, 20x3 consolidated financial statements?arrow_forwardLorn Corporation purchased inventory from Dresser Corporation for P 120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2. What inventory balance will be provided by the consolidated entity on December 31, 20x2? A. P15, 000 B. P16, 800 C. P24, 000 D. P39, 000arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning