Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 5, Problem 5.21.1P
To determine
Concept Introduction:
Equity Method of valuation of investment: In this method parent company value investment on the historical cost of the investment plus apportioned profit in the associate company less dividend paid by the associate company. The difference in the historical value and the amount paid for investment is debited to
To choose: The correct option and calculates income of associate company.
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On January 1, 20x1, AAA Co. acquired 80% of the equity interests of BBB, Inc. in exchange for cash. Because the former owners of BBB needed to dispose of their investments in BBB by a specified date, they did not have sufficient time to market BBB to multiple potential buyers.As January 1, 20x1, BBB’s identifiable assets and liabilities have fair values of ₱2,400,000 and ₱800,000, respectively.
Case #1:AAA Co. elects the option to measure non-controlling interest at fair value. An independent consultant was engaged who determined that the fair value of the 20% non-controlling interest in BBB, Inc. is₱310,000. If AAA Co. paid ₱2,000,000 cash as consideration for the 80% interest in BBB, Inc., how much is thegoodwill (gain on bargain purchase) on the business combination?
Case #2:AAA Co. elects the option to measure non-controlling interest at fair value. An independent consultantwas engaged who determined that the fair value of the 20% non-controlling interest in BBB, Inc. is₱310,000.If…
48.On January 1, 2020, XYZ, Inc. acquired for $ 1,000,000 100% of the voting shares of ABC, Inc. As of December 31, 2020, the market value of the shares was $ 1,450,000. XYZ bought this investment with the objective of retaining it for an indefinite time. Which of the following statements is true regarding XYZ's investment and financial statements?
Select one:
a. This investment requires the XYZ and ABC financial statements to be consolidated and the investment account does not appear in the Statement of Financial Position.
b. In XYZ's unconsolidated books, the investment is reported at amortized cost.
c. This investment requires the financial statements of ABC and XYZ to be consolidated, and the investment account is reported as a long-term asset in the Consolidated Statement of Position.
d. In XYZ's unconsolidated books, the investment is classified as Available for sale.
For which of the corporate distributions listed below may loss be recognized?
Question options:
A dividend of property with a basis of $500,000 and a value of $450,000
Securities with a value of $500,000 and a basis of $550,000 distributed to its shareholders pro-rata as part of a complete liquidation; the securities were bought by the corporation three years ago with internal funds.
Land with a value of $400,000 and a basis of $470,000 distributed to a 70% shareholder pursuant to a complete liquidation; the land was contributed by the same shareholder 20 months before the liquidation
Chapter 5 Solutions
Advanced Financial Accounting
Ch. 5 - Where is the balance assigned to the...Ch. 5 - Why must a noncontrolling interest be reported in...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - Prob. 5.5QCh. 5 - Prob. 5.6QCh. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - Under what Circumstances would a parent company...Ch. 5 - Prob. 5.12QCh. 5 - Prob. 5.13QCh. 5 - Prob. 5.14AQCh. 5 - Prob. 5.15AQCh. 5 - Consolidation Worksheet Preparation The newest...Ch. 5 - Prob. 5.2CCh. 5 - Prob. 5.3CCh. 5 - Prob. 5.4CCh. 5 - Prob. 5.5CCh. 5 - Prob. 5.1.1ECh. 5 - Prob. 5.1.2ECh. 5 - Prob. 5.1.3ECh. 5 - Prob. 5.1.4ECh. 5 - Prob. 5.2.1ECh. 5 - Prob. 5.2.2ECh. 5 - Prob. 5.2.3ECh. 5 - Prob. 5.2.4ECh. 5 - Prob. 5.2.5ECh. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Balance Sheet Worksheet Problem Company owns 90...Ch. 5 - Prob. 5.6ECh. 5 - Prob. 5.7ECh. 5 - Prob. 5.8.1ECh. 5 - Prob. 5.8.2ECh. 5 - Prob. 5.8.3ECh. 5 - Prob. 5.8.4ECh. 5 - Prob. 5.8.5ECh. 5 - Prob. 5.8.6ECh. 5 - Prob. 5.8.7ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10ECh. 5 - Prob. 5.11ECh. 5 - Prob. 5.12ECh. 5 - Prob. 5.13ECh. 5 - Prob. 5.14ECh. 5 - Prob. 5.15ECh. 5 - Prob. 5.16ECh. 5 - Prob. 5.17AECh. 5 - Prob. 5.18AECh. 5 - Prob. 5.19PCh. 5 - Prob. 5.20PCh. 5 - Prob. 5.21.1PCh. 5 - Multiple-Choice Questions on Applying the Equity...Ch. 5 - Prob. 5.21.3PCh. 5 - Prob. 5.21.4PCh. 5 - Prob. 5.22PCh. 5 - Computation of Account Balances Pencil Company...Ch. 5 - Prob. 5.24PCh. 5 - Equity Entries with Differential On January 1,...Ch. 5 - Equity Entries with Differential Plug Corporation...Ch. 5 - Prob. 5.27PCh. 5 - Prob. 5.28PCh. 5 - Prob. 5.29P
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