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 5.9E
a
To determine
Introduction: Immediately after a business combination, the parent company records income and dividends from the subsidiary using the equity method, in addition, parents must also write off the portion of the differential of the excess acquisition price. Further, all the intercompany transactions must be eliminated before the preparation of consolidated financial statements.
The entries by P during 20X3 on its books for its investment in S using equity method,
b
To determine
Introduction: Immediately after a business combination, the parent company records income and dividends from the subsidiary using the equity method, in addition, parents must also write off the portion of the differential of the excess acquisition price. Further, all the intercompany transactions must be eliminated before the preparation of consolidated financial statements.
The consolidation entries needed at December 31, 20X3.
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Server Corporation is a majority-owned subsidiary of Proxy Corporation. Proxy acquired 75 percent ownership on January 1, 20X3, for $133,500. At that date, Server reported common stock outstanding of $60,000 and retained earnings of $90,000, and the fair value of the noncontrolling interest was $44,500. The differential is assigned to equipment, which had a fair value $28,000 more than book value and a remaining economic life of seven years at the date of the business combination. Server reported net income of $30,000 and paid dividends of $12,000 in 20X3.Required:a. Prepare the journal entries recorded by Proxy during 20X3 on its books if it accounts for its investment in Server using the equity method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare the consolidation entries needed at December 31, 20X3, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No…
Parent Company acquired 15% of Subsidiary Company’s common stock for P500,000 cash and carried the investment using the cost method. A few months later, Parent purchased another 60% of Subsidiary’s stock for P2,160,000. At that date, Subsidiary had identifiable assets of P3,900,000 and a fair value of P5,100,000, and had liabilities with a book value and fair value of P1,900,000. The fair value of the 25% non-controlling interest is P900,000.The amount of goodwill to be recognized resulting from this combination:
A. 400,000
B. 84,000
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D. 300,000
Parent Company acquired 15% of Subsidiary Company’s common stock for P500,000 cash and carried the investment using the cost method. A few months later, Parent purchased another 60% of Subsidiary’s stock for P2,160,000. At that date, Subsidiary had identifiable assets of P3,900,000 and a fair value of P5,100,000, and had liabilities with a book value and fair value of P1,900,000. The fair value of the 25% non-controlling interest is P900,000.The amount of goodwill to be recognized resulting from this combination:
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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