ADVANCED ACCOUNTING(LL) W/CONNECT
13th Edition
ISBN: 9781260282382
Author: Hoyle
Publisher: MCG
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Chapter 6, Problem 34P
To determine
Prepare appropriate consolidation entries for 2018.
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Through the payment of $10,468,000 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60 percent of the subsidiary’s 100,000 outstanding common shares ($40 par value) as well as all 10,000 shares of 8 percent, cumulative, $100 par value preferred stock. Of the total payment, $3.1 million is attributed to the fully participating preferred stock with the remainder paid for the common. This acquisition is carried out on January 1, 2018, when Young reports retained earnings of $10 million and a total book value of $15 million. The acquisition-date fair value of the noncontrolling interest in Young’s common stock was $4,912,000. On this same date, a building owned by Young (with a 5-year remaining life) is undervalued in the financial records by $200,000, while equipment with a 10-year remaining life is overvalued by $100,000. Any further excess acquisition-date fair value is assigned to a brand name with a 20-year remaining life.During 2018, Young…
Through the payment of $14,890,000 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 70% of the subsidiary;s 150,000 outstanding common shares ($40 par value) as well as all 30,000 shares of 6 percent, cumulative, $100 par value preferred stock. Of the total payment, $3.2 million is attributed to the fully partifipating preferred stock with the remainder paid for the common. This acquisition is carried out on January 1, 2021, when Young reports retained earnings of $10.1 million and a total book value of $19.1 million. The acquisition date fair value of the non-controlling interest in Young's common stock was $5,010,000. On the same date a building owned by Young with a six year remaining life is undervalued in the financial records by $210,000, well equipment with a five year remaining life is overvalued by $110,000. Any further access acquisition date fair value as a sign to a brand name with a 20 year remaining life.
During 2021, Young…
Through the payment of $14,222,500 in cash, Drexel Company acquires voting control over Young Company. This price is paid for 60 percent of the subsidiary's 145,000 outstanding common shares ($40 par value) as well as all 26,000 shares of 5 percent, cumulative, $100 par value preferred stock. Of the total payment, $4.6 million is attributed to the fully participating preferred stock with the remainder paid for the common. This acquisition is carried out on January 1, 2021, when Young reports retained earnings of $11.5 million and a total book value of $19.9 million. The acquisition-date fair value of the noncontrolling interest in Young's common stock was $6,415,000. On this same date, a building owned by Young (with a 6-year remaining life) is undervalued in the financial records by $480,000, while equipment with a 15-year remaining life is overvalued by $240,000. Any further excess acquisition-date fair value is assigned to a brand name with a 20-year remaining life.
During 2021,…
Chapter 6 Solutions
ADVANCED ACCOUNTING(LL) W/CONNECT
Ch. 6 - Prob. 1QCh. 6 - Prob. 2QCh. 6 - When is a firm required to consolidate the...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - How do noncontrolling interest balances affect the...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Problems 7 and 8 are based on the following...Ch. 6 - Prob. 8PCh. 6 - Bens man Corporation is computing EPS. One of its...Ch. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - On January 1, Coldwater Company has a net book...Ch. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - On January 1, 2018, Stamford issues 10,000...Ch. 6 - On January 1, 2018, Stamford reacquires 8,000 of...Ch. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - On December 31, 2017. PanTech Company invests...Ch. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Alford Company and its 80 percentowned subsidiary,...Ch. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Fred, Inc., and Herman Corporation formed a...Ch. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 1DYSCh. 6 - Prob. 2DYSCh. 6 - The FASB ASC Subtopic Variable Interest Entities...
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- On 1/1/20x1, Petwoud Company exchanged 25,000 shares of its $1 par value common stock and $150,000 cash to acquire 80% of the outstanding voting common stock of Supagud, Inc. At the acquisition date, the fair value of Petwoud Company’s common stock was $20 per share. Petwoud’s payment includes a control premium of $15,000. Other investors, unrelated to Petwoud Company, hold the remaining 20% of the outstanding common stock of Supagud. After the acquisition, Supagud, Inc. will continue as a separate operating company. In its separate accounting records, Petwoud Company will apply the equity method to account for their investment in Supagud. The pre-acquisition trial balance for Supagud at 1/1/20x1 was: Cash 50,000 Accounts receivable 125,000 Other current assets 105,000 Buildings 510,000 Land 217,000 Accounts Payable 35,000 Long-term debt 300,000 Common stock 420,000 Retained earnings…arrow_forwardWhen it purchased Sutton, Inc. on January 1, 20X1, Pavin Corporation issued 500,000 shares of its $5 par voting common stock. On that date the fair value of those shares totaled $4,200,000. Related to the acquisition, Pavin had payments to the attorneys and accountants of $200,000, and stock issuance fees of $100,000. Immediately prior to the purchase, the equity sections of the two firms appeared as follows: Pavin Sutton Common stock $ 4,000,000 $ 700,000 Paid-in capital in excess of par 7,500,000 900,000 Retained earnings 5,500,000 500,000 Total $17,000,000 $2,100,000 Immediately after the purchase, the consolidated balance sheet should report retained earnings of: a. $6,000,000 b. $5,800,000 c. $5,500,000 d. $5,300,000arrow_forwardRBE owns 70% of the ordinary share capital of DCA. The total group equity as at 31 December 20X1 was $4,000,000, which included $650,000 attributable to non-controlling interest. RBE purchased a further 20% of the ordinary share capital of DCA on 1 October 20X2 for $540,000. During the year to 31 December 20X2, RBE issued 2 million $1 ordinary shares, fully paid, at $1.30 per share. Dividends were paid by both group entities in April 20X2. The dividends paid by RBE and DCA were $200,000 and $100,000, respectively. Total comprehensive income for the year ended 31 December 20X2 for RBE was $900,000 and for DCA was $600,000. Income is assumed to accrue evenly throughout the year. Required (a) Explain the impact of the additional 20% purchase of DCA's ordinary share capital by RBE on the equity of the RBE Group. (b) Prepare the consolidated statement of changes in equity for the year ended 31 December 20X2 for the RBE Group, showing the total equity attributable to the parent and to the…arrow_forward
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