ADVANCED ACCOUNTING
13th Edition
ISBN: 9781264046263
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 $14,222,500 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,…
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…
Chapter 6 Solutions
ADVANCED ACCOUNTING
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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- Hepner Corporation has the following stockholders’ equity accounts:The preferred stock is participating. Wasatch Corporation buys 80 percent of this common stock for $1,600,000 and 70 percent of the preferred stock for $630,000. The acquisition-date fair value of the noncontrolling interest in the common shares was $400,000 and was $270,000 for the preferred shares. All of the subsidiary’s assets and liabilities are viewed as having fair values equal to their book values. What amount is attributed to goodwill on the date of acquisition?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_forwardPresented below are two independent situations. (1) Grand Cosmetics acquired 10% of the 200,000 ordinary shares of Cey Fashion at a total cost of $12 per share on March 18, 2020. On June 30, Cey declared and paid a $60,000 dividend. On December 31, Cey reported net income of $110,000 for the year. At December 31, the market price of Cey Fashion was $15 per share. The shares are classified as non-trading. (2) Unruh, Inc. obtained significant influence over Olsen Corporation by buying 25% of Olsen's 40,000 outstanding ordinary shares at a total cost of $7 per share on January 1. 2020. On June 15, Olsen declared and paid a cash dividend of $30,000. On December 31. Olsen reported a net income of SS0.000 for the year. Instructions Prepare all the necessary journal entries for 2020 for (a) Grand Cosmetics and (b) Unruh, Incarrow_forward
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