Loose Leaf Advanced Accounting with Connect Access Card
12th Edition
ISBN: 9781259184741
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 40P
a.
To determine
Identify the
b.
To determine
Identify the journal entry which Company A should make to recognize the impact of this stock transaction.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
During 20x1, Windy Co. acquired 10,000 shares of Morning Corp. at P50 per share. Windy Co. paid transaction costs of P25,000 on the acquisition. On Dec. 31,20x1, the fair value of the shares declined to P25 per share. Windy Co. assessed that the decline in fair value will persist over a long period of time. What amount of loss should Windy Co. recognize on Dec. 31, 20x1 if the shares were classified as:
a. FVPL asset: 250,000 P/L , FVOCI asset: 275,000 P/L
b. FVPL asset: 250,000 P/L , FVOCI asset: 275,000 OCI
c. FVPL asset: 250,000 P/L , FVOCI asset: 25,000 OCI
d. FVPL asset: 250,000 P/L , FVOCI asset: 0
Albuquerque, Inc., acquired 16,000 shares of Marmon Company several years ago for $600,000. At the acquisition date, Marmon reported a book value of $710,000, and Albuquerque assessed the fair value of the noncontrolling interest at $150,000. Any excess of acquisition date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.At the present time, Marmon reports $800,000 as total stockholders’ equity, which is broken down as follows:
Common stock ($10 par value) ............. .............................................. . $200,000Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,000Retained earnings . . . .. . . 370,000Total . . . . . . . . . . . . . . . . . $800,000
View the following as independent situations:a. Marmon sells 5,000 shares of previously unissued…
Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $720,000. At the acquisition date, Marmon reported a book value of $500,000, and Albuquerque assessed the fair value of the noncontrolling interest at $30,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.
At the present time, Marmon reports $550,000 as total stockholders’ equity, which is broken down as follows:
Common stock ($10 par value)
$
250,000
Additional paid-in capital
200,000
Retained earnings
100,000
Total
$
550,000
View the following as independent situations:
a. & b. Marmon sells 7,000 and 5,000 shares of previously unissued common stock to the public for $40 and $30 per share. Albuquerque purchased none of this stock. What journal entry…
Chapter 6 Solutions
Loose Leaf Advanced Accounting with Connect Access Card
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 - Prob. 7PCh. 6 - Bens man Corporation is computing EPS. One of its...Ch. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - On January 1, Coldwater Company has a net book...Ch. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 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 - Prob. 36PCh. 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 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 1DYSCh. 6 - Prob. 2DYSCh. 6 - The FASB ASC Subtopic Variable Interest Entities...
Knowledge Booster
Similar questions
- 1. Burch International purchased 70% of the outstanding common stock of Landon Chemical on December 31, 2021. Burch paid $140,000 for the shares and determined that the fair value of all recorded Landon assets and liabilities approximated their book values, with the exception of a customer list that was not recorded and had a fair value of $10,000, and an expected remaining useful life of 5 years. At the time of purchase, Landon had a stockholders’ equity consisting of capital stock amounting to goodwill. The separate financial statements at December 31, 2022. appear in the first two columns of the consolidation worksheet shown below. a. Complete the Income Statement b. Using the information provided, do a Balance Sheet. c. Provide the appropriate journal entries for the investor d. Provide the appropriate elimination entries.arrow_forwardAlbuquerque, Inc., acquired 16,000 shares of Marmon Company several years ago for $600,000. At the acquisition date, Marmon reported a book value of $710,000, and Albuquerque assessed the fair value of the noncontrolling interest at $150,000. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses. At the present time, Marmon reports $800,000 as total stockholders’ equity, which is broken down as follows: View the following as independent situations: a. Marmon sells 5,000 shares of previously unissued common stock to the public for $47 per share. Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction? b. Marmon sells 4,000 shares of previously unissued common stock to the public for $33 per share.…arrow_forwardOn January 1, Tesco Company spent a total of $4,384,000 to acquire control over Blondel Company. This price was based on paying $424,000 for 20 percent of Blondel’s preferred stock and $3,960,000 for 90 percent of its outstanding common stock. At the acquisition date, the fair value of the 10 percent noncontrolling interest in Blondel’s common stock was $440,000. The fair value of the 80 percent of Blondel’s preferred shares not owned by Tesco was $1,696,000. Blondel’s stock-holders’ equity accounts at January 1 were as follows:Preferred stock—9%, $100 par value, cumulative and participating; 10,000 shares outstanding ...... $ 1,000,000Common stock—$50 par value; 40,000 shares outstanding . . 2,000,000Retained earnings . . . . . 3,000,000Total stockholders’ equity . $ 6,000,000 Tesco believes that all of Blondel’s accounts approximate their fair values within the company’s financial statements. What amount of consolidated goodwill should be recognized? Choose the correct.a. $…arrow_forward
- On January 1, Tesco Company spent a total of $4,428,000 to acquire control over Blondel Company. This price was based on paying $432,000 for 20 percent of Blondel’s preferred stock and $3,996,000 for 90 percent of its outstanding common stock. At the acquisition date, the fair value of the 10 percent noncontrolling interest in Blondel’s common stock was $444,000. The fair value of the 80 percent of Blondel’s preferred shares not owned by Tesco was $1,728,000. Blondel’s stockholders’ equity accounts at January 1 were as follows: Preferred stock—9%, $100 par value, cumulative and participating; 10,000 shares outstanding $ 1,000,000 Common stock—$50 par value; 40,000 shares outstanding 2,000,000 Retained earnings 3,350,000 Total stockholders’ equity $ 6,350,000 Tesco believes that all of Blondel’s accounts approximate their fair values within the company’s financial statements. What amount of consolidated goodwill should be recognized?arrow_forwardOn July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $720,000 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $290,000 both before and after Truman’s acquisition.In reviewing its acquisition, Truman assigned a $100,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years.The following financial information is available for these two companies for 2018. In addition, the subsidiary’s income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.Answer each of the following:a. How did Truman allocate Atlanta’s acquisition-date fair value to the various assets acquired and liabilities assumed in the combination?b. How did Truman allocate the goodwill from the acquisition across…arrow_forwardABC Inc. purchased 35,000 voting shares out of 123 Inc.'s 50,000 outstanding voting shares for $350,000 on January 1, 2020. On the date of acquisition, 123's common shares and retained earnings were valued at $120,000 and $180,000, respectively. 123's book values approximated its fair values on the acquisition date with the exception of a patent and a trademark, neither of which had been previously recorded. The fair values of the patent and trademark on the date of acquisition were $30,000 and $20,000 respectively. On January 2, 2020, ABC sold 7,000 shares of 123 on the open market for $57,750. ABC Inc. uses the equity method to account for its investment in 123 Inc. What is the carrying value of the trademark after the sale? A. $12,600 B. $18,000 C. $20,000 D. $30,000arrow_forward
- Santa corp was keen on acquiring its competitor Barta corp and it has succesfully acquired 80 percent of Barta corp voting stock on January 1, 20X8, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Barta at that date. Assume that the accumulated depreciation on depreciable assets was $48,000 on the acquisition date. Santa uses the equity method in accounting for its ownership of Barta. On December 31, 20X9, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Barta corp Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Barta corp Santa corp Debit $235,000 502,000 121,440 22,000 143,000 52,000 Credit $ 195,000 68,000 101,240 181,000 265,000 230,000 Barta corp Debit $ 154,000 315,000 12,000 88,000 22,200 Credit $72,000 48,000 197,200 80,000 50,000…arrow_forwardThe Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $6.40 per share on January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $6.40 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine's underlying accounts except that a building with a 5-year future life was undervalued by $62,000 and a fully amortized trademark with an estimated 10-year remaining life had a $67,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $260,000. Following are the separate financial statements for the year ending December 31, 2024: Holtz Corporation $ (787,000) 282,000 346,000 (16,000) Accounts Sales Cost of goods sold Operating expenses Dividend income Net income $ (175,000) Retained earnings, 1/1/24 $ (727,000) Net income (above) Dividends declared…arrow_forwardOn 1 October 2022, Shikipisha, a listed company, purchased 90% of the ordinary shares of Allan. Allan, which ceased trading one week prior to the share purchase, owns a manufacturing facility comprising of land and buildings as well as related equipment. The fair value of the land and buildings is similar to the fair value of the equipment. The acquisition of Allan only gained legal approval on the basis that all employees who worked at the facility are retained. There are no other assets, including any inventories, or processes transferred as part of the sale. Shikipisha proposes to account for the purchase of Allan as a business combination.arrow_forward
- The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Incorporated, for $7.00 per share on January 1, 2023. The remaining 20 percent of Devine's shares also traded actively at $7.00 per share before and after Holtz's acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine's underlying accounts except that a building with a 5-year future life was undervalued by $65,000 and a fully amortized trademark with an estimated 10-year remaining life had a $73,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $237,000. Following are the separate financial statements for the year ending December 31, 2024: Accounts Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Current assets Investment in Devine, Incorporated…arrow_forwardOn December 31, Phoenix Corporation acquired all of Sedona Corporation’s voting stock in exchange for $560,000 cash. At the acquisition date, the fair values of Sedona’s assets and liabilities equaled their carrying values, except that the fair value of the inventory was $20,000 lower than the carrying value, the fair value of the equipment was $50,000 higher than the carrying value, and the fair value of the long-term debt was $4,000 lower than the carrying value. The separate condensed balance sheets of the two companies immediately after the acquisition (on 12/31) are as follows: Phoenix Sedona Cash $ 90,000 $ 60,000 Accounts receivable 130,000 25,000 Inventory 160,000 70,000 Plant and equipment (net)…arrow_forward(Use the data below for Questions 7-17.) Company Pacquires 80% of Company S for $600,000 on 1/1/19. P did not pay a "control premium" for the acquisition. On that date, S reported common stock of $200,000 and retained earnings of $250,000. In addition, the fair value of S's buildings (14-year remaining life) was higher than their carrying value by $70,000. All other assets and liabilities have fair value equal to carrying value. P uses the partial equity method to record its investment in S. Below are some data taken from accounting records of the year 2020 (the second year). P's own operating income, 2020: $540,000 S's net income, 2020 $180,000 S's retained earnings at 1/1/20: $340,000 S's dividends declared, 2020: $120,000 Provide the following figures: 7. NCI in net assets (i.e., NCI's fair value) at the acquisition date: 8. Goodwill at the acquisition date: 9. Consolidated net income, 2020: 10. NCI in net income, 2020: 11. P's net income, 2020: 12. P's "Investment in S", 12/31/20:…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education