Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Textbook Question
Chapter 6, Problem 6.1P
Problem 6-1 (LO 1) Cash flow, year subsequent to purchase. Marion Company is an 80% owned subsidiary of Lange Company. The interest in Marion is purchased on January 1, 2015, for $680,000 cash. The fair value of the NCI was $170,000. At that date, Marion has
The following comparative consolidated 
a. Marion purchases equipment for $70,000.
b. Marion issues $350,000 of long-term bonds and later uses the proceeds to purchase a new building.
c. On January 1, 2016, Lange purchases 30% of the outstanding common stock of Charles Corporation for $230,000. This is an influential investment. Charles's stockholders' equity is $700,000 on the date of the purchase. Any excess cost is attributed to equipment with a 10-year life. Charles reports net income of $80,000 in 2016 and pays dividends of $25,000.
d. Controlling share of consolidated income for 2016 is $262,000; the noncontrolling interest in consolidated net income is $15.000. Lange pays $100,000 in dividends in 2016; Marion pays $15,000 in dividends in 2016.
Required
Prepare the consolidated statement of
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Problem 2
At the beginning of the current year, Adam Company bought 40% of Eve Company's outstanding ordinary shares for P4,000,000. The carrying amount of Eve's assets at the purchase date totaled P9,000,000.
Fair values and carrying amounts were the same for all items except for plant and inventory, for which the fair values exceeded their carrying amounts by P900,000 and P100,000 respectively.
The plant has an 18-year life. All inventory was sold during the current year
During the current year, the investee reported net income of P1,200,000 and paid P200,000 cash dividend.
Requirements:
1. What is the excess of cost over the carrying amount of the net assets acquired?
2. What amount should be reported as investment income for the current year?
3. What is the carrying amount of the investment in associate at year-end?
Problems 10, 11, and 12 relate to the following:On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $80,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,000 dividend. Sedona recorded net income of $70,000 in 2016 and $80,000 in 2017.Selected account balances from the two companies’ individual records were as follows:What is consolidated net income for Phoenix and Sedona for 2018?a. $148,000b. $203,000c. $228,000d. $238,000
Problems 10, 11, and 12 relate to the following:On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $80,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,000 dividend. Sedona recorded net income of $70,000 in 2016 and $80,000 in 2017.Selected account balances from the two companies’ individual records were as follows:On its December 31, 2018, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list? a. $10,000b. $20,000c. $25,000d. $50,000
Chapter 6 Solutions
Advanced Accounting
Ch. 6 - Prob. 1UTICh. 6 - Prob. 2UTICh. 6 - Prob. 3UTICh. 6 - Prob. 4UTICh. 6 - Prob. 5UTICh. 6 - Prob. 6UTICh. 6 - Prob. 7UTICh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Prob. 3E
Ch. 6 - Prob. 4ECh. 6 - Problem 6-1 (LO 1) Cash flow, year subsequent to...Ch. 6 - Problem 6-4 (L02) Consolidated EPS. On January 1,...Ch. 6 - Prob. 6.8.1PCh. 6 - Prob. 6.8.2PCh. 6 - Problem 6-9 (LO 3) Worksheet, consolidated...Ch. 6 - Problem 6-9 (LO 3) Worksheet, consolidated...Ch. 6 - Prob. 6.11.1PCh. 6 - Prob. 6.11.2PCh. 6 - Problem 6-12 (LO 4) Worksheet, separate tax,...Ch. 6 - Prob. 6.12.2P
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