Concept Introduction:
Intercompany Transfer
Intercompany transfer is referred to as ownership interest which is director indirect in a restricted party among the holders.
Requirement 1
To calculate: Net income of consolidated for the year of 20X3.
b
Concept Introduction:
Intercompany Transfer
Intercompany transfer is referred to as ownership interest which is direct or indirect in a restricted party among the holders.
Requirement 2
Preparation of
Concept Introduction:
Intercompany Transfer
Intercompany transfer is referred to as ownership interest which is direct or indirect in a restricted party among the holders.
Requirement 3
Preparation of Consolidation entries which will help in for making consolidated worksheet.
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Advanced Financial Accounting
- Plumber Corporation owns 60 percent of Socket Corporation’s voting common stock. On December 31, 20X4, Plumber paid Socket $234,000 for dump trucks Socket had purchased on January 1, 20X2. Both companies use straight-line depreciation. The consolidation entry included in preparing consolidated financial statements at December 31, 20X4, was Consolidation Worksheet Entry Debit Credit Trucks 21,000 Gain on Sale of Trucks 30,000 Accumulated Depreciation 51,000 a)What amount did Socket pay to purchase the trucks on January 1, 20X2? b)What was the economic life of the trucks on January 1, 20X2? c)Prepare the worksheet consolidation entry needed in preparing the consolidated financial statements at December 31, 20X5. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to whole dollar.arrow_forwardParent Company purchases 80% of the outstanding shares of Subsidiary Company for P9,000,000. The carrying value of Subsidiary Company’s net assets at the time of acquisition was P6,000,000 and had a fair value of P8,000,000. Determine the GOODWILL arising from the consolidation if the 100,000, P50 par value shares of the subsidiary are currently selling at 90 per share.arrow_forwardPretzel Corporation acquired 100 percent of Stick Company’s outstanding shares on January 1, 20X7. Balance sheet data for the two companies immediately after the purchase follow: As indicated in the parent company balance sheet, Pretzel purchased $59,000 of Stick’s bonds from the subsidiary at par value immediately after it acquired the stock. An analysis of intercompany receivables and payables also indicates that the subsidiary owes the parent $8,000. On the date of combination, the book values and fair values of Stick’s assets and liabilities were the same. Record the basic consolidation entryarrow_forward
- Parent Company purchases 80% of the outstanding shares of Subsidiary Company for P9,000,000. The carrying value of SubsidiaryCompany’s net assets at the time of acquisition was P6,000,000 and had a fair value of P8,000,000. Determine the following: 1.Goodwill arising from the consolidation if the non-controlling interest is stated at fair value ofP2,000,000.2. Goodwill arising from the consolidation if the 100,000, P50 par value shares of the subsidiary arecurrently selling at 90/share.3. Assume Parent purchased 80% of Subsidiary shares for P6,300,000; determine the goodwill arisingfrom the consolidation if the non-controlling interest is stated at fair value of P2,000,000.arrow_forwardDate of Acquisition Consolidation Eliminating Entries, Bargain Purchase Peregrine Company acquired 80 percent of Sparrow Company’s common stock for $20,000,000 in cash; fees paid to an outside firm to estimate the earning power of Sparrow and the fair values of its properties amounted to $2,500,000. Sparrow’s equity consisted of $3,000,000 in capital stock, $25,000,000 in retained earnings, $1,500,000 in accumulated other comprehensive loss, and $500,000 in treasury stock. Book values of Sparrow’s identifiable assets and liabilities approximated their fair values except as noted below: Book value Fair value Land $1,000,000 $300,000 Other plant assets, net 6,000,000 4,000,000 Identifiable intangible assets -- 3,000,000 Assume that the fair values above have been carefully evaluated for accuracy. The fair value of the noncontrolling interest is estimated to be $4,000,000 at the date of acquisition. Required a. Calculate the gain on acquisition and prepare Peregrine’s acquisition entry.…arrow_forwardP Company purchases 80% of the outstanding shares of S Company for P9,000,000. The carrying value of S Company's net assets at the time of acquisition was P6,000,000 and had a fair value of P8,000,000. WHAT IS THE AMOUNT OF THE: a. Goodwill arising from the consolidation if the 100,000, P50 par value shares of the subsidiary are currently selling at 90/share. b. Assume Parent purchased 80% of Subsidiary shares for P6,300,000; determine the goodwill arising from the consolidation if the non-controlling interest is stated at fair value of P2,000,000.arrow_forward
- King Company owns a 90 percent interest in the outstanding voting shares of Pawn Company. No excess fair-value amortization resulted from the acquisition. Pawn reports a net income of $110,000 for the current year. Intra-entity sales occur at regular intervals between the two companies. Intra-entity gross profits of $30,000 were present in the beginning inventory balances, whereas $60,000 in similar gross profits were recorded at year-end. What is the noncontrolling interest’s share of consolidated net income?arrow_forwardUpper Company holds 60 percent of Lower Company’s voting shares. During the preparation of consolidated financial statements for 20x4, the following eliminating entry was made: Retained earnings, January 1 10,000 Land 10,000 Which of the following statements is correct? A. Upper Company purchased land from Lower Company during 20x4. B. Upper Company purchase land from Lower Company before January 1, 20x4. C. Lower Company purchased land from Upper Company during 20x4. D. Lower Company purchased land from Upper Company before January 1, 20x4.arrow_forwardEnron Corporation acquired by Walt Corporation. Walt acquired 75 percent ownership on January 1, 2018, for $200,250. At that date, Enron reported common stock outstanding of $90,000 and retained earnings of $135,000, and the fair value of the non-controlling interest was $66,750. The differential is assigned to equipment, which had a fair value $42,000 more than book value and a remaining economic life of seven years at the date of the business combination. Enron reported net income of $45,000 and paid dividends of $18,000 in 2018. Prepare and explain the journal entries recorded by Walt during 2018 on its books if it accounts for its investment in Enron using the equity method.arrow_forward
- Harvey Company increased its ownership in Washington Company from 70% to 90% by the purchase of additional shares of the Washington’s outstanding stock from noncontrolling shareholders for a purchase price of $300,000. Immediately prior to the transaction, Harvey’s consolidated balance sheet included a noncontrolling interest balance of $1,000,000.The journal entry by Harvey to record the purchase includes: Select one: A. Cash credit, $333,333 B. APIC credit, $300,000 C. APIC credit, $333,333 D. APIC credit, $33,333arrow_forwardPit Coporation owns 75% of Stop Company's outstanding common stock. On 08/28/21, Pit sold inventory to Stop in exchange for $540,000 cash. Pit had purchased the inventory on 05/02/21 at a cost of $324,000. On 12/21/21, Stop sold 80% of the inventory to 3rd parties at a cash price of $720,000. The other 20% of the inventory remains on hand at 12/31/21. The Consolidation Entry at Year End would include:arrow_forwardAt 1 January 20X4 Yogi acquired 80% of the share capital of Bear for $1,400,000. At that date the share capital of Bear consisted of 600,000 ordinary shares of 50c each and its reserves were $50,000. The fair value of the non-controlling interest was valued at $525,000 at the date of acquisition. In the consolidated statement of financial position of Yogi and its subsidiary Bear at 31 December 20X8, what amount should appear for goodwill?arrow_forward
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning