ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 7, Problem 7.24P
To determine
Concept Introduction:
Controlling Interest
Controlling Interest is referred to as the ownership interest in the company which has voting stock shares to get any stockholder’s motion. Majority of voting shares are the controlling interest.
Requirement 1
The controlling interest income which will appear in consolidated income statement.
b
To determine
Concept Introduction:
Controlling Interest
Controlling Interest is referred to as the ownership interest in the company which has voting stock shares to get any stockholder’s motion. Majority of voting shares are the controlling interest.
Requirement 2
Computation of amount of controlling interest income increase or decrease if gain on sale of land is included in P’s income.
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Pirate Corporation acquired 60 percent ownership of Ship Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Ship Company. Accumulated depreciation on Buildings and Equipment was $75,000 on the acquisition date. Trial balance data at December 31, 20X8, for Pirate and Ship are as follows:
Item
Pirate Corporation
Ship Company
Debit
Credit
Debit
Credit
Cash
$ 27,000
$8,000
Accounts Receivable
65,000
22,000
Inventory
40,000
30,000
Buildings and Equipment
500,000
235,000
Investment in Row Company
40,000
Investment in Ship Company
108,000
Cost of Goods Sold
150,000
110,000
Depreciation Expense
30,000
10,000
Interest Expense
8,000
3,000
Dividends Declared
24,000
15,000
Accumulated Depreciation
$ 140,000
$ 85,000
Accounts Payable
63,000
20,000
Bonds Payable
100,000
50,000
Common Stock
200,000…
Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, fr $102,200. The fair
value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies
Included the following amounts as of the date of acquisition:
Item
Cash
Accounts Receivable
Inventory
Land
Buildings & Equipment
Less: Accumulated Depreciation.
Investment in Scholar Corporation
Total Assets
Accounts Payable
Mortgage Payable
Common Stock
Retained Earnings
Total Liabilities & Stockholders' Equity
Professor
Corporation
$
50,300
90,000
Scholar
Corporation
$21,000
44,000
130,000
75,000
60,000
30,000
410,000
250,000
(150,000)
(80,000)
102,200
$ 692,500
$340,000
$
152,500
$ 35,000
250,000
180,000
80,000
40,000
210,000
85,000
$
692,500
$340,000
At the date of the business combination, the book values of Scholar's assets and liabilities approximated fair value except for
Inventory, which had a fair value of $81,000, and…
Package Corporation acquired 90 percent ownership of Sack Grain Company on January 1, 20X4, for $116,100 when the fair value of Sack’s net assets was $13,000 higher than its $116,000 book value. The increase in value was attributed to amortizable assets with a remaining life of 10 years. At that date, the fair value of the noncontrolling interest was equal to $12,900.
During 20X4, Sack sold land to Package at a $7,000 profit. Sack Grain reported net income of $25,000 and paid dividends of $4,800 in 20X4. Package reported income, exclusive of its income from Sack Grain, of $34,000 and paid dividends of $14,300 in 20X4.
Required:
Compute the amount of income assigned to the controlling interest in the consolidated income statement for 20X4.
By what amount will the 20X4 income assigned to the controlling interest increase or decrease if the sale of land had been from Package to Sack Grain, the gain on the sale of land had been included in Package’s $34,000 income, and the $25,000 was…
Chapter 7 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Prob. 7.7QCh. 7 - Prob. 7.8QCh. 7 - Prob. 7.9QCh. 7 - Prob. 7.10Q
Ch. 7 - Prob. 7.11QCh. 7 - Prob. 7.12QCh. 7 - Prob. 7.13QCh. 7 - Prob. 7.14QCh. 7 - Prob. 7.15QCh. 7 - Prob. 7.16QCh. 7 - Prob. 7.17QCh. 7 - Prob. 7.18AQCh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3CCh. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.1.1ECh. 7 - Prob. 7.1.2ECh. 7 - Prob. 7.1.3ECh. 7 - Prob. 7.1.4ECh. 7 - Prob. 7.1.5ECh. 7 - Prob. 7.2.1ECh. 7 - Prob. 7.2.2ECh. 7 - Prob. 7.2.3ECh. 7 - Prob. 7.2.4ECh. 7 - Prob. 7.2.5ECh. 7 - Prob. 7.2.6ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Transfer of Depreciable Asset at Year-End Pitcher...Ch. 7 - Prob. 7.9ECh. 7 - Sale of Equipment to Subsidiary in Current Period...Ch. 7 - Prob. 7.11ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.23AECh. 7 - Prob. 7.24PCh. 7 - Prob. 7.25PCh. 7 - Prob. 7.26PCh. 7 - Prob. 7.27PCh. 7 - Prob. 7.28.1PCh. 7 - Prob. 7.28.2PCh. 7 - Prob. 7.28.3PCh. 7 - Prob. 7.28.4PCh. 7 - Prob. 7.29PCh. 7 - Prob. 7.30PCh. 7 - Prob. 7.31PCh. 7 - Prob. 7.32PCh. 7 - Prob. 7.33PCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.41AP
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