Concept explainers
a
Introduction: Intercompany sale of bonds is a situation where the company sells its own bonds to its subsidiary. In this case, it cannot sale of bonds to its subsidiary as an investment in its own bonds to itself, as the entity is now a consolidated entity, thus all amounts linked to intercompany obligation must be eliminated, including bonds investment, payable any unamortized discount or premium, the interest income or expenses or any accrued interest receivable or payable.
The price did P pay to purchase S bonds.
b
Introduction: Intercompany sale of bonds is a situation where the company sells its own bonds to its subsidiary. In this case, it cannot sale of bonds to its subsidiary as an investment in its own bonds to itself, as the entity is now a consolidated entity, thus all amounts linked to intercompany obligation must be eliminated, including bonds investment, payable any unamortized discount or premium, the interest income or expenses or any accrued interest receivable or payable.
The carrying amount of the bonds on S books on the date of purchase
c
Introduction: Intercompany sale of bonds is a situation where the company sells its own bonds to its subsidiary. In this case, it cannot sale of bonds to its subsidiary as an investment in its own bonds to itself, as the entity is now a consolidated entity, thus all amounts linked to intercompany obligation must be eliminated, including bonds investment, payable any unamortized discount or premium, the interest income or expenses or any accrued interest receivable or payable.
The amount of income assigned to non-controlling interest in 20X5 when income reported by S is $30,000.
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Advanced Financial Accounting
- Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has 60,000 shares of its own common stock outstanding. During the current year, Porter earns net income (without any consideration of its investment in Street) of $150,000 while Street reports $130,000. Annual amortization of $10,000 is recognized each year on the consolidation worksheet based on acquisition-date fair-value allocations. Both companies have convertible bonds outstanding. During the current year, bond-related interest expense (net of taxes) is $32,000 for Porter and $24,000 for Street. Porter’s bonds can be converted into 8,000 shares of common stock; Street’s bonds can be converted into 10,000 shares. Porter owns none of these bonds. What are the earnings per share amounts that Porter should report in its current year consolidated income statement?arrow_forwardPenny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisition, the fair value of the noncontrolling interest was equal to 25 percent of Saul’s book value. The balance sheets of the two companies for January 1, 20X1, are as follows: On January 2, 20X1, Penny purchased an additional 2,500 shares of common stock directly from Saul for $150,000. Required:a. Prepare the consolidation entry needed to complete a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny. b. Prepare a consolidated balance sheet worksheet immediately following the issuance of additional shares to Penny.arrow_forwardPrice Company issued 8,740 shares of its $20 par value common stock for the net assets of Sims Company in a business combination under which Sims Company will be merged into Price Company. On the date of the combination, Price Company common stock had a fair value of $30 per share. Balance sheets for Price Company and Sims Company immediately prior to the combination were: Price Sims Current assets $460,540 $61,810 Plant and equipment (net) 529,190 140,940 Total $989,730 $202,750 Liabilities $274,100 $53,300 Common stock, $20 par value 558,200 88,000 Other contributed capital 72,870 20,750 Retained earnings 84,560 40,700 Total $989,730 $202,750 (a) If the business combination is treated as a purchase and Sims Company’s net assets have a fair value of $209,574, Price Company’s balance sheet immediately after the combination will include goodwill of…arrow_forward
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- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning