ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 8.30BP
a
To determine
Introduction: All the effects related to indebtedness of the intercompany are eliminated when the intercompany sale of bonds takes place between affiliates for the purpose of consolidated financial statements because the company has no right to report an investment in its own bonds or bond liability. Therefore, the balances from each subsidiary of the parent company are considered when the consolidated financial statements are prepared.
The
b
To determine
Introduction: All the effects related to indebtedness of the intercompany are eliminated when the intercompany sale of bonds takes place between affiliates for the purpose of consolidated financial statements because the company has no right to report an investment in its own bonds or bond liability. Therefore, the balances from each subsidiary of the parent company are considered when the consolidated financial statements are prepared.
The elimination entries needed to complete consolidation worksheet using cost method.
c
To determine
Introduction: All the effects related to indebtedness of the intercompany are eliminated when the intercompany sale of bonds takes place between affiliates for the purpose of consolidated financial statements because the company has no right to report an investment in its own bonds or bond liability. Therefore, the balances from each subsidiary of the parent company are considered when the consolidated financial statements are prepared.
A complete three part consolidation worksheet as of December 31, 20X4.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
At the time of acquisition X & Y Co., stock issue expected cost expenses OMR 48,000. Finally, acquisition cost was OMR 64,000. How much will record in the income statement.
Select one:
a. OMR 48,000
b. OMR 64,000
c. OMR 16,000
d. OMR 112,000
In Bell Group's consolidation worksheet, the opening
balance of retained earnings under 'group' column
shows a balance of 70000. If there is a debit entry of
16000 in the NCI column, the opening balance of
retained earnings under 'parent' column could be:
A. 86000
B. 54000
C. 70000
D. 16000
Please show entries or details to explain.
Goodwill & Impairment of GoodwillSolve the following problems. It will be helpful for the gradedcomprehensive problem found in Unit 3. Record your answers in yourlearning journal.1. On January 1, 2007 A acquired a 20% shareholding in B at acost of $40,000. On January 1, 2009, A acquired a further 40%shareholding in B at a cost of $150,000. At this time it wasdetermined that the fair value of A’s 20% shareholding in B was$50,000. Between January 1, 2007 and January 1, 2009 B madea profit of $30,000.Required:a. Calculate the cost of investment that will be used in computinggoodwillb. Calculate the goodwill arising on this transactionc. Calculate the gain arising that will be recognized in the incomestatement assuming that A’s 20% shareholding did NOT allowit to exercise significant influence over Bd. Calculate the gain arising that will be recognized in the incomestatement assuming that A’s 20% shareholding did allow it toexercise significant influence over B
Chapter 8 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 8 - Prob. 8.1QCh. 8 - What is meant by a constructive bond retirement in...Ch. 8 - Prob. 8.3QCh. 8 - Prob. 8.4QCh. 8 - When a parent company sells land to a subsidiary...Ch. 8 - Prob. 8.7QCh. 8 - Prob. 8.8QCh. 8 - Prob. 8.9QCh. 8 - Prob. 8.10QCh. 8 - Prob. 8.11Q
Ch. 8 - How is the amount of income assigned to the...Ch. 8 - Prob. 8.13QCh. 8 - How would the relationship between interest income...Ch. 8 - Prob. 8.15QCh. 8 - Prob. 8.16QCh. 8 - Prob. 8.17QCh. 8 - Prob. 8.18QCh. 8 - Prob. 8.1CCh. 8 - Prob. 8.2CCh. 8 - Prob. 8.4CCh. 8 - Prob. 8.1ECh. 8 - Bond Sale from Parent to Subsidiary (StraightLine...Ch. 8 - Computation of Transfer Price (Effective Interest...Ch. 8 - Prob. 8.2AECh. 8 - Prob. 8.3ECh. 8 - Bond Sale at Discount (Straightline Method) Assume...Ch. 8 - Evaluation of Intercorporate Bond Holdings...Ch. 8 - Prob. 8.5.1ECh. 8 - Prob. 8.5.2ECh. 8 - MultipleChoice Questions (Effective Interest...Ch. 8 - Prob. 8.5.4ECh. 8 - Prob. 8.5.5ECh. 8 - Prob. 8.5.6ECh. 8 - Prob. 8.5.1AECh. 8 - Prob. 8.5.2AECh. 8 - Prob. 8.5.3AECh. 8 - Prob. 8.5.4AECh. 8 - Prob. 8.6.1ECh. 8 - Prob. 8.6.2ECh. 8 - MultipleChoice Questions (Effective Interest...Ch. 8 - Prob. 8.6.1AECh. 8 - Prob. 8.6.2AECh. 8 - Prob. 8.6.3AECh. 8 - Prob. 8.7ECh. 8 - Prob. 8.7AECh. 8 - Prob. 8.8ECh. 8 - Prob. 8.8AECh. 8 - Prob. 8.9ECh. 8 - Prob. 8.9AECh. 8 - Prob. 8.10ECh. 8 - Prob. 8.10AECh. 8 - Prob. 8.11ECh. 8 - Prob. 8.11AECh. 8 - Evaluation of Bond Retirement (Effective Interest...Ch. 8 - Prob. 8.12AECh. 8 - Prob. 8.13ECh. 8 - Prob. 8.13AECh. 8 - Prob. 8.14PCh. 8 - Prob. 8.14APCh. 8 - Prob. 8.15PCh. 8 - Prob. 8.15APCh. 8 - Prob. 8.16PCh. 8 - Prob. 8.16APCh. 8 - Prob. 8.17PCh. 8 - Prob. 8.17APCh. 8 - Prob. 8.18PCh. 8 - Prob. 8.18APCh. 8 - Prob. 8.19APCh. 8 - Prob. 8.20PCh. 8 - Prob. 8.20APCh. 8 - Prob. 8.21PCh. 8 - Prob. 8.21APCh. 8 - Prob. 8.22APCh. 8 - Prob. 8.22BPCh. 8 - Prob. 8.23PCh. 8 - Prob. 8.23APCh. 8 - Prob. 8.24PCh. 8 - Prob. 8.24APCh. 8 - Intercorporate Inventory and Debt Transfers...Ch. 8 - Intercorporate Inventory and Debt Transfers...Ch. 8 - Prob. 8.26PCh. 8 - Prob. 8.26APCh. 8 - Prob. 8.27.1BPCh. 8 - Prob. 8.27.2BPCh. 8 - Prob. 8.27.3BPCh. 8 - Prob. 8.27.4BPCh. 8 - Prob. 8.27.5BPCh. 8 - Prob. 8.27.6BPCh. 8 - Prob. 8.27.7BPCh. 8 - Prob. 8.27.8BPCh. 8 - Prob. 8.27.9BPCh. 8 - Prob. 8.27.10BPCh. 8 - Prob. 8.28PCh. 8 - Prob. 8.28APCh. 8 - Prob. 8.29BPCh. 8 - Prob. 8.30BP
Knowledge Booster
Similar questions
- Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $165,000, respectively, common stock outstanding of $80,000, and retained earnings of $175,000. The book values and fair values of Scrub's assets and liabilities were identical except for land, which had increased in value by $20,000, and inventories, which had decreased by $7,000. 1. Prepare the following consolidating entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $251,000. ****please help with the red blanks ****arrow_forwardComprehensive: Income Statement and Retained Earnings Milwaukee Manufacturing Company presents the following partial list of account balances, after adjustments, as of December 31, 2019: The following information is also available but is not reflected in the preceding accounts: a. The company sold Division E (a major component of the company) on August 2, 2019. During 2019, Division E had incurred a pretax loss from operations of 16,000. However, because the acquiring company could vertically integrate Division E into its facilities, Milwaukee Manufacturing was able to recognize a 42,000 pretax gain on the sale. b. On January 2, 2019, without warning, a foreign country expropriated a factory of Milwaukee Manufacturing which had been operating in that country. As a result of that expropriation, the company has incurred a pretax loss of 30,000. c. The common stock was outstanding for the entire year. A cash dividend of 1.20 per share was declared and paid in 2019. d. The 2019 income tax expense totals 31,050 and consists of the following: Required: 1. As supporting documents for Requirement 2, prepare separate supporting schedules for selling expenses and for general and administrative expenses (include depreciation expense where applicable in these schedules). 2. Prepare 2019 multiple-step income statement for Milwaukee Manufacturing. 3. Prepare a 2019 retained earnings statement. 4. Next Level What was Milwaukee Manufacturings return on common equity for 2019 if its average shareholders equity during 2019 was 500,000? What is your evaluation of this return on common equity if its target for 2019 was 15%? 5. Next Level Discuss how Milwaukee Manufacturings income statement in Requirement 2 might be different if it used IFRS.arrow_forwardPost Delivery Service acquired at book value 80 percent of the voting shares of Script Real Estate Company. On that date, the fair value of the noncontrolling interest was equal to 20 percent of Script's book value. Script Real Estate reported common stock of $280,000 and retained earnings of $100,000. During 20X3, Post Delivery provided courier services for Script Real Estate in the amount of $21,000. Also during 20X3, Script Real Estate purchased land for $5,000. It sold the land to Post Delivery Service for $22,000 so that Post Delivery could build a new transportation center. Post Delivery reported $52,000 of operating income from its delivery operations in 20X3. Script Real Estate reported net income of $53,000 and paid dividends of $12,000 in 20X3. Required: a. Compute consolidated net income for 20X3. Consolidated net income $ 88,000 b. Prepare all journal entries recorded by Post Delivery Service related to its investment in Script Real Estate assuming Post uses the fully…arrow_forward
- In the preparation of the 20x4 consolidated income statement, depreciation expense will be: a. Debited for 5,000 in eliminating entries b. Credited for 5,000 in eliminating entries c. Debited for 13,000 in eliminating entries d. Credited for 13,000 in eliminating entries In the preparation of the 20x4 consolidated balance sheet, the computer equipment will be: a. Debited for 1,000 b. Debited for 15,000 c. Credited for 24,000 d. Debited for 40,000arrow_forwardThe fuel and oil as a major line of business of San Miguel Enterprises becomes available for immediate sale in its present condition. The termination costs of employees resulting from the discontinuance should be A. Included in the computation of other comprehensive income B. Shown as other expense C. Shown as a prior period adjustment D. Netted against the income from operations of the component as part of discontinued operation E. None of themS1: The publication of interim financial reports is on a quarterly basis.S2: For financial statements at interim date, inventories shall be measured using the gross profit method because conducing inventory count is not required. * A. Both statements are true B. Both statements are false C. Only statement 1 is true D. Only statement 2 is truearrow_forwardIn the preparation of the 20x4 consolidated income statement, depreciation expense will be: A. Debited for 5,000 in eliminating entries B. Credited for 5,000 in eliminating entries C. Debited for 13,000 in eliminating entries D. Credited for 13,000 in eliminating entriesarrow_forward
- Required information (The folowing information applies to the questions displayed below.] Pumpworks Inc. and Seaworthy Rope Company agreed to merge on January 1, 20X3. On the date of the merger agreement, the companies reported the following data: Seaworthy Rope Company Book Value Pumpworks Fair Balance Sheet Items Assets Cash & Receivables Inventory Land Plant & Equipment Less: Accumulated (131,000) Depreciation Total Assets$ 601,000 Liabilities & Equities Current Liabilities Fair Value Book Value Value $ 189,000 $109,000 $ 19,000 $ 19,000 107,000 107,000 168,000 160,000 29,000 9,000 41,000 14,000 409,000 309,000 219,000 123,000 picture picture (71,000) $746,000 $205,000 $197,000 $ 77,000 $ 77,000 $ 28,000 $ 28,000 Capital Stock Capital in Excess of 327,000 73,500 22,000 7,000 Par Value Retained Earnings Total Liabilities $ 601,000 & Equities 175,000 96,500 $205,000 Pumpworks has 10,900 shares of its $30 par value shares outstanding on January 1, 20X3, and Seaworthy has 4,900 shares…arrow_forwardPrepare the necessary adjusting entries for the following independent transactions:1. Alps Co. acquired land, building, and equipment from Bankrupt Inc. for P2,800,000. Bankrupt’s assets on acquisition date had the following values: Book Value Fair ValueLand P 800,000 P 600,000Building 1,000,000 1,400,000Equipment 1,200,000 1,200,000 Alps decided to take a conservative position by recording the lower of the two values for each PPE item acquired. The following entry was made:Land 600,000Building 1,000,000Equipment 1,200,000Cash 2,800,000arrow_forwardM&A Journal entry Company A acquires Company B on May 1, 2016. The following data includes measurements of assets, liabilities, and non-controlling interest as of the closing date. Prepare the journal entries to record the assets acquired and liabilities assumed. Adjusted Fair Value Accounts Receivable 830 Contract assets 1,670 Inventories 1,020 Other current assets 500 Property, plant and equipment 1,220 Operating lease right-of-use assets 700 Goodwill 14,650 Other intangible assets 7,880 Other non-current assets 320 Total assets acquired 28790 Accounts payable 880 Contract liabilities 700 Other current liabilities 830 Operating lease liabilities 720 Defined benefit plans 1,300 Long-term debt, net 3,550 Other long-term liabilities 1,870 Total liabilities assumed 9,850 Net assets acquired 18,940 Noncontrolling interests 160 Total net consideration transferred 18,780arrow_forward
- 5-Parent Co. acquired 100% of Sub, Inc. on January 1, 2021. During 2021, Parent sold goods to Sub for $260,000 that cost Parent $170,000. Sub still owned 30% of the goods at the end of the year. In their pre-consolidation books, cost of goods sold was $1,050,000 for Parent and $375,000 for Sub. Required:a. Prepare all consolidation entries related to inventory and cost of goods sold for 2021.b. Compute consolidated cost of goods sold for 2021.c. Assuming that the remainder of the inventory was sold to third parties during 2022, prepare the 2022 consolidation entry to recognize the previously deferred profit.arrow_forwardNEED JOURNAL ENTRIES ONLY FOR BOTH PLEASE Like S, A, I, etc. Prime Company acquired 75%of the common stock of Second Company January 1, year one, for $450,000 The consideration given was proportional to Second's fair value. On that date, Second had the following trial balance: account debit credit Additional paid in capital $100,000 Building (12-year life) $250,000 Common stock 170,000 Current assets 170,000 Equipment (6-yr life) 160,000 Land 110,000 Liabilities (due in 4 years) 300,000 Retained earnings 1/year 1 120,000Totals $690,000 $690,000 During year one, Second reported net income of $60,000 During year one, Sonny paid dividends of $30,000 During year two, Second reported net income of $80,000 During year two, Sonny paid dividends of $40,000 On January 1, year one, fair values were: Land $146,000 Building $262,000 Equipment $184,000There was no impairment of any goodwill arising from the acquisition.Please indicate clearly which method you choose for Prime to use to account for…arrow_forwardTopic: Non-Current Assets Held for Sale and Discontinued Operations 15. Which of the following shall be recognized by the entity in its 20x3 financial statements? Held for ale asset Impairment loss a. P1,100,000 P450,000 b. P1,000,000 P350,000 c. P750,000 P250,000 d. P0 P350,000 16. Requirement: Provide the journal entry on December 31, 20x3.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning