PRINCIPLES OF TAXATION F/BUS...(LL)
23rd Edition
ISBN: 9781260433197
Author: Jones
Publisher: MCG
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Chapter 9, Problem 23AP
a.
To determine
Discuss the business reasons for which a parent corporation like Incorporation PV operates a business through a subsidiary like incorporation SV.
b.
To determine
Calculate Incorporation PV’s realized gain, recognized gain, and basis in its Incorporation SV’s stock.
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Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 35,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred:
Cost
Book Value
Fair Value
Cash
$ 32,000
$ 32,000
$ 32,000
Inventory
83,000
83,000
83,000
Land
69,000
69,000
99,000
Buildings
188,000
147,000
249,000
Equipment
95,000
74,000
123,000
Accounts Payable
58,000
58,000
58,000
Required:
Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon
Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Choose the correct. Aceton Corporation owns 80 percent of the outstanding stock of Voctax, Inc. During the current year, Voctax made $140,000 in sales to Aceton. How does this transfer affect the consolidated statement of cash flows?a. The transaction should be included if payment has been made.b. Only 80 percent of the transfers should be included because the subsidiary made the sales.c. Because the transfers were from a subsidiary organization, the cash flows are reported as investing activities.d. Because of the intra-entity nature of the transfers, the amount is not reported in the consolidated cash flow statement.
Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and
liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $6 par value common stock. The following Information is
provided on the assets and accounts payable transferred:
Cash
Inventory
Land
Buildings
Equipment
Accounts Payable
Required:
Cost
$ 30,000
84,000
Book Value
$ 30,000
Fair Value
$ 30,000
84,000
84,000
71,000
71,000
101,000
175,000
141,000
242,000
98,000
71,000
114,000
59,000
59,000
59,000
a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon
b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon.
Note: If no entry is required for a…
Chapter 9 Solutions
PRINCIPLES OF TAXATION F/BUS...(LL)
Ch. 9 - Prob. 1QPDCh. 9 - Prob. 2QPDCh. 9 - Prob. 3QPDCh. 9 - Prob. 4QPDCh. 9 - Prob. 5QPDCh. 9 - Prob. 6QPDCh. 9 - Prob. 7QPDCh. 9 - Prob. 8QPDCh. 9 - Prob. 9QPDCh. 9 - Explain the difference between a substituted basis...
Ch. 9 - Prob. 11QPDCh. 9 - Prob. 12QPDCh. 9 - Prob. 13QPDCh. 9 - Prob. 14QPDCh. 9 - Prob. 15QPDCh. 9 - Prob. 1APCh. 9 - Prob. 2APCh. 9 - Prob. 3APCh. 9 - Prob. 4APCh. 9 - Prob. 5APCh. 9 - Prob. 6APCh. 9 - This year, Neil Inc. exchanged a business asset...Ch. 9 - Prob. 8APCh. 9 - Prob. 9APCh. 9 - XYZ exchanged an old building for a new like-kind...Ch. 9 - Prob. 11APCh. 9 - Prob. 12APCh. 9 - Prob. 13APCh. 9 - Prob. 14APCh. 9 - Prob. 15APCh. 9 - Prob. 16APCh. 9 - Prob. 17APCh. 9 - Prob. 18APCh. 9 - Prob. 19APCh. 9 - On October 18 of last year, a flood washed away...Ch. 9 - Prob. 21APCh. 9 - Prob. 22APCh. 9 - Prob. 23APCh. 9 - Mr. ZJ owns a sole proprietorship. The business...Ch. 9 - Prob. 25APCh. 9 - Prob. 26APCh. 9 - Prob. 27APCh. 9 - Prob. 28APCh. 9 - Prob. 29APCh. 9 - Prob. 30APCh. 9 - Prob. 31APCh. 9 - Prob. 32APCh. 9 - Prob. 33APCh. 9 - Prob. 34APCh. 9 - Prob. 1IRPCh. 9 - Prob. 2IRPCh. 9 - Prob. 3IRPCh. 9 - Prob. 4IRPCh. 9 - Prob. 5IRPCh. 9 - Prob. 6IRPCh. 9 - Prob. 7IRPCh. 9 - Prob. 8IRPCh. 9 - Prob. 9IRPCh. 9 - Prob. 10IRPCh. 9 - Prob. 1RPCh. 9 - Prob. 2RPCh. 9 - Prob. 3RPCh. 9 - Prob. 1TPCCh. 9 - Prob. 2TPCCh. 9 - Prob. 3TPCCh. 9 - Croyden is a calendar year, accrual basis...
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- Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 34,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cash Inventory Land Buildings Equipment Accounts Payable Required A Required: a. Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon b. Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab. Complete this question by entering your answers in the tabs below. Required B View transaction list Cost $ 38,000 89,000 61,000 174,000 99,000 45,000 A Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry…arrow_forwardA Parent corporation purchased 25% of the outstanding common shares of Subsidiary Limited for $2,500,000 on January 1, 2020. The following relates to Subsidiary since the acquisition date: Year Net Income Other Comprehensive Income Dividends Paid 2020 $ 51,800 $11,400 $74,000 2021 148,000 29,600 74,000 Required: Assume that Parent is a private company. Even though it has significant influence, it chose to use the cost method to account for its investment. Prepare ALL the journal entries that Parent should make regarding this investment in Year 2020 and Year 2021arrow_forwardOn the 1/01/x3, J Group acquired 2 025 000 of the 4 500 000 ordinary R1 shares in Entity PA for R5 695 000. At acquisition, PA had retained earnings of R1 400 000. When preparing the J Group's consolidated financial statements for the year end date of 31/12/x3, accountants at the group entity are working with the following information: In the x3 financial year, Entity PA made a profit after tax of R 1 230 000; In the x3 financial year, PA paid a dividend totaling R45 000 to its shareholders; At the end of the x3 financial year, the group's investment in PA is found to have impaired by R94 000. Based on this information, calculate the group's investment in associate figure, in its consolidated financial statements dated 31/12/x3.arrow_forward
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