56. Consolidation subsequent to date of acquisition—Equity method with noncontrolling interest,AAP, and upstream intercompany inventory saleAssume, on January 1, 2016, a parent company acquired an 80% interest in its subsidiary. The total fairvalue of the controlling and noncontrolling interests was $456,000 over the book value of the subsidiary'sStockholders' Equity on the acquisition date. The parent assigned the excess to the following [A] assets:Patent..Goodwill[A] AssetInitial Fair ValueUseful Life$171,000285,00010 yearsIndefinite$456,00080% of the Goodwill is allocated to the parent. Assume the subsidiary sells inventory to the parent(upstream) which includes that inventory in products that it ultimately sells to customers outside of thecontrolled group. You have compiled the following data as of 2021 and 2022:

Part 2: Explanation:Step 1: Calculation of GoodwillOn January 1, 2016, the parent company acquired…

Answered: 56. Consolidation subsequent to date of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consolidated net income and net income attributable to the noncontrolling interest Assume that on January 1, 2021, a parent company acquired an 85% interest in a subsidiary's voting common stock. On the date of acquisition, the fair-value of the subsidiary's net assets equaled their reported book values except for machinery and equipment, which had a fair value of $720,000 and a reported book value of $300,000. the machinery and equipment had a 5-year remaining useful life and no salvage value. The following are the highly summarized pre-consolidation income statements of the parent and subsidiary for the year ended December 31, 2022: Income Statement Parent Subsidiary Revenues $2,592,000 $345,600 75,480 (1,728,000) (172,800) $939,480 $172,800 Equity income Expenses Net income For the year ended December 31, 2022, what amounts will be reported for (1) consolidated net income and (2) net income attributable to the noncontrolling interest, respectively, in the parent's consolidated…
46. Consolidation at the end of the first year subsequent to date of acquisition-Equity method (purchase price equals book value) Assume a parent company acquires its subsidiary on January 1, 2022, by exchanging 30,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $17 per share, for all of the outstanding voting shares of the acquiree. You have been charged with preparing the consolidation of these two companies at the end of the first year. On the acquisition date, all of the subsidiary's assets and liabilities had fair values equaling their book values. The parent uses the equity method of pre-consolidation Equity investment bookkeeping. Following are financial statements of the parent and its subsidiary for the year ended December 31, 2022. LO2 X
Please don't give handwritten answer..thanku Intercompany sale of depreciable assets Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $345,600 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $288,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent’s “stand-alone” income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $360,000 . The subsidiary’s recorded net income is $72,000. Based on this information, determine the…
Preparing the consolidation entries for sale of land Assume that during 2015 a wholly owned subsidiary sells land that originally cost $450,000 to its parent for a sale price of $500,000. The parent holds the land until it sells the land to an unaffiliated company on December 31, 2019. The parent uses the equity method of pre-consolidation bookkeeping a. Prepare the required [] consolidation entry in 2015. Description gain Gain on a Cash b. Prepare the required [] consolidation entry required at the end of each year 2016 through 2018 Description Debit Credit gain Retained earnings Land gain Equityment Gain on sa Debit x 50,000 ✓ L c. Assume that the parent re-sells the land outside of the consolidated group for $525,000 on December 31, 2019. Prepare the journal entry made by the parent to record the sale and the required 3 consolidation entry for 2019. Description Credit 50,000 Debi 525,000 0✔ 0✔ Credit 25,000 0✔ 50,000 Dx DU 25,000x d. What will be the amount of gain reported in the…
Noncontrolling interest and intercompany sale of depreciable assets Assume on January 1, 2018, a parent company acquired a 75% interest in a subsidiary’s voting common stock. On the date of acquisition, the fair value of the subsidiary’s net assets equaled their reported book values. On January 1, 2020, the subsidiary purchased a building for $777,600 The building has a useful life of 8 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2022, the subsidiary sold the building to the parent for $648,000 The parent estimated that the building had a six-year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. For the year ending December 31, 2022, the parent’s “stand-alone” income (i.e., net income before recording any adjustments related to preconsolidation investment accounting) is $810,000 . The subsidiary’s recorded net income is $162,000. Based on this information, determine the balance for…
Pushdown Accounting Assume a parent company acquires its subsidiary by paying $1,700,000 for all of the outstanding voting shares of the investee. On the acquisition date, subsidiary's assets and liabilities have individual fair values that equal their book values, except for property equipment with a fair value greater than book value by $150,000 and license with a fair value greater than book value by $250,000. The parent and subsidiary have the following balance sheets immediately after the acquisition, but before any pushdown adjustments by the subsidiary: Parent Parent Subsidiary Assets: Cash & receivables $ 800,000 $ 350,000 Inventory 600,000 200,000 Property & equipment, net 2,300,000 1,025,000 Equity investment 1,700,000 Licenses - 275,000 $ 5,400,000 $ 1,850,000 Liabilities and stockholders' equity: Current liabilities $ 400,000 $ 400,000 Other liabilities 300,000 - Note payable - 600,000 Common stock 1,670,000…

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