(Use the data below for Questions 7-17.)Company Pacquires 80% of Company S for $600,000 on 1/1/19. P did not pay a "controlpremium" for the acquisition. On that date, S reported common stock of $200,000 andretained earnings of $250,000. In addition, the fair value of S's buildings (14-year remaininglife) was higher than their carrying value by $70,000. All other assets and liabilities have fairvalue equal to carrying value. P uses the partial equity method to record its investment in S.Below are some data taken from accounting records of the year 2020 (the second year).P's own operating income, 2020: $540,000S's net income, 2020$180,000S's retained earnings at 1/1/20: $340,000S's dividends declared, 2020: $120,000Provide the following figures:7. NCI in net assets (i.e., NCI's fair value) at the acquisition date:8. Goodwill at the acquisition date:9. Consolidated net income, 2020:10. NCI in net income, 2020:11. P's net income, 2020:12. P's "Investment in S", 12/31/20:13. NCI in net assets, 12/31/20:Now assume P has been using the equity method instead, re-compute the following items:14. P's net income, 2020:15. P's "Investment in S", 12/31/20:16. NCI in net income, 2020:17. Consolidated net income, 2020:

You have asked multiple sub-parts kindly resubmit the remaining sub-parts as our guidelines have to…

Answered: 7. NCI in net assets (i.e., NCI's fair…

7. NCI in net assets (i.e., NCI's fair value) at the acquisition date: 8. Goodwill at the acquisition date: 9. Consolidated net income, 2020:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A gain on the disposition of Section 1245 property is treated as ordinary income to the extent of:…

A: Section 1245 properties are defined by IRS includes any personal property whether tangible or…

Q: 1. What amount of depreciation should be reported in the historical cost income statement for 2021?…

A: 1. Depreciation Expense based on Historical Cost = P5,000,000/5years = P1,000,000 2.…

Q: Which of the following is (are) acceptable valuation(s) for reporting of assets on the balance…

A: The objective of the question is to identify the correct methods of asset valuation for reporting on…

Q: A consolidation adjustment will have a tax effect if: Select one: A. It adjusts the carrying…

A: Consolidation Consolidation is the process of combining the financial resources of two or more…

Q: To calculate the an part of the calcula

A: Amount realized means all forms of compensation received by the seller from the buyer. It can be in…

Q: Which of the following statements is true about goodwill? The intangible asset goodwill may be…

A: Goodwill is an intangible asset which appears in the asset side of entities balance sheet.

Q: Th e initial measurement of goodwill is most likely aff ected by: B . the acquired company’s book…

A: Initially goodwill is measured as the difference between the purchase price paid for acquisition and…

Q: f the value implied by the purchase price of an acquired company exceeds the fair values of…

A: Goodwill refers to an intangible form of asset which arises when a verified buyer acquires or takes…

Q: 3. Statement 1: An entity shall begin.capitalizing borrowing costs as part of the cost of qualifying…

A: Answer is Option c) Both the statements are correct

Q: If the value implied by the purchase price of an acquired company exceeds the fair values of…

A: Goodwill on acquisition = Purchase consideration paid - Fair value of net identifiable assets…

Q: When nonmonetary assets are exchanged, a company records the cost of the nonmonetary asset acquired…

A: When a non monetary assets is exchanged for another non monetary assets. Asset shall be organised.…

Q: Priya Corporation acquired 90 percent of Sheldon Company on January 1, 2020 for $760,500 cash. The…

A: Goodwill = Purchase Consideration + Fair Value of Non Controlling Interest - Fair Value of Net…

Q: Under IAS 36, which of the following is a recoverable amount? Historical cost of the asset O…

A: Recoverable amount in accounting refers to the higher of an asset's fair value less costs to sell…

Q: em is normally reported as a current asset, NCA if non- current. If not an asset, write NA. 9.…

A: Non current assets refers to the those assets which the company made for long term time frame and…

Q: 11 In a taxable asset acquisition, the seller would likely pay ordinary income taxes on the gain…

A: The company's aim will be to increase the profitability of the company. The profits can be arrived…

Q: If an entity capitalized transaction costs to a financial asset at fair value through profit or…

A: Transaction costs seem to be the costs spent while purchasing or selling a product or service.…

Q: Goodwill arising from business combination is Charged to retained earnings after the acquisition…

A: Last option i.e. Never amortized, is the correct answer.

Q: (1) An intangible asset is acquired in connection with a business acquisition O A. Intangible assets…

A: Intangible Assets The examples for the intangible assets are goodwill, copyright, patent, francize,…

Q: What basic principle do U.S. GAAP and IFRS rely upon in recording the initial acquisition value for…

A: Generally Accepted Accounting Principles (GAAP): Generally Accepted Accounting Principles are the…

Q: According to China accounting standards indicates that goodwill normally is Select one: a.…

A: At the time of acquisitions of one company, the other company is required to pay more amount than…

Q: When nonmonetary assets are exchanged, a company records the cost of the nonmonetary asset acquired…

A: The cost of the nonmonetary asset acquired will be explained:

Q: Explain how the following transactions result in taxable /deductible temporarydifference:a. Interest…

A: The objective of this question is to understand how certain transactions can result in taxable or…

Q: nder IFRS, disclosure for an investment property must include which of the following

A: The investment property is the property that is held with an intention to earn rental income. It…

Q: When an owner-occupied property is transferred to investment property at fair value, a decrease in…

A: Investment Property: The acquisition of an investment property is made with the purpose of…

Q: The “carrying value” of a long term asset on the Balance Sheet represents: a. The net book value of…

A: Correct answer-option a:The net book value of the asset

Q: for the following intercompany transaction state the principle to be used in accounting for…

A: In this question we have been given the current or the future event of transaction. We have to…

Q: An entity starts the capitalization of borrowing costs to the cost of a qualifying asset when *…

A: Borrowing costs are costs that are incurred for borrowing money for the purpose of acquisition,…

Q: Where non-current assets are held for sale, they are required to be measured using: the…

A: Non-current assets are held for sale - Non Current Assets are part of the assets in the balance…

Q: Under the Acquisition Method, regardless of the purchase price, identifiable net assets of the…

A: In case one company overtake the assets and liabilities of another company , then accounting for…

Q: In computing the realized gain in a like-kind exchange, it is necessary to compare A) the fair…

A: market value of the assets given up.

Q: 28 Required: 1. 2. 3. 4. 5. amount. Purchased a computer on credit for $2,200. Journalise the…

A: Introduction: The trial balances showing the all balances of general ledgers, that means the…

Q: The cost of intangible asset acquired in business combination is recognized by entity in its book…

A: Intangible assets are those assets which have no physical existence in nature but recognition in…

Q: In an accretion/dilution analysis of an acquisition, if the purchase price exceeds the book value of…

A: Accretion / Dilution Analysis of Acquisition Acquisition of the companies means the taken over the…

Q: Question 6 of 30. Which of the following items increases the basis of property received in a…

A: A nontaxable exchange is one in which neither profit or loss is taxed and no loss may be deducted.…

Q: In an accretion/dilution analysis of an acquisition, if the purchase price exceeds the book value of…

A: Accretion / Dilution Analysis of Acquisition Acquisition of the companies means the taken over the…

Q: for the following intercompany transaction state the principle to be used in accounting for…

A: Intercompany Gains means profit arising from transactions like transfer of inventory, sale of assets…

Q: The difference between book value of the asset with the proceeds received from its sale, will result…

A: The book value of an asset is the value of the asset calculated by deducting the accumulated…

Q: if the value implied by the purchase price of an acquired company exceeds the fair values of the…

A: Acquisition refers to purchase of a company by another company by paying purchase consideration in…

Q: Prepare • When appropriate, use negative signs with your excess of fair value over book value…

A: Acquisition cost, occasionally appertained to as book value or asset book value, is a cost…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

25. A parent company’s investment account would include an element which is representative of : Multiple Choice the unrecorded difference between fair value and book value of the investee’s assets. the unrecorded book value of the investor’s assets. the goodwill accrued since the purchase of the investee. the recorded current value of the investee’s assets.
Fair value as a method of asset measurement is defined as: Multiple Choice O O the cost of an asset adjusted for the depreciation or amortization accumulated over its lifetime. price that would be received to sell assets in an orderly transaction between market participants on a given date. the net amount of cash into which an asset could be converted in the ordinary course of business. the value of what is given in exchange for the asset at its initial acquisition.
12
Explain the nature of lump-sum purchases including the factor(s) to be considered and the process/steps to properly account for and reflect the newly acquired assets on the balance sheet.
When investments measured at amortized cost are reclassified to FVOCI, the gain or loss recognized in profit or loss is equal to * a. zero b. the amount realized to date c. the amount from beginning of period to reclassification date d.the amount from acquisition date to reclassification date e.none of the above
In 2020, which of the following types of business or investment property is eligible for like-kind exchange? Group of answer choices 1.Machinery & Equipment 2.Inventory held for sale 3.Rental real estate 4. Securities
At acquisition date the net assests of the acquired subsidairy are included in the consolidated financial statement at their acquisition date fair value. However most of the parent assets and liabilities are measured on an historical cost basis . Is this Consistent ? Explain.
During the measurement period, which of the following may affect the amount ofgoodwill from business combination? A.New information regarding estimates in the contingent consideration that are not existing atthe date of acquisitionB.Nothing can affect the amount of goodwill.C.New information regarding estimates in the contingent consideration that are existing at thedate of acquisition.D.New information regarding estimates in the contingent consideration
Which of the following is/are true regarding goodwill achieved through acquisition as part of business combination? Where the acquirer was able to purchase the business at a discount, the excess of the market capitalization over the consideration transferred will be recognized in profit or loss. The acquirer shall recognize goodwill as of the acquisition date measured as the excess of the aggregate of the consideration transferred over the net of the fair values of all the assets acquired and the liabilities assumed Group of answer choices Both statements are true. None of these statements are true. 2 only. 1 only.
Statement 1: Measurement period is relevant if Fair Value of Net Assets of acquiree includes the recognition of the contingent asset, contingent liability, and assets/liabilities with provisional amounts. Statement 2: Measurement period is relevant for the remeasurement fo all contingent considerations. A. Both Statetements are Correct B. Both Statements are Incorrect C. Only Statement 1 is Correct D. Only Statement 2 is Correct
The following rules represent correct guidelines in the transfer to and from investment property classification except: Group of answer choices For transfers from inventory to PPE, the difference between fair value and the previous carrying amount is recognized in profit or loss during the period. For transfers from investment property carried at fair value to inventories, the difference between fair value and carrying amount shall be recognized in profit or loss during the period. For transfers from investment property carried at fair value to PPE, the fair value at the date of change of use is the cost of the property under the new classification. For transfers from PPE to investment property carried at fair value, any difference from carrying amount and fair value is treated as revaluation.
If an asset is sold at a gain, why is the gain deducted from net income when computing the netcash provided by operating activities under the indirect method?