AAA Inc. acquired on January 1, 2016 all the issued and outstanding common shares of BBB Inc. for P320,000 and BBB Inc. is dissolved. On this day, the assets and liabilities of BBB Inc. show: Cash P 30,000 Merchandise inventory 90,000 Plant and equipment 160,000 Goodwill 50,000 Liabilities ( 60,000) Per appraisal, plant and equipment and merchandise inventory were valued at P190,000 and P75,000, respectively. The journal entry in the books of the acquirer would include a debit to Plant and equipment amounting to The amount of goodwill from this transaction is:

AAA Inc. acquired on January 1, 2016 all the issued and outstanding common shares of BBB Inc. for P320,000 and BBB Inc. is dissolved. On this day, the assets and liabilities of BBB Inc. show: Cash P 30,000 Merchandise inventory 90,000 Plant and equipment 160,000 Goodwill 50,000 Liabilities ( 60,000) Per appraisal, plant and equipment and merchandise inventory were valued at P190,000 and P75,000, respectively. The journal entry in the books of the acquirer would include a debit to Plant and equipment amounting to The amount of goodwill from this transaction is:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Johannes Inc. acquired 80 percent of Corner Brook Ltd. common shares on January 1, Year 4, for $744,000. At that date, the fair value of the non-controlling Interest was $186,000. Corner Brook's balance sheet contained the following amounts at the time of the combination: Cash Accounts Receivable Inventory Construction Work in Progress Other Assets (net) Total Assets 66,000 140,000 40,000 Accounts Payable $ 106,000 Bonds Payable 610,000 950,000 Common Shares ($10 par value) Retained Earnings 400,000 530,000 450,000 $1,646,000 $ 1,646,000 Total Liabilities & Equities During each of the next three years, Corner Brook reported net income of $120,000 and paid dividends of $60,000. On January 1, Year 6, Johannes sold 8,800 of the Corner Brook shares for $260,000 in cash. Johannes used the equity method in accounting for its ownership of Corner Brook. Required: (a) Compute the balance in the Investment account reported by Johannes on January 1, Year 6, before its sale of shares. (Omit $ sign…
On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year.what is the Noncontrolling interest's share in the Net income of the subsidiary?
PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021. Fair value versus carrying value differences were identified as follows: Jan 1, 2021 SUB Inc. carrying value fair value Cash $5,000 $5,000 Accounts Receivable $30,000 $30,000 Inventory $30,000 $50,000 Equipment (net) $25,000 $20,000 Land $20,000 $30,000 Trademark $10,000 $18,000 Total Assets $120,000 $153,000 Liabilities $70,000 $70,000 Common Shares $30,000 Retained Earnings $20,000 Total Liabilities and Equity $120,000 The equipment had a remaining useful life of 10 years from the date of acquisition. SUB's trademark is estimated to have a remaining life of 5 years from the date of acquisition. ASSUME INSTEAD that PAR has chosen to use the identifiable net assets method to value the non-controlling interest. Calculate at acquisition date: NCI ii) Goodwill
E Company purchased 80% of the outstanding common stock of P Company on January 2, 2020, for $390,000. Balance sheets for E Company and P Company immediately after the stock acquisition were as follows: Current assets Investment in P Company Plant and equipment (net) Land Current liabilities Long-term notes payable Common stock Other contributed capital Retained earnings E Company $166,000 390,000 560,000 48,000 $1,164,000 $124,000 -0- 510,000 340,000 190,000 $1,164,000 P Company $95,000 -0- 228,000 131,000 $454,000 $44,000 31,000 180,000 64,000 135,000 $454,000 P Company owed E Company $22,000 on open account on the date of acquisition. Prepare a consolidated balance sheet for E and P Companies on the date of acquisition. Any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of P Company's other assets and liabilities are equal to their fair values. (List assets in order of…
On January 2, 20Y7, Mikedes Company acquired 30% of the outstanding stock of Violet Company for $720,000. For the year ended December 31, 20Y7, Violet Company earned income of $190,000 and paid dividends of $40,000. On January 31, 20Y8, Mikedes Company sold all of its investment in Violet Company stock for $770,000. Required: Journalize the entries for Mikedes Company for the purchase of the stock, the share of Violet income, the dividends received from Violet Company, and the sale of the Violet Company stock. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
Problems 10, 11, and 12 relate to the following:On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $80,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,000 dividend. Sedona recorded net income of $70,000 in 2016 and $80,000 in 2017.Selected account balances from the two companies’ individual records were as follows:On its December 31, 2018, consolidated balance sheet, what amount should Phoenix report for Sedona’s customer list? a. $10,000b. $20,000c. $25,000d. $50,000
Premier Inc. acquired a 42% interest in Jungle Vine Inc. (JV) for $86,000 cash on January 1, 2017 when JV had retained earnings of $100,000. On purchase of shares of JV, the acquisition differential schedule relating to Premier's share of JV was: Equipment $10,000 Goodwill $35,000 $45,000 Equipment was expected to last five more years from date of acquisition and is still owned at year end. Goodwill was written down by $5,000 in 2018. In 2019, Premier sold JV land, reporting a gain of $20,000. JV still has the land. In 2019, JV sold Premier inventory for $30,000 reporting a profit of $6,000. $15,000 of the inventory was still held by Premier at the end of 2019 and sold early in 2020. In 2020, JV reported net income of $35,000 and declared and paid total dividends of $15,000. At December 31, 2020, JV had retained earnings of $160,000. Calculate the equity method income related to Jv for 2020 reported by Premier.
2. Cinema Company acquired 75 percent of Movie Corporation's shares on December 31, 2015, at underlying book value of $98,000. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Movie Corporation. Movie's balance sheet on January 1, 2018, contained the following balances: Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets $50,000 Accounts Payable 35,000 Bonds Payable 40,000 Common Stock 300,000 Additional Paid-In Capital (100,000) Retained Earnings $325,000 Total Liabilities and Equities $40,000 100,000 50,000 Prepare the entries recorded on the books of each company. 75,000 60,000 $325,000 On January 1, 2018, Movie acquired 3,500 of its own $2 par value comm on shares from Nonaffiliated Corporation for $6 per share.
Matrix, Inc. acquired 25% of Neo Enterprises for $2,000,000 on January 1, 2014. The fair value and book value of 25% of Neo's identifiable net assets was $2,000,000 and $1,600,000 on that date, and the difference was attributable to assets that would be depreciated over 10 years. During 2014 Neo recognized net income of $500,000 and paid dividends of $400,000. Matrix’s portion of Neo’s fair value was $2,500,000 as of December 31, 2014. Required: Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix accounts for that investment as (1) an equity method investment, and (2) elects the fair-value option. Show entries for the purchase of the investment, recognition of net income, receipt of dividends, and adjustment at year-end, as appropriate. DATE ACCOUNTS DEBIT CREDIT EQUITY METHOD FAIR…
Problems 10, 11, and 12 relate to the following:On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc., for $600,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $420,000. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $80,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,000 dividend. Sedona recorded net income of $70,000 in 2016 and $80,000 in 2017.Selected account balances from the two companies’ individual records were as follows:What is consolidated net income for Phoenix and Sedona for 2018?a. $148,000b. $203,000c. $228,000d. $238,000
M On January 1, 2023, Stream Company acquired 21 percent of the outstanding voting shares of Q-Video, Incorporated, for $718,000. Q- Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.6 million and $768,000, respectively. A customer list compiled by Q-Video had an appraised value of $312,000, although it was not recorded on its books. The expected remaining life of the customer list was six years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill Q-Video generated net income of $284,000 in 2023 and a net loss of $108,000 in 2024 In each of these two years, Q-Video declared and paid a cash dividend of $10,000 to its stockholders During 2023, Q-Video sold inventory that had an original cost of $80,000 to Stream for $160,000. Of this balance, $77,000 was resold to outsiders during 2023, and the…
On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Determine the consolidated net income for 2020. compute for the Equity Shareholder's Net Income.