Comprehensive Question Ch4: Par Corporation acquired a 70 percent interest in Sul Corporation's outstanding voting common stockon January 1, 2011, for $490,000 cash. The stockholders' equity (book value) of Sul on this date consisted of $500,000 capital stock and $100,000 retained earnings. The differences between the fair valueof Sul and the book value of Sul were assigned $5,000 to Sul's undervalued inventory, $14,000 to undervalued buildings, $21,000 to undervalued equipment, and $40,000 to previously unrecorded patents. Any remaining excess is goodwill. The undervalued inventory items were sold during 2011, and the undervalued buildings andequipment had remaining useful lives of seven years and three years, respectively. The patents have a 40- year life. Depreciation is straight line.At December 31, 2011, Sul's accounts payable include $10,000 owed to Par. This $10,000account payable is due on January 15, 2012. Separate financial statements for Par and Sul at 31 Dec-

Comprehensive Question Ch4: Par Corporation acquired a 70 percent interest in Sul Corporation's outstanding voting common stockon January 1, 2011, for $490,000 cash. The stockholders' equity (book value) of Sul on this date consisted of $500,000 capital stock and $100,000 retained earnings. The differences between the fair valueof Sul and the book value of Sul were assigned $5,000 to Sul's undervalued inventory, $14,000 to undervalued buildings, $21,000 to undervalued equipment, and $40,000 to previously unrecorded patents. Any remaining excess is goodwill. The undervalued inventory items were sold during 2011, and the undervalued buildings andequipment had remaining useful lives of seven years and three years, respectively. The patents have a 40- year life. Depreciation is straight line.At December 31, 2011, Sul's accounts payable include $10,000 owed to Par. This $10,000account payable is due on January 15, 2012. Separate financial statements for Par and Sul at 31 Dec-

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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
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X co, purchased 75% of Y Common stock at 1/1/2020 for $ 300,000 ,on the same date the Y co stock was $ 100,000 and retained earning $120,000 , at acquisition date the net assets of Y co. book value was equal to fair value except ( inventory FV more than BV of $26,000) and (land its FV more than BV10,000 ) (Building its FV more than BV by $ 14,000 ) but ( equipment its FV less than B V by $10,000) if Y CO. reported $160,000 net income for 31/12/2020 and paid $ 60,000 dividends . Other information 1- the y inventory completely sold during 2020 2- the building useful life was 7 years , but equipment 5 years 3- there is no impairment for goodwill during 2020 What is the amount of NCI in net assets in 1/1/2020 Select one: a. 100,000 b. 55,000 c. 80,000 d. 75,000
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E9–6Subsidiary with Preferred Stock Outstanding Playtown Corporation purchased 75 percent of Sandbox Company common stock and 40 percent of its preferred stock on January 1, 20X6, for $270,000 and $80,000, respectively. At the time of purchase, the fair value of Sandbox’s common shares held by the noncontrolling interest was $90,000. Sandbox’s balance sheet contained the following balances:Preferred Stock ($10 par value) $200,000Common Stock ($5 par value) 150,000Retained Earnings 210,000Total Stockholders’ Equity $560,000page 486 For the year ended December 31, 20X6, Sandbox reported net income of $70,000 and paid dividends of $50,000 (which includes the preferred dividend). The preferred stock is cumulative and pays an annual dividend of 8 percent.Required Prepare the journal entries recorded by Playtown for its investments in Sandbox during 20X6.Present the consolidation entries needed to prepare the consolidated financial statements for Playtown Corporation as of…
Ch TB MC Qu. 01-16 Borgin Inc, owns 30% of the outstanding... Borgin Inc. owns 30% of the outstanding voting common stock of Burkes Co. and has the ability to significantly influence the investee's operations and decision-making. On January 1, 2021, the balance in the Investment in Burkes Co. account was $402,000. Amortization associated with the purchase of this investment is $8,000 per year. During 2021, Burkes earned income of $108,000 and paid cash dividends of $36,000. Previously in 2020, Burkes had sold inventory costing $28,800 to Borgin for $48,000. All but 25% of this merchandise was consumed by Borgin during 2020. The remainder wos used during the first few weeks of 2021. Additional sales were made to Borgin in 2021; inventory costing $33,600 was transferred at a price of $60,000. Oor this total, 40% was not consumed until 2022. What was the balance in the Investment in Burkes Co. account at the end of 2021?
Ch On December 31, 2019, Akron, Inc., purchased $16,500. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $94,250. percent of Zip Company's common shares on the open market in exchange for During the next two years, the following information is available for Zip Company: Common Stock Dividends Fair Value Income Declared (12/31) $330,000 377,000 480,000 2019 2020 $85,000 98,000 $6,300 15,800 2021 At December 31, 2020, Zip reports a net book value of $293,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2020. a. Assume Akron applies the equity method to its Investment in Zip account: 1. What amount of equity income should Akron report for 2021? 2. On Akron's December 31, 2021, balance sheet, what amount is reported for the Investment in Zip account?