Consolidated amounts when affiliate's debt is acquired from non-affiliate Assume that a Parent company owns 100 percent of its Subsidiary. On January 1, 2019, the Parent company had $360,000 of bonds payable (par) outstanding with a carrying value of $378,000. The bonds were originally issued to an unaffiliated company. On that same date, the Subsidiary acquired the bonds for $356,400. During 2019, the Parent company reported $162,000 of (pre-consolidation) income from its own operations (i.e., prior to any equity method adjustments by the Parent company) and after recording interest expense. The Subsidiary reported $90,000 of (pre-consolidation) income from its own operations after recording interest income. Related to the bonds during 2019, the parent reported interest expense of $40,500 while the subsidiary reported interest income of $36,900. Determine the following amounts that will appear in the 2019 consolidated income statement: Note: If no amount will appear on the consolidated income statement, enter zero. If item c. is a loss, use a negative sign with your answer.

Consolidated amounts when affiliate's debt is acquired from non-affiliate Assume that a Parent company owns 100 percent of its Subsidiary. On January 1, 2019, the Parent company had $360,000 of bonds payable (par) outstanding with a carrying value of $378,000. The bonds were originally issued to an unaffiliated company. On that same date, the Subsidiary acquired the bonds for $356,400. During 2019, the Parent company reported $162,000 of (pre-consolidation) income from its own operations (i.e., prior to any equity method adjustments by the Parent company) and after recording interest expense. The Subsidiary reported $90,000 of (pre-consolidation) income from its own operations after recording interest income. Related to the bonds during 2019, the parent reported interest expense of $40,500 while the subsidiary reported interest income of $36,900. Determine the following amounts that will appear in the 2019 consolidated income statement: Note: If no amount will appear on the consolidated income statement, enter zero. If item c. is a loss, use a negative sign with your answer.

Name: Consolidated amounts when affiliate's debt is acquired from non-affil
Uploaded: 2024-03-04T10:43:15.000Z
Channel: Bartleby
Description: Consolidated amounts when affiliate's debt is acquired from non-affiliate Assume that a Parent companyowns 100 percent of its Subsidiary. On January 1, 2019, the Parent company had $360,000 of bondspayable (par) outstanding with a carrying value of

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

On January 1, 2023, Pyxis Company issued share appreciation rights to its president exercisable for one year beginning January 1, 2025 provided that the president is still in the employ of the company at that date of exercise. Each right provides for a cash payment equal to the excess of the entity’s share price over P50. The equivalent number of shares for share appreciation rights will be based on the level of sales at the date of exercise. The number of equivalent shares is 20,000 if the level of sales is P4,000,000 to P6,000,000 and 30,000 shares if the level of sales is over P6,000,000. The actual sales achieved totaled P5,000,000 in 2023 and P7,000,000 in 2024. The share prices are P70 in 2023 and P65 in 2024. What is the compensation expense for 2023? ANSWER: 200,000 What is the compensation expense for 2024? ANSWER: 150,000 Show full solution
A Parent Company owns 100 percent of its Subsidiary. During 2021, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,840,000 and the subsidiary reports net income of $736,000. The parent had a bond payable outstanding on December 31, 2021, with a carrying value equal to $1,545,600. The Subsidiary acquired the bond on December 31, 2021, for $1,453,600. During 2021, the Parent reported interest expense (related to the bond) of $128,800 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2021? b. $2,668,000 d. $2,796,800
On January 3, 2019, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Inc., in exchange for $6,815,000 in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 fiscal year-ends. At the acquisition date, Sea Cliff’s stockholders’ equity was $2,527,500 including retained earnings of $1,727,500. Persoff pursued the acquisition, in part, to utilize Sea Cliff’s technology and computer software. These items had fair values that differed from their values on Sea Cliff’s books as follows: Asset Book Value Fair Value RemainingUseful Life Patented technology $ 152,500 $ 2,427,500 7 years Computer software $ 67,500 $ 1,867,500 12 years Sea Cliff’s remaining identifiable assets and liabilities had acquisition-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Sea Cliff…
Elimination of intercompany profits for variable interest entities (VIES) and voting interest entities Assume that on January 1, 2019, a Reporting Company acquires a 35 percent interest in a Legal Entity for $392,000 cash. The fair value of the 65 percent interest not acquired by the Reporting Company is $728,000. The fair value and book value of the identifiable net assets of the Legal entity equals $1,120,000. The Reporting Company has a right to 35 percent of the reported income (loss) of the Legal Entity. The Legal Entity is determined to be a VIE, and the Reporting Company is determined to be primary beneficiary. For the year ended December 31, 2019, the Reporting Company and the VIE reported the following pre-consolidation income statements assuming that the Reporting Company applies the equity method: Sales Costs of goods sold Gross profit Operating expenses Equity method income (loss) from VIE Net income Reporting Company VIE $1,232,000 $336,000 (739,200) (224,000) 492,800…
Windsor Company acquired an 80% interest in the common stock of Sheridan Company for $ 1,541,800 on July 1, 2022. Sheridan Company's stockholders' equity on that date consisted of: Common stock $801, 400 Other contributed capital 400, 400 Retained earnings 332,300 Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. (2) economic unit concept. Total Noncontrolling Interest (1) Parent company concept $ (2) Economic unit concept $
The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2019, just after the parent had purchased 90% of the subsidiary's stock: Case I Case II P Company S Company P Company S Company Current assets $ 880,000 $260,000 $ 780,000 $280,000 Investment in S Company 190,000 190,000 Long‐term assets 1,400,000 400,000 1,200,000 400,000 Other assets 90,000 40,000 70,000 70,000 Total $2,560,000 $700,000 $2,240,000 $750,000 Current liabilities $ 640,000 $270,000 $ 700,000 $260,000 Long‐term liabilities 850,000 290,000 920,000 270,000 Common stock 600,000 180,000 600,000 180,000 Retained earnings 470,000 (40,000) 20,000 40,000 Total $2,560,000 $700,000 $2,240,000 $750,000…
XYZ Company merged into UUU Company on July 1, 2021. In exchange for the net assets at fair market value of XYZ Company amounting to P696,450, UUU, issued 68,000 ordinary shares at P9 par value with a market price of P12 per share. Out-of-pockets of the combination were as follows: Legal fees for the contract of business combination P35,600 Audit fee for SEC registration of stock issue P90,000 Printing costs of stock certificates P14,500 Broker's fee P23,600 Accountant's fee for pre-acquisition P80,000 Other indirect cost of acquisition P75,000 General and allocated expenses P43,000 Listing fees in issuing new shares P36,000 XYZ will pay an additional cash consideration of P455,000 in the event that UUU's net income will be equal or greater than P950,000 for the period ended December 31, 2021. At acquisition date, there is a high probability of reaching the target net income and the fair value of the additional consideration was determined to be P195,000. Actual net income for the…
In business combination, the fair value of combinee bonds payable was $ 120,000 and the carrying amount of bonds payable was $ 100,000. The journal entry to allocate liquidated company to identifiable assets and liabilities with remainder to goodwill includes: а. Credit to premium on bonds payable $ 20,000. b. Debit to discount on bonds payable $ 20,000. C. Credit to bonds payable $ 120,000. d. Debit to premium on bonds payable $ 20,000
Panda Company acquired a $20,000 bond originally issued by its 75%-owned subsidiary on January 2, 2015. The bond was issued in a prior year for $21,250, matures January 1, 2020, and pays 8% interest at December 31. The bond's book value at January 2, 2015 is $20,625, and Panda paid $18,500 to purchase it. Straight-line amortization is used by both companies. How much interest income should be eliminated in 2015?
On 1/1/2019, Allie Company issued bonds payable of $500,000 at 8%. It was sold at $464,000 with effective interest rate of 9%. On 1/1/2020, Choco purchased all of Allie's bond for $532,000 cash with effective interest at 7% and Allie's bonds payable has been effectively retired. 3) Compute the consolidated gain or loss on a consolidated income statement for at the end of 2020
SUB is a 90% owned subsidiary of PAR. SUB issued $100,000 of 8%, 5-year bonds for $96,110 on 1/1/2015, when the market rate was 9%. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2018, for $103,667, when the market rate was 6%. Both companies use the effective interest method to amortize the premium/discount on the bonds. 1/ The net adjustment needed to consolidated income in the consolidation process for 2019 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment) a. 2,622 increase b. 2,805 increase c. 5,427 decrease d. 2,714 increase 2/ The elimination and adjustment process for 2018 consolidated statements include a. Credit Investment in Subsidiary Bond 101,887 b. Credit Gain 3,667 c. Credit Discount 1,760 d. Credit Bond Payable 100,000
Elimination of intercompany profits for variable interest entities (VIES) and voting interest entities Assume that on January 1, 2019, a Reporting Company acquires a 35 percent interest in a Legal Entity for $441,000 cash. The fair value of the 65 percent interest not acquired by the Reporting Company is $819,000. The fair value and book value of the identifiable net assets of the Legal entity equals $1,260,000. The Reporting Company has a right to 35 percent of the reported income (loss) of the Legal Entity. The Legal Entity is determined to be a VIE, and the Reporting Company is determined to be primary beneficiary. For the year ended December 31, 2019, the Reporting Company and the VIE reported the following pre-consolidation income statements assuming that the Reporting Company applies the equity method: Sales Costs of goods sold Gross profit Operating expenses Equity method income (loss) from VIE Net income Reporting Company VIE $1,386,000 $378,000 (831,600) (252,000) 554,400…