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

SUB is an 80% owned subsidiary of PAR. SUB issued $100,000 of 8%, 10-year bonds for $95,000 on 1/1/2011. Annual interest is paid on 12/31/. PAR purchased the bonds on 1/1/2017, for $102,000. Both companies use the straight-line method to amortize the premium/discount on the bonds. 1) How much gain or loss on retirement should be reported in 2017 consolidated statements? Select one: a. 2,000 loss b. 0 c. 4,000 loss d. 2,000 gain 2) The elimination and adjustment process for 2017 consolidated statements include: Select one: a. Credit Investment in Subsidiary Bond 102,000 b. Credit Interest Expense 8,000 c. Debit Interest Revenue 7,500 d. Credit Discount 500 Clear my choice
Company S is a 100%-owned subsidiary of Company P. On January 1, 2016, Company S had $100,000 of 8% rate bonds outstanding. The bonds had 5 years to maturity on January 1, 2016, and had an unamortized discount of $5,000. On that date, Company P purchased the bonds for $99,000. The net adjustment needed to consolidated retained earnings of the two companies in the consolidation process for 2016 is: a. 800 decrease b. 0 c. 3,200 decrease d. 4,000 decrease
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/ How much gain or loss on retirement should be reported in 2018 consolidated statements? a. 3,667 loss b. 3,667 gain c. 5,427 loss d. 1,760 loss 2/ The net adjustment needed to consolidated income in the consolidation process for 2018 is: (hint: complete the subsidiary income distribution schedule and calculate the surplus of a gain or loss on retirement and the interest adjustment) a. 2,714 decrease b. 5,427 decrease c. 2,622 increase d. 2,805 decrease
In December 31, 2020 consolidated statements, non-controlling interest should be reported at: a. P397,714b. P380,614c. P372,000d. P345,500
On January 1, 2019, Parent Company acquires 75% (750,000 ordinary shares) of Subsidiary Company for P7,500,000. During this time, the shares of the subsidiary are trading at P8 per share. Moreover, at the date of acquisition, the Subsidiary reports outstanding shares of P4,000,000 and the retained earnings is valued at P2,000,000 and the Subsidiary's inventories is understated by P100,000, equipment with a remaining 5-year life is understated by P600,000 and land is understated by P1,300,000. The Non-controlling interest is valued at P2,375,000 at this date. Parent and Subsidiary furthermore reports net income of P700,000 and P180,000 each respectively and declared dividends of P400,000 and P300,000 each respectively for 2019. What is the Non-controlling interest in net assets arising from the consolidation to be reported at the end of 2019 if the Non-controlling interest is stated at fair value? What is the net income of the Equity Holder's of the Parent to be reported in the…
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
P Co paid $140,000 for 70% interest in S CO.on 1/1/2019, when S had Capital Stock of $50,000 and Retained Earnings of $100,000. Fair values of net assets were the same as recorded book values. During 2019, S had income of $20,000, declared dividends of $7,500, On 31/12/2019, the P CO financial statements will show income from subsidiary for 2019 Amount? Select one: a. 12,500 b. 5,250 c. 20, 000 d . 14, 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 $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 $
Kk.25.
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…
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?