g book value. The fair value of the non-controlling interest at the date of acquisition was equal to 10% of the book value of Martin Corp. On April 1, 2020, Martin Corp. purchased inventory from Coco Inc. for P180,000. Martin Corp. sold the entire inventory to unrelated parties for P240,000 on Dece
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On January 1, 2020, Coco Inc. purchased 90% ownership in Martin Corp. at underlying book value. The fair value of the non-controlling interest at the date of acquisition was equal to 10% of the book value of Martin Corp. On April 1, 2020, Martin Corp. purchased inventory from Coco Inc. for P180,000. Martin Corp. sold the entire inventory to unrelated parties for P240,000 on December 1, 2020. Coco Inc. had purchased the inventory sold to Martin Corp. for P124,000. The companies had no other transactions during 2020. What amount of cost of goods sold will be reported in the 2020 consolidated financial statements?*
a. P 116,000
b. P 240,000
c. P 124,000
d. P 180,000
Thank you for answering
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- The Individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent Interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $420,000. At the acquisition date, the fair value of the noncontrolling interest was $280,000 and Bellstar's book value was $550,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $150,000. This Intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its Investment In Bellstar. Abbey sold Bellstar land with a book value of $70,000 on January 2, 2023, for $140,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers Inventory to Abbey. In 2023, it shipped Inventory costing $130,000 to Abbey at a price of $200,000. During 2024, Intra-entity shipments totaled $250,000, although the original…On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $492,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $328,000, and Rockne's assets and liabilities had a collective net fair value of $820,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $300,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $360,000 in 2020 and $460,000 in 2021. Approximately 35 percent of the inventory purchased during any one year is not used until the following year. What is the noncontrolling interest's share of Rockne's 2021 income? Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.On January 1, 2020, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,274,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,540,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $270,000. On January 1, 2021, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $512,500 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2020 2021 Net income $ 505,000 $ 626,000 Dividends declared 170,000 200,000 Show Palka’s journal entry to record its January 1, 2021, acquisition of an additional…
- On January 1, 2020, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $391,800. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $231,600. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $261,200. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $85,600 and an unrecorded customer list (15-year remaining life) assessed at a $61,800 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, McIlroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Year Cost to McIlroy Transfer Priceto Stinson Ending Balance(at transfer price) 2020…On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $2,054,400 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $513,600. Seidel's acquisition-date total book value was $2,040,000. The fair value of Seidel's recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $294,000 and several customer relationships estimated to be worth $216,000 with four-year remaining lives. Any remaining acquisition-date fair value in the Seidel acquisition was considered goodwill. During 2021, Seidel reported $206,400 net income and declared and paid dividends totaling $60,000. Also in 2021, Ackerman reported $420,000 net income, but neither declared nor paid dividends. a. What amount should Ackerman assign to the 20 percent noncontrolling interest of Seidel at the acquisition date? b. How much of…On January 1, 2020, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,222,900 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,470,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $267,000. On January 1, 2021, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $467,500 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2020 2021 Net income $ 477,500 $ 592,500 Dividends declared 150,000 190,000 Show Palka’s journal entry to record its January 1, 2021, acquisition of an additional 25…
- On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,050,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $810,000, retained earnings of $360,000, and a noncontrolling interest fair value of $450,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income Dividends Declared Inventory Purchases from Corgan 2020 $ 260,000 $ 46,000 $ 210,000 2021 240,000 56,000 230,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's inventory. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of…On January 1, 2020, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $448,000 consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $112,000, and Rockne's assets and liabilities had a collective net fair value of $560,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $170,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $230,000 in 2020 and $330,000 in 2021. Approximately 30 percent of the inventory purchased during any one year is not used until the following year. What is the noncontrolling interest's share of Rockne's 2021 income?Ocean, Inc. acquired 15% of River Co. on January 1, 2022 for $94,500 and appropriately accounted for the investment using the fair-value method. On January 1, 2023, Ocean purchased an additional 20% of River for $180,000, achieving the ability to exert significant influence over River. On that date, the fair value of River's common stock was $900,000 in total. River's January 1, 2023, book value equaled $680,000, although land was undervalued by $40,000. Any additional excess cost over fair value was attributable to an undervalued patent with a 6-year remaining life. During 2023, River reported net income of $168,000 and paid dividends of $40,000. Based on the above information, use the prospective approach to account for the change to the equity method and determine the following numbers. (a) The amount of annual excess amortization for 2023. Answer: (b) The amount of equity income that Ocean should report for 2023. Answer: (c) Compute the balance of Investment in River account at the…
