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On January 1, 2020 Big acquires 90% of Small for a cash payment of $600,000. At acquisition date, the book value of all of Small’s assets and liabilities equaled their fair value with the exception of Building (10 year remaining life) that had a book value of $400,000 and a fair value of $900,000.
For full year 2020, Small has net income of $300,000. How much is the noncontrolling interest share of Small’s net income for 2020 ?
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- Kingbird Corp. sells idle machinery to Enyart Company on July 1, 2020, for $46,000. Kingbird agrees to repurchase this equipment from Enyart on June 30, 2021, for a price of $49,680 (an imputed interest rate of 8%). (a) Prepare the journal entry for Kingbird for the transfer of the asset to Enyart on July 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit eTextbook and MediaOn January 1, 2020, Marshall acquired an investment for P500,000 plus a purchase commission of P10,000. The investment is designated as financial asset at fair value through other comprehensive income. On December 31, 2020, quoted market price of the investment is P500,000. If the investment were sold, a commission of P15,000 would be paid. On December 31, 2020, the investment should be carried at A.P485,000B.P500,000C.P495,000D.P510,000On January 2, 2024, Cole Inc. paid $100,000 for a 30% interest in Johnas Corp. This investee had assets with a book value of $550,000 and liabilities of $300,000. A patent held by Johnas having a book value of $10,000 was actually worth $40,000 with a six-year remaining life. Any goodwill associated with this acquisition is considered to have an indefinite life. In 2024, Johnas reported a net income of $50,000 and paid dividends of $20,000 while in 2025 it reported a net income of $75,000 and dividends of $30,000. Assume Cole has the ability to significantly influence the operations of Johnas. The equity in income of Johnas for 2025, is: O $22,500. O $21,000. O $12,000. O $13,500. $75,000.
- In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $846,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose balance sheet on that date showed total assets of $4,428,000 with liabilities of $978,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. In 2020, Martes reported net income of $221,000. In 2021, Martes reported net income of $266,000. Dividends of $94,000 were declared in each of these two years. What is the equity method balance of Domingo’s Investment in Martes, Inc., at December 31, 2021?On January 1, 2020 Thomas acquires 40,000 shares representing 30% ownership of Wolf for $600,000 cash. Thomas will use the equity method. At acquisition date, Wolf had a book value of assets of $700,000 and a book value of liabilities of $200,000. In addition, Wolf has a Building (remaining useful life of 15 years) with a book value of $500,000 and a fair value of $900,000 at January 1, 2020. All remaining assets and liabilities of Wolf had book value equal to fair value at date of acquisition. What is the amount of Goodwill included with Thomas Investment accountOn January 1, 2021, Anna Company sold a piece of equipment to Banana Company with a cost of P3,500,000 and accumulated depreciation of P600,000 in exchange for an annual 10% interest-bearing note, P3,000,000. Banana is required to make four equal annual payments of principal plus interest. What is the interest income for the year 2022?
- On January 1, 2019, Uncle Company purchased 80 percent of Nephew Company's capital stock for $614,400 in cash and other assets. Nephew had a book value of $719,000, and the 20 percent noncontrolling interest fair value was $153,600 on that date. On January 1, 2021, Nephew had acquired 30 percent of Uncle for $344,500. Uncle's appropriately adjusted book value as of that date was $1,115,000. Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $20,000 in dividends to shareholders each year and Nephew distributes $5,000 annually. Any excess fair-value allocations are amortized over a 10-year period. Nephew Company $ 33,800 53,000 57,800 Uncle Company $ 165,000 190,000 205,000 Year 2019 2020 2021 a. Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary's income recognized by Uncle in 2021? b. What is the net income attributable to the noncontrolling…Moon Company is contemplating the acquisition of Yount, Inc., on January 1, 2015. If Moon acquires Yount, it will pay $730,000 in cash to Yount and acquisition costs of $20,000. The January 1, 2015, balance sheet of Yount, Inc., is anticipated to be as attached:Fair values agree with book values except for the inventory and the depreciable fixed assets, which have fair values of $70,000 and $400,000, respectively. Your projections of the combined operations for 2015 are as follows: Combined sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000 Combined cost of goods sold, including Yount’s beginning inventory, at book value, which will be sold in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Other expenses not including depreciation of Yount assets . . . . . . . . . . . . . . . . . . . . . . . . 25,000Depreciation on Yount fixed assets is…Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $550,400 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $537,600. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 480,000 $ 236,000 Investment in Clay 550,400 0 Equipment 713,600 462,000 Liabilities (261,000) (232,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (1,133,000) (316,000) In 2023, Clay earns a net income of $50,400 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $201,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (508,000) $ (360,000) Expenses 368,300 270,000 Investment income Not given 0 Retained earnings,…
- On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $306,000 when K-Tech’s book value was $406,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $204,000. At the acquisition date, K-Tech's trademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5-year remaining life) was undervalued by $24,000. In 2020, K-Tech reports $28,000 net income and declares no dividends. At the end of 2021, the two companies report the following figures (stockholders’ equity accounts have been omitted): French CompanyCarrying Amounts K-Tech CompanyCarrying Amounts K-Tech CompanyFair Values Current assets $ 624,000 $ 304,000 $ 324,000 Trademarks 264,000 204,000 284,000 Patented technology 414,000 154,000 178,000 Liabilities (394,000 ) (124,000 ) (124,000 ) Revenues (904,000 ) (404,000 )…On January 1, 2025, Sunland Company makes the two following acquisitions. 1. Purchases land having a fair market value of $860,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $1,263,622. 2. Purchases equipment by issuing a 5%, 9-year promissory note having a maturity value of $350,000 (Interest payable annually on January 1). The company has to pay 9% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Sarasota Company for the two purchases on January 1, 2025. (b) Record the interest at the end of the first year on both notes using the effective-interest method.Berny Ltd owns 100 per cent of Cozy Ltd. On 1 July 2019 Berny Ltd sells an item of plant to Cozy Ltd for $3.6 million. This plant cost Berny $4.5 million and had accumulated depreciation of $1.8 million at the date of the sale. The remaining useful life of the plant is assessed as 12 years and the tax rate is 30 per cent. Required: a) Prepare the entries to eliminate the effects of the above intragroup transactions in the consolidation journal of Berny Ltd’s group at 30 June 2020 b) Prepare the entries to eliminate the effects of the above intragroup transactions in the consolidation journal of Berny Ltd’s group at 30 June 2021
