How much share premium must be reallocated by Pe Inc. due to the dilution to its ownership interest over So Corp.?
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In January 1, 2021, Pe Inc. purchased So Corp.’s 61,200 shared of P6,000,000. This represents a 61.2% ownership of Pe Inc. and So Corp. The net assets of So Corp. was P8,000,000 in the consolidated
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- On March 15, 2021, Smith Corp. (Smith) purchased 18,000 common shares of Costa Inc. (CI) for $72,000, plus transaction costs of $6,000. Smith elected to record the shares of Cl at fair value through other comprehensive income. On July 15, 2021, Smith received a $1.50 per share dividend. At December 31, 2021, the fair value of Cl's shares was $7.00 per share. On February 15, 2022, all the shares of CI were sold for $12.00 per share due to the favourable market rate of the shares. Smith's policy is to transfer the net balance of accumulated other comprehensive income to retained earnings upon derecognition of the investment in Cl's shares. Smith reports under IFRS. Required: a) Prepare all journal entries necessary for the investment-related transactions in 2021. b) Prepare all journal entries necessary for the sale of the shares on February 15, 2022.Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $455,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso’s stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire’s assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. BelAire Reporting Unit Fair Values1/1/20 Carrying Amounts12/31/21 Cash $ 92,000 $ 49,000 Receivables 208,250 244,000 Inventory 234,000 259,000 Patents 753,500 864,000 Customer relationships 597,250 576,000 Equipment (net) 397,500 297,000 Goodwill ? 410,000 Accounts payable (97,500 ) (187,000 ) Long-term liabilities (640,000 ) (542,000…Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $ 1,294,800 for 49,800 shares. Kulikowski Inc. declared and paid an $ 0.75 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $ 764,000 for 2021. The fair value of Kulikowski’s stock was $ 29 per share at December 31, 2021. At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the total net income reported in 2021 under each of these methods? Fair Value Method Equity Method Investment amount (balance sheet) $ $ Dividend revenue (income statement) Unrealized holding gain (income statement) Investment income (income statement)
- On January 1, 2019, Long Corporation acquired 30% of the outstanding common shares of FeeleyCorporation for $300,000, purchased 25% of the outstanding common shares of Holmes for $82,500,and obtained significant influence in both situations.During 2019, Feeley reported a loss of $70,000 and paid dividends of $40,000; Holmes reported incomeof $45,000 and paid dividends of $28,000. On January 2, 2020, Long sold all the Holmes shares for$90,000.During 2020, Feeley reported a net loss of $10,000 and did not declare and pay dividends. The fair valueof the Feeley common shares at December 31, 2020 was $240,000. Long Corporation is not sure if theywill keep or sell their Investment in Feeley based on Feeley’s performance over the past two years.Instructions:1. Prepare the journal entries to record the events above for 2019 and record the sale of the Holmesshares on January 2, 2020. Assume Long recorded both investments under the equity method.2. Determine the balance for Long’s investment in…On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Note: Parentheses indicate a credit balance. Multiple Choice O $1,760 In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. Compute the amount of…FILA Company agreed to pay $850,000 cash and issue 50,000 shares of its $10 par (20 current fair value a share on September 30, 2021, to COOKED Corporation for all the net assets of COOKED except cash. In addition, FILA agreed that if the fair market value of its ordinary share was not $20 a share or more on September 30, 2022, a sufficient number of additional ordinary shares would be issued to COOKED to make the ste market value of its FILA ordinary shareholdings equal to $1 million on that date. The statement of l position of COOKED on September 30, 2021 with related current fair values of assets and liabilities, is as follows: Book value Fair value Cash 100,000 100,000 Accounts receivable, net 300,000 300,000 Merchandise inventory 520,000 680,000 Prepaid Expenses 20,000 20,000 Land 180,000 180,000 Building 500,000 650,000 Equipment 1,000,000 1,250,000 Other Plant Assets 80,000 100,000 Book Value…
- Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $461,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso's stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire's assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. TT Fair Values 1/1/20 $ Carrying Amounts BelAire Reporting Unit Cash 12/31/21 $ 89,000 189,750 218,750 776, 500 586,000 355,000 48,000 243,000 258,000 860,000 546,000 269,000 452,000 (184,000) (518,000) Receivables Inventory Patents Customer relationships Equipment (net) Goodwill Accounts payable Long-term liabilities (114,500) (591,500) Note: Parentheses indicate a credit balance. a. Prepare Alfonso's journal entry…On January 1, 2021, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Moody Osorio Cash $ 180 $ 40 Receivables 810 180 Inventories 1,080 280 Land 600 360 Buildings (net) 1,260 440 Equipment (net) 480 100 Accounts payable (450 ) (80 ) Long-term liabilities (1,290 ) (400 ) Common stock ($1 par) (330 ) Common stock ($20 par) (240 ) Additional paid-in capital (1,080 ) (340 ) Retained…Pedro Corporation owns an 80% interest in Simon Company. In the consolidated financial statements on December 2020, the carrying amount of Simon’s net assets if P5,500,000 and the carrying amount of the non-controlling interest in Simon Company (including the non-controlling interest’s share of accumulated other comprehensive income) is P300,000. On January 1, 2021, Pedro Corporation decided to sell 50% of their interest in Simon Company to outsiders for cash proceeds of P3,750,000. As a result of this transaction, Pedro Corporation loses control of Simon Company but retains a 40% interest in the former subsidiary valued at P2,000,000. What is the gain in disposal or deconsolidation? Can you help me out, thank you!
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