Answered: ments: Provide the journal entries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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CPA corporation purchased a 10% interest in ABC co. on January 1, 2021 as an available for sale investment for a price of P120,000. On January 1, 2022, CPA purchase 7,000 additional shares of ABC from existing stockholders for P945,000. This purchase increased CPA's interest to 70%. ABC had the following statement of financial position just prior to the second purchase. Current Assets 495,000 Building, Net Equipment, Net 420,000 300,000 Liabilities 195,000 Common Stock, P30 par Retained Earnings 300,000 720,000 On the date of second purchase, CPA determines that the equipment was understated by 150,000 and had a remaining life of 5yrs. All other book values approximate their fair values. Any remaining excess is attributed to goodwill. On January 1, 2022 consolidated financial position, what is the amount of goodwill to be reported?
Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20X1, for $2,100,000. At the date of acquisition, Sword reported common stock with a par value of $940,000, additional paid-in capital of $1,290,000, and retained earnings of $520,000. The fair value the noncontrolling Interest at acquisition was $700,000. The differential at acquisition was attributable to the following items: Inventory (sold in 28X2) Land Goodwill Total Differential During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $7,000; Sword continues to hold the land. In 20X6, Prince and Sword entered into a five-year contract under which Prince provides management consulting services to Sword on a continuing basis; Sword pays Prince a fixed fee of $92,000 per year for these services. At December 31, 20X8. Sword owed Prince $23,000 as the final 20X8 quarterly payment under the contract. On January 2, 20X8, Prince…
Tanner-UNF Corporation acquired as a long-term investment $200 million of 6% bonds, dated July 1, 2024. Assume Tanner-UNF management is holding the bonds in a trading portfolio. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $210 million. Required: 1. to 3. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2024, interest on December 31, 2024, at the effective (market) rate and the fair value adjustment at December 31. 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motiving Tanner-UNF to sell the investment on January 2, 2025, for $190 million. Prepare the journal entry to record the sale. Comple this question by entering your wers in the tabs below. Req 1 to 3 Suppose Moody's bond rating agency downgraded the risk rating of the bonds motiving Tanner-UNF to…

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