Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $195,000 and appropriately accounted for the investmentusing the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $600,000 which resulted insignificant influence over Seida. On that date, the fair value of Seida's common stock was $2,000,000 in total. Seida's January 1, 2018book value equaled $1,850,000, although land was undervalued by $130,000. Any additional excess fair value over Seida's book valuewas attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $332,000 and declared and paiddividends of $101,000. Prepare the 2018 journal entries for Milani related to its investment in Seida. (If no entry is required for atransaction/event, select "No journal entry required" in the first account field.)View transaction listJournal entry worksheet123 45>Record acquisition of Seida stock.Note: Enter debits before credits.TransactionGeneral JournalDebitCreditRecord entryClear entryView general journal

Journal entry is the practice of recording commercial transactions for the first time in the books…

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $195,000 and appropriately accounted for the sing the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $600,000 which r ignificant influence over Seida. On that date, the fair value of Seida's common stock was $2,000,000 in total. Seida's Janu ook value equaled $1,850,000, although land was undervalued by $130,000. Any additional excess fair value over Seida' vas attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $332,000 and declar lividends of $101,000. Prepare the 2018 journal entries for Milani related to its investment in Seida. (If no entry is required ransaction/event, select "No journal entry required" in the first account field.) Viow trapeaction list

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $195,000 and appropriately accounted for the sing the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $600,000 which r ignificant influence over Seida. On that date, the fair value of Seida's common stock was $2,000,000 in total. Seida's Janu ook value equaled $1,850,000, although land was undervalued by $130,000. Any additional excess fair value over Seida' vas attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $332,000 and declar lividends of $101,000. Prepare the 2018 journal entries for Milani related to its investment in Seida. (If no entry is required ransaction/event, select "No journal entry required" in the first account field.) Viow trapeaction list

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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On January 1, 2016, Aspen Company acquired 80 percent of Birch Company's voting stock for $480,000. Birch reported a $495,000 book value and the fair value of the noncontrolling interest was $120,000 on that date. Then, on January 1, 2017, Birch acquired 80 percent of Cedar Company for $168,000 when Cedar had a $165,000 book value and the 20 percent noncontrolling interest was valued at $42,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life. These companies report the following financial information. Investment income figures are not included. 2016 2017 2018 Sales: Aspen Company $ 472,500 $ 645,000 $ 850,000 Birch Company 262,250 337,500 607,300 Cedar Company Not available 233,800 251,600 Expenses: Aspen Company $ 397,500 $ 642,500 $ 690,000 Birch Company 205,000 267,000 520,000 Cedar Company Not available 219,000…
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Land $ 65,000 Fair Value $ 290,000 Buildings and equipment (10-year remaining life) 287,000 Copyright (20-year remaining life) Notes payable (due in 8 years) 122,000 (176,000) 263,000 216,000 (157,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Padre Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/21 Net income…
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On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,120,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $830,000, retained earnings of $380,000, and a noncontrolling interest fair value of $480,000. 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 2017 S 2018 Inventory Purchases Dividends Declared from 280,000 260,000 Corgan $ 48,000 58,000 $ 230,000 250,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 30 percent of the current year purchases remain in Smashing's inventory. 1. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018. 2. Prepare the…
Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $195,000 and appropriately accounted for the investment using the fair - value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $624,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $ 2,080,000 in total. Seida's January 1, 2021, book value equaled $1,930,000, although land was undervalued by $130,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $342,000 and declared and paid dividends of $100,000. Prepare the 2021 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record acquisition of Seida stock. Record the 40% income earned during period by Seida. Record 2021…
Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $199,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $624,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,080,000 in total. Seida’s January 1, 2021, book value equaled $1,930,000, although land was undervalued by $136,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $286,000 and declared and paid dividends of $100,000. Prepare the 2021 journal entries for Milani related to its investment in Seida.
On January 1, 2017, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $312,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $208,000 and Rockne's assets and liabilities had a collective net fair value of $520,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $150,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $210,000 in 2017 and $310,000 in 2018. Approximately 35 percent of the inventory purchased during any one year is not used until the following year. a. What is the noncontrolling interest's share of Rockne's 2018 income? b. Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers. Complete this question by entering your answers in the tabs below. Required A Required B What is the…
Milani, Incorporated, acquired 10 percent of Seida Corporation on January 1, 2023, for $192,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2024, Milani purchased an additional 30 percent of Seida for $591,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,970,000 in total. Seida's January 1, 2024, book value equaled $1,820,000, although land was undervalued by $139,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2024, Seida reported income of $319,000 and declared and paid dividends of $100,000. Required: Prepare the 2024 journal entries for Milani related to its investment in Seida. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 2 3 4 5 Record collection of dividend…
Milani, Incorporated, acquired 10 percent of Seida Corporation on January 1, 2023, for $192,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2024, Milani purchased an additional 30 percent of Seida for $591,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,970,000 in total. Seida's January 1, 2024, book value equaled $1,820,000, although land was undervalued by $139,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2024, Seida reported income of $319,000 and declared and paid dividends of $100,000. Required: Prepare the 2024 journal entries for Milani related to its investment in Seida. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 2 3 4 5 Record the accrual of 40 percent of…
On January 1, 2022, Aspen Company acquired 80 percent of Birch Company's voting stock for $452,000. Birch reported a $505,000 book value, and the fair value of the noncontrolling interest was $113,000 on that date. Then, on January 1, 2023, Birch acquired 80 percent of Cedar Company for $112,000 when Cedar had a $104,000 book value and the 20 percent noncontrolling interest was valued at $28,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life. These companies report the following financial information. Investment income figures are not included. Items Sales: Aspen Company Birch Company Cedar Company Expenses: Aspen Company 2022 $ 517,500 294,500 Not available 2023 2024 $ 715,000 368,000 247,100 $ 935,000 594,600 223,400 $ 557,500 510,000 181,000 $ 55,000 18,000 6,000 Birch Company Cedar Company Dividends declared: $ 477,500 241,000 Not available $ 495,000 305,000 236,000 Aspen Company Birch…