On 1/1/2020, Company XX purchased 30% of the common shares of Company YY for $ 150,000 cash. On that date, Company YY had stockholders' equity of $ 250,000. On 1/1/2020 Company YY had the following: a- Overvalued inventory by $ 30,000 (all sold in 2020) [Overvalued means that BV is larger than FV] b- Unrecorded copyright valued at $ 120,000 (10 years expected useful life) In 2020, Company YY had net income $ 100,000 and did not pay dividends. Required a- Compute the goodwill for Company YY as on 1/1/2020 b- Record the journal entry for the investment on 1/1/2020 in Company ZZ books C- Record the journal entry on 31/12/2020 by Company XX for net income from YY d- Record the journal entry on 31/12/2020by Company XX for inventory adjustment e- Record the journal entry on 31/12/2020 by Company XX for copyright amortization adjustment

On 1/1/2020, Company XX purchased 30% of the common shares of Company YY for $ 150,000 cash. On that date, Company YY had stockholders' equity of $ 250,000. On 1/1/2020 Company YY had the following: a- Overvalued inventory by $ 30,000 (all sold in 2020) [Overvalued means that BV is larger than FV] b- Unrecorded copyright valued at $ 120,000 (10 years expected useful life) In 2020, Company YY had net income $ 100,000 and did not pay dividends. Required a- Compute the goodwill for Company YY as on 1/1/2020 b- Record the journal entry for the investment on 1/1/2020 in Company ZZ books C- Record the journal entry on 31/12/2020 by Company XX for net income from YY d- Record the journal entry on 31/12/2020by Company XX for inventory adjustment e- Record the journal entry on 31/12/2020 by Company XX for copyright amortization adjustment

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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A5
PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021. Fair value versus carrying value differences were identified as follows: Jan 1, 2021 SUB Inc. carrying value fair value Cash $5,000 $5,000 Accounts Receivable $30,000 $30,000 Inventory $30,000 $50,000 Equipment (net) $25,000 $20,000 Land $20,000 $30,000 Trademark $10,000 $18,000 Total Assets $120,000 $153,000 Liabilities $70,000 $70,000 Common Shares $30,000 Retained Earnings $20,000 Total Liabilities and Equity $120,000 The equipment had a remaining useful life of 10 years from the date of acquisition. SUB's trademark is estimated to have a remaining life of 5 years from the date of acquisition. ASSUME INSTEAD that PAR has chosen to use the identifiable net assets method to value the non-controlling interest. Calculate at acquisition date: NCI ii) Goodwill
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2. Cinema Company acquired 75 percent of Movie Corporation's shares on December 31, 2015, at underlying book value of $98,000. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Movie Corporation. Movie's balance sheet on January 1, 2018, contained the following balances: Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets $50,000 Accounts Payable 35,000 Bonds Payable 40,000 Common Stock 300,000 Additional Paid-In Capital (100,000) Retained Earnings $325,000 Total Liabilities and Equities $40,000 100,000 50,000 Prepare the entries recorded on the books of each company. 75,000 60,000 $325,000 On January 1, 2018, Movie acquired 3,500 of its own $2 par value comm on shares from Nonaffiliated Corporation for $6 per share.
On 1/1/2020 P Company acquired 80% of S Company for 200000 JD cash. The book value of equity for S is 195000 JD. The following table shows differences between FV and BV: Difference between FV & BV Inventory 25000 Equipment 60000 the remaining balance of differences will be: Select one: a. 30000 bargain gain O b. 30000 goodwill Oc.0 O d. None of the given answers
P Co acquired an 80% interest in S Co on 1/1/2023 when the book values of S assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of S net assets. During 2023,P sold merchandise that cost $86,000 to S for $70,000. On 31/12/2014, three-fourths of the merchandise acquired from P remained in S inventory. Separate incomes (investment income not included) of the two companies are as follows: P S Sales Revenue 160,000 Cost of Goods Sold 90,000 Operating Expenses 21,000 Select one: O Separate incomes 49,000 What is P income from S for 2023? a. $29,600 b. $39,200 180,000 c. $49,000 d. $ 51,200 120,000 17,000 43,000
No. 32
Ab Company bought 20% of CD Company' ordinary share on January 1, 2021 for P3,700,000. The carrying amount of CD's net assets at purchase date totaled P16,000,000. Fair values and carrying amount were the same for all items, except for inventory for which fair values exceed their carrying amount by P1,500,000. All inventories at January 1, 2021 were sold during the year. During 2021, CD reported profit of P7,500,000 and paid P1,500,000 cash dividends. What amount should AB Company report as income from investment in its 2021 profit or loss section of the statement of comprehensive income?
4
Pizza Factory Company owns 100% controlling interest in its long held subsidiary; The Sugar Company and they use the Equity Method. Pizza Factor sells inventory to Sugar Company for a 25% Gross Profit. During 2019 and 2020, intercompany sales amounted to: Intercompany Sales: 2019 840,000 2020 930,000 At the end of 2019, Sugar Company had one-fifth of the goods purchased that year from Pizza Factory in its ending inventory. At the end of 2020, Sugar Company's 2020 ending inventory contained one-fourth of that year’s purchases from Pizza Factory. There were no intercompany sales prior to 2019. Prepare in general journal form all entries necessary on the consolidated statements…
Fried Inc. purchased 90% ownership of Chicken Corp. in 2020, at underlying book value. On that date, the fair value of non-controlling interest was equal to 10% of the book value of Chicken Corp. Fried Inc. purchased inventory from Chicken Corp. for P270,000 on September 1, 2021, and resold the 70% of the inventory to unrelated parties on December 5, 2021 for P300,000. Chicken Corp. produced the inventory sold to Fried Inc. for 201,000. The entities had no other transactions during 2021. What amount of consolidated net income will be assigned to Fried Inc. in 2021?* a. P 111,000 b. P 60,300 c. P 154,470 d. P 159,300 Thank you for answering!
Luxemburg Company purchased the following investments during 2021: Initial Cost Transaction cost Fair value Year-end 2021 Security A P180,000 P5,000 P170,000 Security B 150,000 2,500 120,500 On July 31, 2022, the entity sold all of the shares of Security B for P125,800. On December 31, 2022, the shares of Security A had a fair value of P205,000. No other activity occurred during 2022 concerning the portfolio. Retained earnings before any adjustments on equity securities on December 31, 2022, is P975,000. Assuming nontrading securities, how much is the Retained earnings on December 31, 2022?