On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows: Cash Accounts Receivable Inventory Fixed Assets (net) Investment in Sentence Co. Total Debits Accounts Payable Notes Payable Common Stock Retained Earnings Total Credits Assets Paragraph Corporation $ 74,000 120,000 180,000 Total Assets Liabilities and Stockholders' Equity 350,000 136,000 $860,000 Total Liabilities and Stockholders' Equity $ 65,000 350,000 150,000 295,000 $860,000 PARAGRAPH CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8. Sentence Company $ 20,000 70,000 90,000 240,000 $420,000 $ 30,000 220,000 90,000 80,000 $420,000

On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows: Cash Accounts Receivable Inventory Fixed Assets (net) Investment in Sentence Co. Total Debits Accounts Payable Notes Payable Common Stock Retained Earnings Total Credits Assets Paragraph Corporation $ 74,000 120,000 180,000 Total Assets Liabilities and Stockholders' Equity 350,000 136,000 $860,000 Total Liabilities and Stockholders' Equity $ 65,000 350,000 150,000 295,000 $860,000 PARAGRAPH CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8. Sentence Company $ 20,000 70,000 90,000 240,000 $420,000 $ 30,000 220,000 90,000 80,000 $420,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2.…

A: Goodwill is a fixed asset of the company which is created due to customer base, reputation, employee…

Q: Assets Cash and receivables Inventory Land Buildings and equipment (net) Investment in Solution…

A: Problem Company and Subsidiary…

Q: Halwell Motor Company acquires all of the stock of Ornex Auto Services for $60,000,000 in cash. The…

A: Goodwill:Goodwill is calculated by taking the difference between cash paid for an acquisition and…

Q: 2) On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at…

A: The objective of this question is to prepare the consolidation entries and a three-part…

Q: North Ltd acquired $100,000 of shares in South Ltd for trading purposes on 1 January 20X3.…

A: In investment accounting intention of the buyer will decide the accounting treatment of the…

Q: Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm…

A: Answer:- Consolidation accounting is the procedure used to merge the financial outcomes of several…

Q: On January 1, 2024, Metlock Company purchased 7,400 shares of Bonita Company's common stock for…

A: For calculating percentage ownership, we would have to divide the number of shares acquired by the…

Q: On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,840…

A: Investment in Associates and Joint venture and Subsidiary Equity Accounting method - This method is…

Q: Orange Company owns 20% of Blue Company, and accounts for its investment using the equity method. On…

A: The provided scenario revolves around the accounting treatment of an equity investment using the…

Q: eep Inc. acquired 100% of the outstanding common stock of Shy Inc. for $2,293,700 cash and 15,700…

A: Purchase of common stock of other company amounts to investment in the company. To invest in a…

Q: Pesto Corporation acquired 75 percent of Sauce Corporation's common stock on January 1, 20X7, for…

A: A consolidated balance sheet is a document that, without dividing the companies, compiles all of the…

Q: Wooden Reed Inc. (WRI) issued 30,000 voting common shares to acquire all of the assets and…

A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Q: E Company Ltd, a reporting entity, purchases all the issued shares of D Company Pty Ltd for…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: What is the basic consolidation entry Parent would use in the consolidation worksheet on December…

A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Q: On 1 July 2020, Sky Ltd acquired 70% of the share capital (ex. div.) of Jim Ltd for $500,000. At…

A: Part 2: ExplanationIn Step 1, we calculated the NCI share of Jim Ltd's equity on the acquisition…

Q: On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at…

A: Investment in Associates and Joint venture and Subsidiary Equity Accounting method - This method is…

Q: On 1/1/2020, X Company acquired 100% of Y Company's Net assets for $150,000 cash. The Book value of…

A: First, determine Company Y's fair value of net assets by deducting the fair market value of the land…

Q: Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $270,000 on…

A: The financial statements of a company having several subsidiaries or divisions are consolidated…

Q: Papa Ltd. acquires 80% shares of Child Ltd. for $90,000 with control. The fair value of Child's net…

A: Consolidated Financial Statements: Asset, liabilities, equity, income, expenses and cash flows of a…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the
acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity
method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately
following the acquisition is as follows:
Cash
Accounts Receivable
Inventory
Fixed Assets (net)
Investment in Sentence Co.
Total Debits
Accounts Payable
Notes Payable
Common Stock
Retained Earnings
Total Credits
Assets
Paragraph
Corporation
$ 74,000
120,000
180,000
Total Assets
Liabilities and Stockholders' Equity
350,000
136,000
$860,000
Total Liabilities and Stockholders' Equity
$ 65,000
350,000
150,000
295,000
$860,000
PARAGRAPH CORPORATION AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 20X8
Required:
Prepare a consolidated balance sheet for Paragraph at December 31, 20X8.
Sentence
Company
$ 20,000
70,000
90,000
240,000
$420,000
$ 30,000
220,000
90,000
80,000
$420,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

LGM Motors acquired 80% of NS Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition. Consolidated Balances Total Assets Total Liabilities Amount 15,670,000 4,575,000 Total Shareholder's Equity The book value of the net assets of NS Services Center is P4,500,000. The assets of NS Service Center are fairly valued except for the following: • Patent on the product that is deemed worthless, P50,000. • Goodwill of P150,000. • Unrecognized identifiable R&D of P75,000. The fair value of the non-controlling interest is 705,000 and the book value of LGM's equity balance is P9,500,.000. On December 31, 2022 the following information were provided by NS Services Center: • Net income of 400,000 was recognized. • Patents remaining useful life is 4 years. • Pre-existing goodwill presented above was impaired with a current value of 120,000. • Dividends were declared amounting to…
An acquiring company pays $45 million in cash, and issues new no-par stock with a fair value of $75 million, to the acquired company's former owners, for the assets and liabilities of the acquired company. Registration fees associated with the new stock issuance are $300,000, paid in cash. Consulting fees for the acquisition are $1 million, paid in cash. The fair value of the acquired company's identifiable net assets is $65 million. The entry or entries the acquiring company makes to record the acquisition have what net effect on its account balances? Select one: O A. Capital stock increases by $75 million. O B. Expenses increase by 1.3 million. C. Goodwill increases by $55 million. O D. Cash decreases by $46 million.
Phelps Co. uses the sophisticated equity method to account for the 80% investment in its subsidiary Shore Corp. At the time of the acquisition, the fair values of the net asset required approximated their book values. Based upon the following information, what is consolidated net income? Phelps internally generated income: $250,000 Shore internally generated income: $ 50,000 Intercompany profit on Shore beginning inventory: $ 10,000 Intercompany profit on Shore ending inventory: $ 15,000 a. $300,000 b. $295,000 c. $286,000 d. $305,000
please make sure you are using the values in this question because they are differerent
Johannes Inc. acquired 80 percent of Corner Brook Ltd. common shares on January 1, Year 4, for $744,000. At that date, the fair value of the non-controlling Interest was $186,000. Corner Brook's balance sheet contained the following amounts at the time of the combination: Cash Accounts Receivable Inventory Construction Work in Progress Other Assets (net) Total Assets 66,000 140,000 40,000 Accounts Payable $ 106,000 Bonds Payable 610,000 950,000 Common Shares ($10 par value) Retained Earnings 400,000 530,000 450,000 $1,646,000 $ 1,646,000 Total Liabilities & Equities During each of the next three years, Corner Brook reported net income of $120,000 and paid dividends of $60,000. On January 1, Year 6, Johannes sold 8,800 of the Corner Brook shares for $260,000 in cash. Johannes used the equity method in accounting for its ownership of Corner Brook. Required: (a) Compute the balance in the Investment account reported by Johannes on January 1, Year 6, before its sale of shares. (Omit $ sign…
Peace Computer Corporation acquired 75 percent of Symbol Software Company’s stock on January 2, 20X3, by issuing bonds with a par value of $85,250 and a fair value of $102,750 in exchange for the shares. Summarized balance sheet data presented for the companies just before the acquisition follow: Peace Computer Corporation Symbol Software Company Book Value Fair Value Book Value Fair Value Cash $ 216,000 $ 216,000 $ 62,000 $ 62,000 Other Assets 406,000 406,000 137,000 137,000 Total Debits $ 622,000 $ 199,000 Current Liabilities $ 82,000 82,000 $ 62,000 62,000 Common Stock 290,000 62,000 Retained Earnings 250,000 75,000 Total Credits $ 622,000 $ 199,000 Required: Prepare a consolidated balance sheet immediately following the acquisition.
On January 1, Barnyard Corporation acquired common stock of Fresh Hay Corporation. At the time of acquisition, the book value and the fair value of Fresh Hay Corporation's net assets were $1 billion. During the year, Fresh Hay Corporation reported net income of $480 million and declared dividends of $160 million. The fair value of the shares increased by 10 percent during the year. How much income would Barnyard Corporation report for the year related to its investment under the assumption that it: A. Paid $150 million for 15 percent of the common stock and uses the fair value method to account for its investment in Fresh Hay Corporation. (Pay attention to the "fair value method" mention, others who attempted to answer this question got it wrong because they missed that). B. Paid $300 million for 30 percent of the common stock and uses the equity method to account for its investment in Fresh Hay Corporation. Please show all your steps so we can follow what…
Audi Motors acquired 80% of BMW Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition. Consolidated Balances Amount Total Assets 15,670,000 Total Liabilities 4,575,000 Total Shareholder’s Equity ? The book value of the net assets of BMW Services Center is P4,500,000. The assets of BMW Service Center are fairly valued except for the following: Patent on the product that is deemed worthless, P50,000. Goodwill of P150,000. Unrecognized identifiable R&D of P75,000. The fair value of the non-controlling interest is 705,000 and the book value of Audi’s equity balance is P9,500,000. On December 31, 2022 the following information were provided by BMW Services Center: Net income of 400,000 was recognized. Patents remaining useful life is 4 years. Pre-existing goodwill presented above was impaired with a current value of 120,000.…