On January 1, 2007, Jones Company acquired 90 percent of the outstanding common stock of Smith Corporation for P1,242,000. On that date, the fair value of noncontrolling interest was equal to P138,000. The entire differential was related to land held by Smith. At the date of acquisition, Smith had common stock outstanding of P520,000, additional paid-in capital of P200,000, and retained earnings of P540,000. During 2007, Smith sold inventory to Jones for P440,000. The inventory originally cost Smith P360,000. By year-end, 30 percent was still in Jones' ending inventory. During 2008, the remaining inventory was resold to an unrelated customer. Both Jones and Smith use perpetual inventory systems. Income and dividend information for both Jones and Smith for 2007 and 2008 are as follows: Smith Corp. Net income 360,000 Jones Company Operating income 2007 860,000 Dividends 160,000 Dividends 200,000

On January 1, 2007, Jones Company acquired 90 percent of the outstanding common stock of Smith Corporation for P1,242,000. On that date, the fair value of noncontrolling interest was equal to P138,000. The entire differential was related to land held by Smith. At the date of acquisition, Smith had common stock outstanding of P520,000, additional paid-in capital of P200,000, and retained earnings of P540,000. During 2007, Smith sold inventory to Jones for P440,000. The inventory originally cost Smith P360,000. By year-end, 30 percent was still in Jones' ending inventory. During 2008, the remaining inventory was resold to an unrelated customer. Both Jones and Smith use perpetual inventory systems. Income and dividend information for both Jones and Smith for 2007 and 2008 are as follows: Smith Corp. Net income 360,000 Jones Company Operating income 2007 860,000 Dividends 160,000 Dividends 200,000

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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