On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $352,000. Birch reported a $380,000 book value, and the fair value of the noncontrolling interest was $88,000 on that date. Then, on January 1, 2020, Birch acquired 80 percent of Cedar Company for $128,000 when Cedar had a $106,000 book value and the 20 percent noncontrolling interest was valued at $32,000. 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. 2019 2020 2021 Sales: Aspen Company $ 512,500 $ 557,500 $ 827,500 Birch Company 239,000 360,750 523,200 Cedar Company Not available 235,200 310,200 Expenses: Aspen Company $ 400,000 $ 437,500 $ 522,500 Birch Company 177,000 286,000 435,000 Cedar Company Not available 216,000 267,000 Dividends declared: Aspen Company $ 18,000 $ 45,000 $ 55,000 Birch Company 8,000 20,000 20,000 Cedar Company Not available 2,000 6,000 Assume that each of the following questions is independent: If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's Investment in Birch Company account? What is the consolidated net income for this business combination for 2021? What is the net income attributable to the noncontrolling interest in 2021? Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year: Date Amount 12/31/19 $13,800 12/31/20 19,100 12/31/21 29,100 What is the accrual-based net income of Birch in 2020 and 2021, respectively?

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $352,000. Birch reported a $380,000 book value, and the fair value of the noncontrolling interest was $88,000 on that date. Then, on January 1, 2020, Birch acquired 80 percent of Cedar Company for $128,000 when Cedar had a $106,000 book value and the 20 percent noncontrolling interest was valued at $32,000. 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.

	2019	2020	2021
Sales:
Aspen Company	$	512,500	$	557,500	$	827,500
Birch Company		239,000		360,750		523,200
Cedar Company	Not available		235,200		310,200
Expenses:
Aspen Company	$	400,000	$	437,500	$	522,500
Birch Company		177,000		286,000		435,000
Cedar Company	Not available		216,000		267,000
Dividends declared:
Aspen Company	$	18,000	$	45,000	$	55,000
Birch Company		8,000		20,000		20,000
Cedar Company	Not available		2,000		6,000

Assume that each of the following questions is independent:

If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's Investment in Birch Company account?
What is the consolidated net income for this business combination for 2021?
What is the net income attributable to the noncontrolling interest in 2021?
Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year:

Date	Amount
12/31/19	$13,800
12/31/20	19,100
12/31/21	29,100

What is the accrual-based net income of Birch in 2020 and 2021, respectively?

On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $352,000. Birch reported a $380,000
book value, and the fair value of the noncontrolling interest was $88,000 on that date. Then, on January 1, 2020, Birch acquired 80
percent of Cedar Company for $128,000 when Cedar had a $106,000 book value and the 20 percent noncontrolling interest was
valued at $32,000. 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.
2019
2020
2021
Sales:
$ 512,500 $ 557,500 $ 827,500
360,750
235, 200
Aspen Company
Birch Company
Cedar Company
Expenses:
Aspen Company
Birch Company
Cedar Company
Dividends declared:
239,000
Not available
523, 200
310, 200
177,000
Not available
$ 400,000 $ 437,500 $ 522,500
286,000
216,000
435,000
267,000
Aspen Company
Birch Company
Cedar Company
8,000
Not available
$ 18,000 $ 45,000 $ 55, 000
20,000
2,000
20,000
6,000
Assume that each of the following questions is independent:
a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's
Investment in Birch Company account?
b. What is the consolidated net income for this business combination for 2021?
c. What is the net income attributable to the noncontrolling interest in 2021?
d. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in
inventory at the end of each year:
Amount
$13,800
19,100
29,100
Date
12/31/19
12/31/20
12/31/21

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