On January 1, 2019, ATA Company purchased 25% of the ordinary share of Passim Company by issuing 10000 par value S10, and fair market$25, paid direct fees and cost 5000, and indirect 1200 S. On this date, Passim had total owners' equity of $800,000 consisting of S200,000 in ordinary share, $500,000 premium, and S100,000 in retained earnings. Inventory undervalued 15000, equipment undervalued 50,000 with useful life 10 years and building undervalued 60,000 for 20 year. In 31/12/2019 net income was 50000, and dividend 20000, in 31/12/2020income was 70000 dividend 40000..

On January 1, 2019, ATA Company purchased 25% of the ordinary share of Passim Company by issuing 10000 par value S10, and fair market$25, paid direct fees and cost 5000, and indirect 1200 S. On this date, Passim had total owners' equity of $800,000 consisting of S200,000 in ordinary share, $500,000 premium, and S100,000 in retained earnings. Inventory undervalued 15000, equipment undervalued 50,000 with useful life 10 years and building undervalued 60,000 for 20 year. In 31/12/2019 net income was 50000, and dividend 20000, in 31/12/2020income was 70000 dividend 40000..

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: On 1/1/2019, P Co acquired 75% of S Co's outstanding common stock for cash. The fair value of the…

A: Non-Controlling Interest: It implies a minority interest whereby the shareholders own less than 50%…

Q: Pretzel Company purchased a 90% interest in Salt Corporation for $8,100,000 on January 1, 2023. Salt…

A: Intercompany Elimination -In the process of creating consolidated financial accounts, intercompany…

Q: On January 01, 2021, Batman Corp. acquired 75% of the outstanding stock of Superman Co. for…

A: It refers to a situation where the carrying value of an asset exceeds its recoverable amount.…

Q: Acker Inc. bought 40% of Howell Co. on January 1, 2020 for $576,000. The equity method of accounting…

A: Unrealized profit, December 31, 2020 = [($20,000 / $75,000) x $15,000] x 40% = $1,600

Q: Let Company owns 80% of Tam Corp.’s common stock. During October 2019 Tam sold merchandise to Let…

A: The question is multiple choice question and related to Consolidated Financial Statements.

Q: 20. Goodwill (income) to be recorded by West Corp. 21. Total assets on the consolidated balance…

A: As per our protocol we provide solution to the one question only and you have asked multiple…

Q: Denber Co. acquired 60% of the common stock of Kailey Corp. on September 30, 2019. For 2019, Kailey…

A: The acquisition means that the the company acquires the other company by acquiring more than 50%…

Q: On July 1, 2019, Killearn Company acquired 105,000 of the outstanding shares of Shaun Company for…

A: When a corporation acquires another corporation, the accounting treatment of the invested capital or…

Q: In 1/1/2024 Smart co. with owner equity (ordinary shares 1,500,0000, premium 2,500,000 and retained…

A: Detailed Journal Entries for Seesaw Co.'s Investment in MMI1. January 1, 2024:• Debit: Investment…

Q: On 1 July 2021, Xero Ltd acquired 90% of the issued shares of Accounting Ltd for $750,000 when the…

A: In the acquisition analysis, the fair value of identifiable net assets, non-controlling interest,…

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 January 1, 2019, ATA Company purchased 25% of the ordinary share of Passim
Company by issuing 10000 par value $10, and fair market$25, paid direct fees and cost 5000, and
indirect 1200 S. On this date, Passim had total owners' equity of $800,000 consisting of
S200,000 in ordinary share, $500,000 premium, and S100,000 in retained earnings. Inventory
undervalued 15000, equipment undervalued 50,000 with useful life 10 years and building
undervalued 60,000 for 20 year. In 31/12/2019 net income was 50000, and dividend 20000, in
31/12/2020income was 70000 dividend 40000..
Required:
1- Prepare table of allocation and amortization at
1/1/2019,31/12/2019,31/12/2020
2- Journalize parent entries from 01/01/2019 until 31/12/2020
3- Journalize the elimination entry for working paper?

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 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

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
On January 1, 2018, Powers Company acquired 80% of the ordinary share of Scullery Company for $195,000. On this date Scullery had total owners' equity of $200,000 (ordinary share, premium ordinary and retained earnings of $10,000, $90,000, and $100,000 respectively). In that date inventory undervalued $6,250 and equipment undervalued $12,500. The equipment has a remaining life of five years and straight-line depreciation is used. The following transaction occurred during 2018 and 2019: 1) On December 31, 2018, Powers sold equipment to Scullery at a gain of $10,000. During 2019, the equipment was used by Scullery. Depreciation is being computed using the straight-line method, a five-year life, and no salvage value. 2) during 2018scullery sold merchandise inventory 120,000 to powers with gross profit 25% which sold all except 20,000 3) On July 1, 2018 Scullery sold land $100,000 to Powers including 10,000 gain. 4) 1/1/2019 Scullery sold a truck to Powers for 70,000 and book value 50,000…
On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $198,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $353,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $27,000 to Burks during 2021 for $35,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment 2. Record the 36 percent income earned by Alamar from this investment.
On April 1, 2024, BigBen Company acquired 30% of the shares of LittleTick, Incorporated BigBen paid $100,000 for t investment, which is $40,000 more than 30% of the book value of LittleTick's identifiable net assets. BigBen attributer $15,000 of the $40,000 difference to inventory that will be sold in the remainder of 2024, and the rest to goodwill. LittleTick recognized a total of $20,000 of net income for 2024, and paid total dividends for the year of $10,000; these dividends were issued quarterly. BigBen's investment in LittleTick will affect BigBen's 2024 net income by: O a loss of $10,500. earnings of $4,500. earnings of $1,125. earnings of $3,450.