On January 1, 2020, Pail Corporation acquired 80 percent of Sand Company's common stock for $540,000 cash. The fair value of the noncontrolling interest at that date was determined to be $135,000. At December 31, 2020, Pail reported on its general ledger Investme
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On January 1, 2020, Pail Corporation acquired 80 percent of Sand Company's common stock for $540,000 cash. The fair value of the noncontrolling interest at that date was determined to be $135,000.
At December 31, 2020, Pail reported on its general ledger Investment in Sand at $947000.
What amount of Investment in Sand would be reported on the 12/31/20 consolidated
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- E Company purchased 80% of the outstanding common stock of P Company on January 2, 2020, for $390,000. Balance sheets for E Company and P Company immediately after the stock acquisition were as follows: Current assets Investment in P Company Plant and equipment (net) Land Current liabilities Long-term notes payable Common stock Other contributed capital Retained earnings E Company $166,000 390,000 560,000 48,000 $1,164,000 $124,000 -0- 510,000 340,000 190,000 $1,164,000 P Company $95,000 -0- 228,000 131,000 $454,000 $44,000 31,000 180,000 64,000 135,000 $454,000 P Company owed E Company $22,000 on open account on the date of acquisition. Prepare a consolidated balance sheet for E and P Companies on the date of acquisition. Any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of P Company's other assets and liabilities are equal to their fair values. (List assets in order of…On January 1, 2020, Pinnacle Corporation exchanged $3,568,500 cash for 100 percent of the outstanding voting stock of Strata Corporation. On the acquisition date, Strata had the following balance sheet: Cash $ 145,000 Accounts payable $ 453,000 Accounts receivable 356,000 Long-term debt 3,110,000 Inventory 432,000 Common stock 1,500,000 Buildings (net) 2,145,000 Retained earnings 1,365,000 Licensing agreements 3,350,000 Total assets $ 6,428,000 Total liabilities and equity $ 6,428,000 Pinnacle prepared the following fair-value allocation: Fair value of Strata (consideration transferred) $ 3,568,500 Carrying amount acquired 2,865,000 Excess fair value $ 703,500 to buildings (undervalued) $ 328,000 to licensing agreements (overvalued) (101,000 ) 227,000 to goodwill (indefinite life) $ 476,500…On January 2, 2020, Waterway Company acquired 90% of the outstanding common stock of Oriole Company for $549,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Land Total Assets Accounts Payable Mortgage Payable Common Stock, $2 par value Other Contributed Capital Retained Earnings Total Equities Waterway $600,000 345,000 295,000 995,000 180,000 1,050,000 580,000 Oriole 303,000 $155,000 $2,415,000 74,000 $2,415,000 $770,000 168,000 $312,000 $134,000 170,000 275,000 98,000 115,000 210,000 60,000 251,000 $770,000 The fair values of Oriole's assets and liabilities are equal to their book values with the exception of land.
- Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021: On January 1, 2021, Peregrine acquired all of Sprano’s outstanding stock for $680,000 fair value in cash and common stock. At the date of acquisition, copyrights (with a 6-year remaining life) were undervalued by $120,000 (i.e., market value was higher than book value). Peregrine applies the equity method to maintain the Investment in Sprano account. For the year ending December 31, 2021 determined the total Equity Income in Sprano reported in Peregrine’s book.On January 1, 2022, Telconnect acquires 70 percent of Bandmor for $490,000 cash. The remaining 30 percent of Bandmor's shares continued to trade at a total value of $210,000. The new subsidiary reported common stock of $300,000 on that date, with retained earnings of $180,000. A patent was undervalued in the company's financial records by $30,000. This patent had a five-year remaining life. Goodwill of $190,000 was recognized and allocated proportionately to the controlling and noncontrolling interests. Bandmor earns net income and declares cash dividends as follows: Year Net Income $ 75,000 2022 2023 96,000 2024 110,000 On December 31, 2024, Telconnect owes $22,000 to Bandmor. Dividends $ 39,000 44,000 60,000 Required: a. If Telconnect has applied the equity method, what consolidation entries are needed as of December 31, 2024? b. If Telconnect has applied the initial value method, what Entry *C is needed for a 2024 consolidation? c. If Telconnect has applied the partial equity…On January 1, 2022, Green Corporation purchased 25% of the outstanding voting common stock of Gold Company for $500,000. The book value of Gold Company as a whole was $1,700,000. The excess of cost over book value is attributable to a license (intangible asset) to be amortized over fifteen years. For the year ended December 31, 2022, Gold reported net income of $300,000 and paid cash dividends of $12,000. What is the carrying value of Green's investment in Gold at December 31, 2022? O $417,000. O $567,000. O $572,000. O $550,000.
- M On January 1, 2023, Stream Company acquired 21 percent of the outstanding voting shares of Q-Video, Incorporated, for $718,000. Q- Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.6 million and $768,000, respectively. A customer list compiled by Q-Video had an appraised value of $312,000, although it was not recorded on its books. The expected remaining life of the customer list was six years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill Q-Video generated net income of $284,000 in 2023 and a net loss of $108,000 in 2024 In each of these two years, Q-Video declared and paid a cash dividend of $10,000 to its stockholders During 2023, Q-Video sold inventory that had an original cost of $80,000 to Stream for $160,000. Of this balance, $77,000 was resold to outsiders during 2023, and the…Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2020, for $622,000 in cash. Annual excess amortization of $11,300 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $465,000, an Rambis reported a $211,000 balance. Herbert reported internal net income of $43,500 in 2020 and $56,900 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $22,100 in 2020 and $35,500 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert's internal net income figures above do not include any income from the subsidiary. • If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? • What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? b. Under each of the following situations, what is…On January 1, 2023, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Incorporated, for $720,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.8 million and $772,000, respectively. A customer list compiled by Q-Video had an appraised value of $298,000, although it was not recorded on its books. The expected remaining life of the customer list was twenty five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $370,000 in 2023 and a net loss of $116,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders. During 2023, Q-Video sold inventory that had an original cost of $100,040 to Stream for $164,000. Of this balance, $82,000 was resold to outsiders during 2023, and…
- On January 1, 2020, Procise Corporation acquired 100 percent of the outstanding voting stock of GaugeRite Corporation for $1,980,000 cash. On the acquisition date, GaugeRite had the following balance sheet: Cash $ 14,000 Accounts payable $ 120,000 Accounts receivable 100,000 Long-term debt 930,000 Land 700,000 Common stock 1,000,000 Equipment (net) 1,886,000 Retained earnings 650,000 Total assets $ 2,700,000 Total liabilities and equity $ 2,700,000 At the acquisition date, the following allocation was prepared: Fair value of consideration transferred $ 1,980,000 Book value acquired 1,650,000 Excess fair value over book value 330,000 To in-process research and development $ 44,000 To equipment (8-year remaining life) 56,000 100,000 To goodwill (indefinite life) $ 230,000 Although at acquisition date Procise had expected $44,000 in future benefits from…On May 31, 2021, Oriole Company paid $3,675,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $ 945,000 Current liabilities $ 630,000 Noncurrent assets 2,835,000 Long-term liabilities 525,000 Stockholder's equity 2,625,000 Total assets $3,780,000 Total liabilities and stockholder's equity $3,780,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $3,255,000. At December 31, 2021, Pharoah reports the following balance sheet information: Current assets $ 840,000 Noncurrent assets (including goodwill recognized in purchase) 2,520,000 Current liabilities (735,000 ) Long-term liabilities (525,000 ) Net assets $2,100,000 It is determined that the fair value of the Pharoah division is $2,310,000.…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.
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