On January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Incorporated, for $459,000 cash. The acquisition - date fair value of the noncontrolling interest was $51,000. At January1, 2022, Star's net assets had a total carrying amount of $356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by $63, 200. Any remaining excess fair value over book value wasattributed to unpatented technology developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $55,300 in 2022 and $63,200 in 2023. Each year since the acquisition, Star hasdeclared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a $197,500 balance. Selected account balances for the two companies from their separate operations were as follows: Items Pride Star 2024Revenues $393,500 $225,200 2024 Expenses 276, 600 154, 100 1. What is consolidated net income for 2024? 2. Assuming that Pride, in its internal records, accounts for its investment in Star using the equity method, whatamount of retained earnings would Pride report on its January 1, 2024, consolidated balance sheet?

Consolidated net income:Net income is a business's income after taxes, deductions, and other…

On January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Incorporated, for $459,000 cash. The acquisition- date fair value of the noncontrolling interest was $51,000. At January 1, 2022, Star's net assets had a total carrying amount of $356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by $63, 200. Any remaining excess fair value over book value was attributed to unpatented technology developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $55,300 in 2022 and S63,200 in 2023. Each year since the acquisition, Star has declared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a $197,500 balance. Selected account balances for the two companies from their separate operations were as follows: Items Pride Star 2024

On January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Incorporated, for $459,000 cash. The acquisition- date fair value of the noncontrolling interest was $51,000. At January 1, 2022, Star's net assets had a total carrying amount of $356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by $63, 200. Any remaining excess fair value over book value was attributed to unpatented technology developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $55,300 in 2022 and S63,200 in 2023. Each year since the acquisition, Star has declared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a $197,500 balance. Selected account balances for the two companies from their separate operations were as follows: Items Pride Star 2024

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 March 31, 2024, Wolfson Corporation acquired all of the outstanding common stock of Barney…

A: ANSWER THE PURCHASE PRICE PAID BY THE COMPANY FOR ACQUISITION OF ANOTHER COMPANY IS MORE THAN THE…

Q: a. Consolidated net income b(1). Noncontrolling interest's share of the subsidiary's income b(2).…

A: Consolidation is a financial reporting process used to combine the financial statements of parent…

Q: On January 1, 2022, Pop Co. acquired 75% of the outstanding common shares of Soda Inc. for $161,250…

A: Goodwill is 'an asset representing the future economic benefits arising from other assets acquired…

Q: On January 1, 2022, Matsui Co. purchased 42% of the outstanding voting common stock of Yankee, Inc.…

A: Investments: Investment is disclosed as an asset in the balance sheet, as it helps in earnings and…

Q: At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the…

A: Depreciation can be termed as a reduction in the value of an asset over its useful period when used…

Q: Tyler Company acquired all of Jasmine Company's outstanding stock value of only $140,000 on that…

A: Goodwill is an intangible asset that arises when a company acquires another company for a price…

Q: On January 1, 2023, Novak Corporation, a public company following IFRS, acquired 15,900 of the…

A: Journal entries are the primary method used to record financial transactions in accounting. They…

Q: Martinez’s journal entries

A: Date Particulars LF Debit$ Credit$ 07/01/2020 Common stock of Paulson Co…

Q: Peter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and…

A: Under net asset method any amount paid in access of net assets is treated as goodwill.

Q: Jacob Corporation paid $536,200 for a 30% share of Gardner Enterprises on January 1 of the current…

A: The objective of the question is to prepare the journal entries required to record the sale of the…

Q: On August 1, 2023, Sandhill Corporation, which follows ASPE, purchased 20% of the outstanding voting…

A: The objective of the question is to prepare the journal entries for Sandhill Corporation for the…

Q: On March 31, 2021, JISOO Company purchased 32,000 shares of the 40,000 outstanding shares of ROSE…

A: Non controlling interest is the share of minority in Holding co. It is calculated by proportionate…

Q: On July 1, 2019, Killearn Company acquired 124,000 of the outstanding shares of Shaun Company for…

Q: On January 1, 2020, Adamson, Inc. acquired the outstanding voting common stock of Skyview Corp. for…

A: Consolidated financial statements can be defined as the combined financial statements of the parent…

Q: On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill…

A: Equity shareholder's net income is the net income of the parent adjusted for the intercompany…

Q: Illustrate how the statement of comprehensive income is affected in 2023. (Enter answers in…

A: Given in the Question: Grouper Corporation purchased 30% of Martz Limited for $201,000…

Q: Tyler Company acquired all of Jasmine Company's outstanding stock on January 1, 2019, for $286,400…

A: Acquisition refers to a process in which something is obtained against some consideration by one…

Q: On January 3, 2021, Matteson Corporation acquired 40 percent of the outstanding common stock of…

A: Equity method is the method used for accounting equity investments which claims a significant…

Q: At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the…

A: Depreciation can be termed as a reduction in the value of an asset over its useful life when used…

Q: Determine the consolidated net income for 2020. compute for the total realized gross profit (from…

A: Realized gross profit refers to the profit generated from actual sales transactions after accounting…

Q: Jacob Corporation paid $536,200 for a 30% share of Gardner Enterprises on January 1 of the current…

A: Now, let's summarize the calculations:- Initial Investment: $536,200- Adjusted Net Assets:…

Q: On January 1, 2023, Bertrand Incorporated paid $70,800 for a 40% interest in Chestnut Corporation's…

A: Income from an investment refers to the earnings or returns generated by holding an asset or…

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: On January 1, 2021, Flesh-n-Bone Corporation acquired 30% of Doug Corporation's 200,000 outstanding…

A: Investment -An asset or thing acquired with the intention of earning revenue or recognition is…

Q: On January 2, 2019, ABC Co. acquired 80% of the outstanding common stock of Shade Co. for ₱1,344,000…

A: Consolidated financial statements are a set of financial statements prepared for a group company…

Q: On March 31, 2024, Wolfson Corporation acquired all of the outstanding common stock of Barney…

A: Goodwill is the intangible asset which is reported on the balance sheet of the entity. It is 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 January 1, 2022, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Incorporated, for $459,000 cash. The acquisition - date fair value of the noncontrolling interest was $51,000. At January
1, 2022, Star's net assets had a total carrying amount of $356,000. Equipment (eight-year remaining life) was undervalued on Star's financial records by $63, 200. Any remaining excess fair value over book value was
attributed to unpatented technology developed by Star (four-year remaining life), but not recorded on its books. Star recorded net income of $55,300 in 2022 and $63,200 in 2023. Each year since the acquisition, Star has
declared a $15,800 dividend. At January 1, 2024, Pride's retained earnings show a $197,500 balance. Selected account balances for the two companies from their separate operations were as follows: Items Pride Star 2024
Revenues $393,500 $225,200 2024 Expenses 276, 600 154, 100 1. What is consolidated net income for 2024? 2. Assuming that Pride, in its internal records, accounts for its investment in Star using the equity method, what
amount of retained earnings would Pride report on its January 1, 2024, consolidated balance sheet?

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: Define consolidated net income

VIEW

Step 2: Calculate consolidated net income

VIEW

Step 3: Calculate retained earning

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 1 images

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

The DeBlois Family Co. acquired 40% of Orange Beach Co. with a $500,000 payment on January 1, 2023. The equivalent net book value (40% share) of Orange Beach on the date of acquisition was $425,000. $50,000 of the excess payment was attributable to equipment with a 10-year remaining life. The remainder of the excess payment was not attributable to any identifiable item. Orange Beach Co. Reported net income of $40,000 in 2023. No dividends were paid out. On January 1, 2024, DeBlois Family Co. Acquired an additional 50% ownership share in Orange Beach Co. With a cash payment of $700,000. The fair value of the noncontrolling interest was determined to be $140,000 on the date of acquisition. The total fair value of Orange Beach's identifiable assets and liabilities on January 1, 2024, was $1,000,000. The trading value of stock shares remained the same as acquisition date prices for several months after January 1, 2024. What amount should be reported as consolidated goodwill on January 1,…
On July 1, 2022, Alicia Company purchased 25% of Clarkson Company's ordinary shares. No goodwill resulted from the acquisition; however, the purchase difference of P1,000,000 was allocated to an undervalued equipment with a remaining useful life of five years. Alicia appropriately carries this investment using equity method and the balance of the investment account was P12,000,000 at December 31, 2022. Clarkson reported profit of P20,000,000 for the year ended December 31, 2022 and paid Alicia dividends of P1,000,000 on December 31, 2022. How much did Alicia pay for its 25% interest in Clarkson Company? A P10,400,000 B) P9,900,000 C) P10,600,000 D P9,650,000
On January 1, 2023, Flounder Corporation, a public company following IFRS, acquired 17,400 of the 58,000 outstanding common shares of Noah Corp. for $27 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $287,800 Assets subject to depreciation 863,600 Liabilities 148,600 Additional information: 1. On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation and for the liabilities. 2. 3. 4. On the acquisition date, the fair value of the assets that are subject to depreciation is $957,600. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $94,000 and paid dividends of $4,500 in December 2023. Noah's shares are not actively traded on the stock exchange, but Flounder has determined that they have a fair value of $25 per share on December 31, 2023. (a) Prepare the journal…
On January 1, 2018, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction Companyfor $300 million cash. At the date of acquisition of the stock, Lake’s net assets had a fair value of $900 million.Their book value was $800 million. The difference was attributable to the fair value of Lake’s buildings and itsland exceeding book value, each accounting for one-half of the difference. Lake’s net income for the year endedDecember 31, 2018, was $150 million. During 2018, Lake declared and paid cash dividends of $30 million. Thebuildings have a remaining life of 10 years.Required:1. Prepare all appropriate journal entries related to the investment during 2018, assuming Cameron accounts forthis investment by the equity method.2. Determine the amounts to be reported by Cameron:a. As an investment in Cameron’s 2018 balance sheet
On January 3, 2021, Matteson Corporation acquired 30 percent of the outstanding common stock of O'Toole Company for $1,462, 000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $859, 000. Any excess cost over the underlying book value was assigned to a copyright that was undervalued on its balance sheet. This copyright has a remaining useful life of 10 years. For the year ended December 31, 2021, O'Toole reported net income of $350, 000 and declared cash dividends of $45, 000. On December 31, 2021, what should Matteson report as its investment in O'Toole under the equity method?