On January 1, 2XX1, Bargain Inc. acquired 100% of Wind Corporation for $9,750,000 cash. On that date, Willey's total stockholders' equity was $7,250,000. The following assets had fair values different from book values. Book Value Fair Value $14,500,000 250,000 6,250,000 Buildings and Land $13,500,000 Other Assets 625,000 Bonds Payable 7,500,000

On January 1, 2XX1, Bargain Inc. acquired 100% of Wind Corporation for $9,750,000 cash. On that date, Willey's total stockholders' equity was $7,250,000. The following assets had fair values different from book values. Book Value Fair Value $14,500,000 250,000 6,250,000 Buildings and Land $13,500,000 Other Assets 625,000 Bonds Payable 7,500,000

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: t of Stylus Corporation’s stock on January 2, 20X3, for $85,400 cash. Summarized balance sheet data…

A: A consolidated balance sheet refers to the form of a financial document that is prepared in order to…

Q: Required Prepare the [E] and [A] consolidation entries on the date of the acquisition:

A: Consolidation refers to the process of combining financial statements of multiple entities into a…

Q: Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for…

A: The company can invest in another company. The entities generally make investments in another…

Q: Peace Company issued common shares with a par value of $58,000 and a market value of $165,300 in…

A: Extra or additional paid-in capital is not repaid to shareholders and is regarded as a permanent…

Q: On 3 January 20X4, Windsor Company purchased 20% of the shares of Brampton for $640,000 cash.…

A: Answer:- Journal entry meaning:- Journal entry serves as a record of a company's all financial…

Q: Required: Compute the amount of investment income (loss) reported by Peace from its investment in…

A: Extra or additional paid-in capital is not repaid to shareholders and is regarded as a permanent…

Q: Frankie Corporation purchased 100% of Blake Company for P600,000. At that date, Blake Company had…

A: Given in the question: Particulars Book Value Market Value Cash and Receivables…

Q: unc.4 On January 1, Allen Corporation purchased 30% of the 30,000 outstanding common shares of…

A: FV-NI, or fair value through net income, indicates that changes (gains or losses) in the fair value…

Q: On June 10, 20X8, Private Corporation acquired 60 percent of Secret Company’s common stock. The fair…

A: Recording of consolidation entries required to prepare a consolidated balance sheet immediately…

Q: Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for…

A: The process of recording business transactions in the books of accounts for the first time is…

Q: 1,900,000 Plant Assets 1,100,000 1,200,000 Current Liabilities (1,000,000) (1,000,00

A: Journal entries are the initial recording of all the monetary business transactions in a systematic…

Q: On January 1, 2023, Pantop Corporation acquired 85% of the outstanding common stock of Song Company…

A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Q: On January 5, 20X1, Alpha Inc. acquired 80% of the outstanding voting shares of Beta Inc. for…

A: Dear student, I have provided an answer and explanation to your assignment. Please pay close…

Q: pany tota vill and noncontrolling interests amounts?

A: Goodwill is an important component of financial analysis, acquisitions and mergers, and determining…

Q: X Corporation acquired 100 percent of Y Corporation’s outstanding capital stock for $430,000 cash.…

A: At the time of acquisition of business or shares of another company, if amount paid is more than the…

Q: Peanut Company acquired 90 percent of Snoopy Company’s outstanding common

A: When one company decides to takeover the another company (subsidiary company), the parent company…

Q: Play Company acquired 70 percent of Screen Corporation's shares on December 31, 20X5, at underlying…

A: A consolidation worksheet is a spreadsheet that is used to create annual financial reports for a…

Q: I can find the values for the equity and investment asset credits/debits

A: ## Consolidation Entries for Bargain Inc.'s Acquisition of Wind CorporationThe consolidation process…

Q: On January 1, 20X1, Pinto Company purchased an 80% interest in Sands Inc. for $1,000,000. The equity…

A: Solution Income statement is the statement which shows companies Revenue ,expenses and profitability…

Q: On December 31, 20X8, Parkway Corporation acquired 80 percent of Street Company's common stock for…

A: A journal is a company's official book in which all business transactions which is measured in terms…

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, 2XX1, Bargain Inc. acquired 100% of Wind Corporation for $9,750,000 cash. On that date, Willey's total stockholders'
equity was $7,250,000. The following assets had fair values different from book values.
Book Value Fair Value
Buildings and Land $13,500,000 $14,500,000
Other Assets
625,000
Bonds Payable
7,500,000
Required
Prepare the [E] and [A] consolidation entries on the date of the acquisition:
[E]
Debit
Credit
9,750,000
[A]
Cash
250,000
6,250,000
Equity investment
(to record the [E] consolidation entry)
Buildings and land
Other assets
Goodwill
Bonds payable
Cash
(to record the [A] consolidation entry).
0
Debit
14,500,000
250,000
4,000,000
0
0
0x
9,750,000 x
Credit
0x
0x
0x
6,250,000 *
9,750,000 *

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: Consolidation:

VIEW

Step 2: Prepare the [E] and [A] consolidation entries on the date of acquisition:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

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

On 3 January 20X4, Windsor Company purchased 10% of the shares of Brampton for $608,000 cash. Windsor will use the equity method. On this date, Brampton has $1,980,000 of assets, $1,584,000 of liabilities, and $396,000 of equity. Book values reflect fair values except for $895,000 of equipment, which has a five-year life and a fair value of $1,118,750. In 20X4, Brampton pays $35,400 of total dividends and reports earnings of $118,000. Required: 1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. At the end of 20X4, what is the balance in the investment account?
On January 1, 20X1, Pinto Company purchased an 80% interest in Sands Inc. for $1,000,000. The equity balances of Sands at the time of the purchase were as follows: Common stock ($10 par) $100,000 Paid-in capital in excess of par 400,000 Retained earnings 500,000 Any excess of cost over book value is attributable to goodwill. No dividends were paid by either firm during 20X6. The following trial balances were prepared for Pinto Company and its subsidiary, Sands Inc., on December 31, 20X6: Pinto Sands Cash 120,000 70,000 Accounts receivable 240,000 197,000 Inventory 200,000 176,000 Land 600,000 180,000 Buildings and equipment 1,100,000 800,000 Accumulated depreciation (180,000) (120,000) Investment in Sands 1,000,000 Accounts payable (110,000) (50,000) Common stock, $10 par (800,000) (100,000) Paid-in capital in…
Tanner-UNF Corporation acquired as a long-term investment $200 million of 6% bonds, dated July 1, on July 1, 2021. Companymanagement has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired Tanner-UNFdecided to elect the fair value option for accounting for its investment. The market interest rate (yield) was 8% for bonds of similar riskand maturity. Tanner-UNF paid $170 million for the bonds. The company will receive interestsemiannually on June 30 and December31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $180 million. Required:1. How would this investment be classified on Tanner-UNF's balance sheet?2. to 4. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2021, interest on December 31, 2021, atthe effective (market) and fair value changes as of December 31, 2021.5. At what amount will Tanner-UNF report its investment in the December 31, 2021, balance…
Russell Corp.'s transactions for the year ended December 31, 20X1 included the following:· Acquired 50% of Maxwell Corp.'s common stock for $200,000 cash which was borrowed from a bank.· Issued 5,000 shares of its preferred stock for land having a fair value of $320,000.· Issued 500 of its 11% debenture bonds, due 20X6, for $392,000 cash.· Purchased a patent for $220,000 cash.· Paid $120,000 toward a bank loan.· Sold available-for-sale securities for $796,000. Russell’s net cash provided by financing activities for 20X1 was Question 12 options: $472,000. $560,000. $592,000. $680,000.
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal reported the following net income and dividend payments: Dividends Paid Year Net Income 20X7 $ 45,000 $ 25,000 20X8 55,000 35,000 10,000 20X9 30,000 On January 1, 20X7, Steal had $250,000 of $6 par value common stock outstanding and retained earnings of $150,000, and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $23,500 and a market value of $31,000 and equipment with a book value of $335,000 and a market value of $375,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Steal. Increase in fair value
X Corporation acquired 80 percent of Y Corporation’s outstanding capital stock for $430,000 cash. Immediately before the purchase, the balance sheets of both corporations reported the following: XCO Y CO Assets $2,000,000 $750,000 Liabilities $ 750,000 $400,000 Common Stock 1,000,000 310,000 Retained Earnings 250,000 40,000 Liabilities & Stockholders’ Equity $2,000,000 $750,000 At the date of purchase, the fair value of Y assets was $50,000 more than the Book value amounts. In the consolidated balance sheet prepared immediately after the purchase,the non controlling interest should amount to Select one: a. 137,500 b. 215,000 c. 107,500 d. 86,000
On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years. Plus uses the equity method in accounting for its investment in Side. 1) Based on the preceding information, the increase in the fair value of patents held by Side is: A. $20,000 B. $25,000 C. $15,000 D. $5,000 2)…
On 3 January 20X4, Windsor Company purchased 20% of the shares of Brampton for $572,000 cash. Windsor will use the equity method. On this date, Brampton has $1,870,000 of assets, $1,496,000 of liabilities, and $374,000 of equity. Book values reflect fair values except for $840,000 of equipment, which has a five-year life and a fair value of $1,050,000. In 20X4, Brampton pays $28,200 of total dividends and reports earnings of $94,000. Required: 1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value. Goodwill Additional depreciation 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 $ 497,200 $ 42,000 2 Record the investment made in Brampton Corp. Transaction Note: Enter debits before credits. General Journal Debit Credit >
Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 713,000 Accounts Payable Bonds Payable $ 104,000 195,000 Common Stock 128,000 Total $ 713,000 Retained Earnings Total 286,000 $ 713,000 Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements. Complete this question by enter
The Passers Co. acquired 70% of the net assets of Failures Co. for P1,100,000. The assets of Failures Co. have a book value of P1,200,000 and a fair market value of P1,300,000; its liabilities are P200,000. What is the amount of minority interest in the stockholders’ equity section of the consolidated balance sheet?
Peace Company issued common shares with a par value of $59,000 and a market value of $159,300 in exchange for 30 percent ownership of Symbol Corporation on January 1, 20X2. Symbol reported the following balances on that date: Assets Cash Accounts Receivable Inventory (FIFO basis) Land Buildings & Equipment SYMBOL CORPORATION Balance Sheet January 1, 20X2 Book Value Fair Value $ 57,000 86,000 137,000 $ 57,000 86,000 167,000 59,000 74,000 505,000 328,000 (245,000) 33,000 Less: Accumulated Depreciation Patent Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 599,000 $ 745,000 $ 22,000 192,000 137,000 11,000 237,000 $ 599,000 $ 22,000 192,000 The estimated economic life of the patents held by Symbol is 4 years. The buildings and equipment are expected to last 6 more years on average. Symbol paid dividends of $15,000 during 20X2 and reported net income of $87,000 for the year. Required:…
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Phone Corporation Smart Corporation Cash $ 52,300 $ 39,000 Accounts Receivable 99,000 59,000 Inventory 136,000 92,000 Land 66,000 49,000 Buildings & Equipment 417,000 268,000 Less: Accumulated Depreciation (151,000) (73,000) Investment in Smart Corporation 98,000 Total Assets $ 717,300 $ 434,000 Accounts Payable $ 141,500 $ 27,000 Mortgage Payable 300,800 288,000 Common Stock 72,000 40,000 Retained Earnings 203,000 79,000 Total Liabilities & Stockholders’ Equity $ 717,300 $ 434,000 At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of…