On January 1, Year 1, Papa Inc. acquired 80% of the outstanding voting shares of Sonny Inc. for total consideration of $1,200,000. On this date, Sonny reported total assets of $1,800,000 and total liabilities of $800,000. All assets and liabilities had FVs equal to carrying values except for the following: . . Inventory-Carrying value of $150,000 but the fair value is $170,000; and Patent-Carrying value of $130,000 but the fair value is $150,000 The patent had a remaining useful life of 10 years as of the date of acquisition. On December 31, Year 3, Papa and Sonny reported $200,000 and $150,000, respectively, for patent on the separate- entity financial statements. What amount would be reported for patent on the consolidated financial statements as at December 31, Year 3? a. $368,000 O b. $364,000 O c. $336,000 O d. $350,000

On January 1, Year 1, Papa Inc. acquired 80% of the outstanding voting shares of Sonny Inc. for total consideration of $1,200,000. On this date, Sonny reported total assets of $1,800,000 and total liabilities of $800,000. All assets and liabilities had FVs equal to carrying values except for the following: . . Inventory-Carrying value of $150,000 but the fair value is $170,000; and Patent-Carrying value of $130,000 but the fair value is $150,000 The patent had a remaining useful life of 10 years as of the date of acquisition. On December 31, Year 3, Papa and Sonny reported $200,000 and $150,000, respectively, for patent on the separate- entity financial statements. What amount would be reported for patent on the consolidated financial statements as at December 31, Year 3? a. $368,000 O b. $364,000 O c. $336,000 O d. $350,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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, Year 1, Papa Inc. acquired 80% of the outstanding voting shares of Sonny Inc. for total consideration of
$1,200,000. On this date, Sonny reported total assets of $1,800,000 and total liabilities of $800,000. All assets and
liabilities had FVs equal to carrying values except for the following:
Inventory-Carrying value of $150,000 but the fair value is $170,000; and
Patent-Carrying value of $130,000 but the fair value is $150,000
The patent had a remaining useful life of 10 years as of the date of acquisition.
On December 31, Year 3, Papa and Sonny reported $200,000 and $150,000, respectively, for patent on the separate-
entity financial statements.
What amount would be reported for patent on the consolidated financial statements as at December 31, Year 3?
O a. $368,000
O b. $364,000
O c. $336,000
O d. $350,000

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