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
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5f09a9d5-bc97-49ea-91d7-c4ed1e3fe70c%2F463c89dc-9271-496e-8b4c-1f2faa400cc8%2Fw5swgv1_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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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