P Co paid $140,000 for 70% interest in S CO.on 1/1/2019, when S had Capital Stock of $50,000 andRetained Earnings of $100,000. Fair values of net assets were the same as recorded book values. During2019, S had income of $20,000, declared dividends of $7,500, On 31/12/2019, the P CO financialstatements will show income from subsidiary for 2019 Amount? Select one: a. 12,500 b. 5,250 c. 20, 000 d. 14, 000

Investment in Associates and Joint venture and Subsidiary Equity Accounting method - This method is…

Answered: P Co paid $140,000 for 70% interest in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2020, Abbey acquires 90 percent of Benjamin's outstanding shares. Financial information for these two companies for the years 2020 and 2021 follows (credit balances indicated by parentheses): 2020 2021 Abbey Company: Sales $ (860,000 ) $ (964,000 ) Operating expenses 572,000 636,000 Intra-entity gross profits in ending inventory (included in above figures) (193,000 ) (226,000 ) Dividend income—Benjamin Company (13,500 ) (31,500 ) Benjamin Company: Sales (263,000 ) (325,000 ) Operating expenses 158,000 164,000 Dividends paid (15,000 ) (35,000 ) Assume that a tax rate of 21 percent is applicable to both companies. On consolidated financial statements for 2021, what are the income tax expense and the income tax currently payable if Abbey and Benjamin file a consolidated tax return as an affiliated group? On consolidated financial statements for 2021, what are the income…
P Co paid $140,000 for 70% interest in S CO.on 1/1/2019, when S had Capital Stock of $50,000 and Retained Earnings of $100,000. Fair values of net assets were the same as recorded book values. During 2019, S had income of $20,000, declared dividends of $7,500, On 31/12/2019, the P CO financial statements will show income from subsidiary for 2019 Amount? Select one: a. 12,500 b. 5, 250 c. 20, 000 d. 14,000
On January 1, 2021, an investor company acquired 25% of an investee company's common stock for $2,880,000. As a result of this transaction, the investor can exert significant influence over the investee. During each year ended December 31, 2021 and 2022 the investee reported $576,000 of net income and $240,000 of dividends. On January 1, 2021, the book value of the investee's net assets was $9,600,000 and all individual net assets had appraised fair values that equaled their reported book values. On December 31, 2022, what is the balance of the Equity Investment account on the Investor's balance sheet? Select one: a. $3,048, 000 b. $2,880,000 c. $3,552,000 d. $2,964,000
On 1 July 2021, Mel Ltd took control of the assets and liabilities of Syd Ltd. At this date the statement of financial position of Syd Ltd was as follows: Required Prepare the journal entries in the records of Mel Ltd at 1 July 2021 in each of the following situations, assuming the costs of issuing the shares by Mel Ltd cost $1600. Mel Ltd issued 80 000 shares having a fair value of $2.40 per share in exchange for the net assets of Syd Ltd Mel Ltd issued 80 000 shares having a fair value of $2.00 per share in exchange for the net assets of Syd Ltd. Mel Ltd acquired the shares of Syd Ltd. The agreement was that Mel Ltd would pay the shareholders of Syd Ltd one share in Mel Ltd for every two shares held in Syd Ltd plus $1 in cash for each share held in Syd Ltd. Shares in Mel Ltd have a fair value of $1.80 per share.
am. 122.
A-3
B.On January 1, 2021, LASER LTD. acquired 70% of outstanding ordinary shares of JUSTICE INC. at a price of P210,000. On the same date, the net assets of JUSTICE INC. were reported at P260,000. On January 1, 2021, LASER LTD. reported retained earnings of P2,000,000 while JUSTICE INC. reported retained earnings of P200,000. All the assets and liabilities of JUSTICE INC. are fairly valued except machinery, which is undervalued by P80,000 and inventory which is overvalued by P10,000. The said machinery has remaining useful life of five years while 40% of the said inventory remained unsold at the end of 2021. For the year ended December 31, 2021, LASER LTD. reported net income of P1,000,000 and declared dividends of P200,000 in the separate financial statements while JUSTICE INC. reported net income of P150,000 and declared dividends of P20,000 in the separate financial statements. LASER LTD. accounted the investment in JUSTICE INC. using cost method in the separate financial statements.…
QUESTION 2. On September 5, 2019, Soy Company, the 80%-owned subsidiary of Pro Corporation, declared a cash dividend of$1 a share on its 100,000 outstanding shares of S1 par common stock. The dividend was paid on September 26, 2019. For the fiscal year ended September 30, 2019, the first year of the Pro-Soy affiliation, Soy had a net income of $300,000. In addition to goodwill of S80,000, the September 30, 2002 (date of the business combination) working paper elimination (in journal entry format) for Pro Corpo- ration and subsidiary included the following debits: $60,000 Inventories (first-in, first-out cost)-Soy Plant assets (net) (all depreciable over a 10-vear economic life, $80,000 $20,000 straight-line method)-Soy Discount on long-term debt (5-year remaining term)-Soy Prepare journal entries for Pro Corporation on September 5, 26, and 30, 2019, to record its equity method of accounting for the operating results of Soy Company. Use the straight-line method of amortization for…
On January 1, 2021, an investor company acquired 25% of an investee company's common stock for $2,880, 000. As a result of this transaction, the investor can exert significant influence over the investee. During each year ended December 31, 2021 and 2022 the investee reported $576,000 of net income and $240,000 of dividends. On January 1, 2021, the book value of the investee's net assets was $9,600,000 and all individual net assets had appraised fair values that equaled their reported book values. On December 31, 2022, what is the balance of the Equity Investment account on the Investor's balance sheet? Select one: a. $3,048, 000 b. $2,880, 000 c. $3,552,000 d. $2,964,000
Company P acquired 90 percent of the common stock of Company S on 1/1/2020. During 2020, Company S reported a net income of $50,000 and dividends of $12,000. Company P uses the simple equity method to account for the investment in S. Which of the following entries is prepared by Company P when consolidating the financial statements for 2020? Debit Subsidiary Income $45,000, Credit Investment in S $45,000 Debit Investment in S $45,000, Credit Subsidiary Income $45,000 Debit Dividends Receivable $10,800, Credit Subsidiary Income $10,800 Debit Subsidiary Income $10,800, Credit Dividends Declared $10,800
An investor company purchased 17,000 of the 50,000 outstanding shares of the investee company's common stock for $338,000 on January 1, 2021. During 2021, the investee company declared dividends of $33,000 and reported earnings for the year of $158,000. If the investor company uses the equity method of accounting for its investment in the investee company, it should report Dividend Revenue from the investee for 2021 in the amount of $_______. (If there is no Dividend Revenue, then enter 0. Do not round your answer for any part of the computation.)
On 1 July 2021, Mel Ltd took control of the assets and liabilities of Syd Ltd. At this date the statement of financial position of Syd Ltd was as follows: Required Prepare the journal entries in the records of Mel Ltd at 1 July 2021 in each of the following situations, assuming the costs of issuing the shares by Mel Ltd cost $1600. Mel Ltd issued 80 000 shares having a fair value of $2.40 per share in exchange for the net assets of Syd Ltd Mel Ltd issued 80 000 shares having a fair value of $2.00 per share in exchange for the net assets of Syd Ltd. Mel Ltd acquired the shares of Syd Ltd. The agreement was that Mel Ltd would pay the shareholders of Syd Ltd one share in Mel Ltd for every two shares held in Syd Ltd plus $1 in cash for each share held in Syd Ltd. Shares in Mel Ltd have a fair value of $1.80 per share.

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