Patty Corporation acquired 70 percent of the outstanding voting stock of Ally Company on January 1, 2023, for $490,000in cash and other consideration. At the acquisition date, Patty assessed Ally's identifiable assets and liabilities at acollective net fair value of $700,000, and the fair value of the 30 percent noncontrolling interest was $210,000. Noexcess fair value over book value amortization accompanied the acquisition. Ally sells inventory to Patty at a markupequal to 25 percent of cost. Intra-entity transfers were $100,000 in 2023 and $150,000 in 2024. Of this inventory, S25,000 of the 2023 transfers were retained and then sold by Patty in 2024, whereas $40,000 of the 2024 transfers wereheld until 2025. Ally reports net income of $120,000 for year 2024. The amount of net income attributable tononcontrolling interest on 2024 consolidated financial statement would be: 0 $33,600 $35,100 $36,000 $34,200

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Answered: Patty Corporation acquired 70 percent…

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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A
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $556,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $695,000, and the fair value of the 20 percent noncontrolling interest was $139,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2021: Protrade Seacraft Sales $ 810,000 $ 530,000 Cost of goods sold 375,000 282,000 Operating expenses 167,000 122,000 Retained earnings, 1/1/21 910,000 350,000 Inventory 363,000 127,000 Buildings (net) 375,000 174,000 Investment income Not given 0 Each of the following problems is an independent situation: Assume that Protrade sells Seacraft…
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $468,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $585,000, and the fair value of the 20 percent noncontrolling interest was $117,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2021: Protrade Seacraft $ 700,000 $ 420,000 320,000 227,000 156,000 800,000 Sales Cost of goods sold Operating expenses Retained earnings, 1/1/21 Inventory Buildings (net) Investment income 352,000 364,000 Not given Each of the following problems is an independent situation: 8. a. Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $96,000 in 2020 and $116,000 in…
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $564,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $705,000, and the fair value of the 20 percent noncontrolling interest was $141,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2021: Protrade Seacraft Sales $ 820,000 $ 540,000 Cost of goods sold 380,000 287,000 Operating expenses 168,000 123,000 Retained earnings, 1/1/21 920,000 360,000 Inventory 364,000 128,000 Buildings (net) 376,000 175,000 Investment income Not given 0 Each of the following problems is an independent situation: a. Assume that Protrade sells Seacraft…
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $580,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $725,000, and the fair value of the 20 percent noncontrolling interest was $145,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2021: Protrade Seacraft Sales $ 840,000 $ 560,000 Cost of goods sold 390,000 297,000 Operating expenses 170,000 125,000 Retained earnings, 1/1/21 940,000 380,000 Inventory 366,000 130,000 Buildings (net) 378,000 177,000 Investment income Not given 0 Each of the following problems is an independent situation: A. Assume that Protrade sells Seacraft…
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $612,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft’s identifiable assets and liabilities at a collective net fair value of $765,000 and the fair value of the 20 percent noncontrolling interest was $153,000. No excess fair value over book value amortization accompanied the acquisition.The following selected account balances are from the individual financial records of these two companies as of December 31, 2018: Protrade Seacraft Sales $880000 $600000 Cost of goods sold 410000 317000 Operating expenses 174000 129000 Retained earnings, 1/1/18 980000 420000 Inventory 370000 144000 Buildings (net) 382000 181000 Investment income not given -0- Each of the following problems is an independent situation:a. Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers…
On January 1, 2024, Pasture Company acquires 80% of Spring Company for $1,917,440 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $479,360. Spring's acquisition-date total book value was $1,904,000. The fair value of Spring's recorded assets and liabilities equaled their carrying amounts. However, Spring had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $274,400 and licensing agreements estimated to be worth $201,600 with four-year remaining lives. Any remaining acquisition-date fair value in the Spring acquisition was considered goodwill. During 2024, Spring reported $192.640 net income and declared and paid dividends totaling $56,000. Also in 2024, Pasture reported $392.000 net income, but neither declared nor paid dividends. Required: a. What amount should Pasture assign to the 20 percent noncontrolling interest of Spring at the acquisition date? b. How much of…
On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,435.000 in cash and other consideration. At the acquisition date, Smashing had common stock of $920,000, retained earnings of $470,000, and a noncontrolling interest fair value of $615,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income 2020 $370,000 2021 350,000 Dividends Declared $57,000 67,000 Inventory Purchases from Corgan $320,000 340,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 30 percent of the current year purchases remain in Smashing's inventory. a. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. b. Prepare the worksheet…
On January 1, 2023, Novak Corporation, a public company following IFRS, acquired 15,900 of the 53,000 outstanding common shares of Noah Corp. for $22 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $289,800 Assets subject to depreciation 860,100 Liabilities 150,100 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 $964,100. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $104,000 and paid dividends of $5,000 in December 2023. Noah's shares are not actively traded on the stock exchange, but Novak has determined that they have a fair value of $21 per share on December 31, 2023. (a) Your answer is partially…
d On January 1, 2023, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,050,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $810,000, retained earnings of $360,000, and a noncontrolling interest fair value of $450,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Items 2023 2024 Net Income $ 260,000 240,000 Dividends Declared Inventory Purchases from Corgan $ 46,000 56,000 $ 210,000 230,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the currentlyear purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December…
On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,440,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $870,000, retained earnings of $420,000, and a noncontrolling Interest fair value of $360,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for Its Investment in Smashing. During the next two years, Smashing reported the following: Dividends Declared Items 2023 2024 Net Income $ 320,000 300,000 $ 52,000 62,000 Required A Required B Inventory Purchases from Corgan Corgan sells Inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the current year purchases remain in Smashing's Inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of…
On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,050,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $810,000, retained earnings of $360,000, and a noncontrolling interest fair value of $450,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income Dividends Declared Inventory Purchases from Corgan 2020 $ 260,000 $ 46,000 $ 210,000 2021 240,000 56,000 230,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 40 percent of the current year purchases remain in Smashing's inventory. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of…

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