Homework Help is Here – Start Your Trial Now!
Business
Accounting
Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $210,000. At that date, the fair value of the noncontrolling interest was $140,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common stock for $96,000. Summarized balance sheets for Split on the dates indicated are as follows: Assets Cash Accounts Receivable Inventory Buildings & Equipment (net) Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities December 31 20x8 20x7 20x9 $90,000 $ 40,000 $70,000 50,000 90,000 120,000 70,000 100,000 160,000 340,000 320,000 300,000 $500,000 $580,000 $670,000 $ 50,000 $100,000 100,000 100,000 140,000 100,000 150,000 150,000 150,000 200,000 230,000 280,000 $500,000 $580,000 $670,000 Split paid dividends of $20,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and

Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $210,000. At that date, the fair value of the noncontrolling interest was $140,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common stock for $96,000. Summarized balance sheets for Split on the dates indicated are as follows: Assets Cash Accounts Receivable Inventory Buildings & Equipment (net) Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities December 31 20x8 20x7 20x9 $90,000 $ 40,000 $70,000 50,000 90,000 120,000 70,000 100,000 160,000 340,000 320,000 300,000 $500,000 $580,000 $670,000 $ 50,000 $100,000 100,000 100,000 140,000 100,000 150,000 150,000 150,000 200,000 230,000 280,000 $500,000 $580,000 $670,000 Split paid dividends of $20,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

kk.2

 

Required: a. Compute the balance in Peel's Investment in Split Products Company Stock account on December 31, 20X8. Balance in investment account b. Compute the balance in Peel's Investment in Split Products Company Stock account on December 31, 20X9. Balance in investment account c. Prepare the consolidation entries needed as of December 31, 20X9, to complete a worksheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list transaction list A Record the basic consolidation entry. B Record the amortized excess value reclassification entry. с Record the excess value (differential) reclassification entry. X Debit Credit Ⓒ
Transcribed Image Text:Required: a. Compute the balance in Peel's Investment in Split Products Company Stock account on December 31, 20X8. Balance in investment account b. Compute the balance in Peel's Investment in Split Products Company Stock account on December 31, 20X9. Balance in investment account c. Prepare the consolidation entries needed as of December 31, 20X9, to complete a worksheet. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list transaction list A Record the basic consolidation entry. B Record the amortized excess value reclassification entry. с Record the excess value (differential) reclassification entry. X Debit Credit Ⓒ
Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $210,000. At that date, the fair value of the noncontrolling interest was $140,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common stock for $96,000. Summarized balance sheets for Split on the dates indicated are as follows: Assets Cash Accounts Receivable Inventory Buildings & Equipment (net) Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities 20X7 20X9 $ 90,000 120,000 160,000 300,000 $500,000 $580,000 $670,000 December 31 20X8 $40,000 50,000 $ 70,000 90,000 70,000 100,000 340,000 320,000 $ 50,000 $100,000 $140,000 100,000 100,000 100,000 150,000 150,000 150,000 200,000 230,000 280,000 $500,000 $580,000 $670,000 Split paid dividends of $20,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and amortizes all differentials over 10 years against the related investment income. All differentials are assigned to patents in the consolidated financial statements.
Transcribed Image Text:Peel Corporation purchased 60 percent of Split Products Company's shares on December 31, 20X7, for $210,000. At that date, the fair value of the noncontrolling interest was $140,000. On January 1, 20X9, Peel purchased an additional 20 percent of Split's common stock for $96,000. Summarized balance sheets for Split on the dates indicated are as follows: Assets Cash Accounts Receivable Inventory Buildings & Equipment (net) Total Assets Liabilities & Equities Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equities 20X7 20X9 $ 90,000 120,000 160,000 300,000 $500,000 $580,000 $670,000 December 31 20X8 $40,000 50,000 $ 70,000 90,000 70,000 100,000 340,000 320,000 $ 50,000 $100,000 $140,000 100,000 100,000 100,000 150,000 150,000 150,000 200,000 230,000 280,000 $500,000 $580,000 $670,000 Split paid dividends of $20,000 in each of the three years. Peel uses the equity method in accounting for its investment in Split and amortizes all differentials over 10 years against the related investment income. All differentials are assigned to patents in the consolidated financial statements.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 4 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Corporate Distributions and Adjustments
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.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS