Peregrine $ (700,000) Sprano (400,000) Revenues Cost of goods sold Depreciation expense Equity Income in Sprano Retained earnings, 1/1/21 250,000 100,000 150,000 200,000 ??? (600,000) (200,000) Dividends declared 80,000 60,000 Current assets 400,000 500,000 Сорyrights Royalty agreements Investment in Sprano 900,000 400,000 600,000 1,000,000 ??? (1,380,000) (200,000) (80,000) Liabilities (950,000) (600,000) (150,000) Common Stock ($20 par) Additional paid-in capital %24
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Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021:
On January 1, 2021, Peregrine acquired all of Sprano’s outstanding stock for $680,000 fair value in cash and common stock. At the date of acquisition, copyrights (with a 6-year remaining life) were undervalued by $120,000 (i.e., market value was higher than book value). Peregrine applies the equity method to maintain the Investment in Sprano account.
For the year ending December 31, 2021 determined the total Equity Income in Sprano reported in Peregrine’s book.
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- Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $652,000 in cash. Annual excess amortization of $13,700 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $498,000, and Rambis reported a $232,000 balance. Herbert reported internal net income of $44,750 in 2020 and $58,350 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $23,300 in 2020 and $36,900 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? Equity method, initial value method and partial…On January 1, 2021, Alamar Corporation acquired a 42 percent interest in Burks, Inc., for $185,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $337,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $29,000 to Burks during 2021 for $41,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year.what is the Noncontrolling interest's share in the Net income of the subsidiary?
- On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $198,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $353,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $27,000 to Burks during 2021 for $35,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment 1. Record the acquisition of a 36 percent interest in BurksOn January 3, 2021, Matteson Corporation acquired 30 percent of the outstanding common stock of O'Toole Company for $1,462, 000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $859, 000. Any excess cost over the underlying book value was assigned to a copyright that was undervalued on its balance sheet. This copyright has a remaining useful life of 10 years. For the year ended December 31, 2021, O'Toole reported net income of $350, 000 and declared cash dividends of $45, 000. On December 31, 2021, what should Matteson report as its investment in O'Toole under the equity method?Foxx Corporation acquired all of Greenburg Company’s outstanding stock on January 1, 2019, for $640,000 cash. Greenburg’s accounting records showed net assets on that date of $465,000, although equipment with a 10-year remaining life was undervalued on the records by $86,500. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2019 of $130,500 and $126,000 in 2020. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Foxx Greenburg Revenues $ (948,000 ) $ (764,000 ) Cost of goods sold 118,500 191,000 Depreciation expense 312,000 443,000 Investment income (20,000 ) 0 Net income $ (537,500 ) $ (130,000 ) Retained earnings, 1/1/21 $ (1,198,000 ) $ (381,500 ) Net income (537,500 ) (130,000 ) Dividends declared 120,000 20,000 Retained…
- M On January 1, 2023, Stream Company acquired 21 percent of the outstanding voting shares of Q-Video, Incorporated, for $718,000. Q- Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.6 million and $768,000, respectively. A customer list compiled by Q-Video had an appraised value of $312,000, although it was not recorded on its books. The expected remaining life of the customer list was six years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill Q-Video generated net income of $284,000 in 2023 and a net loss of $108,000 in 2024 In each of these two years, Q-Video declared and paid a cash dividend of $10,000 to its stockholders During 2023, Q-Video sold inventory that had an original cost of $80,000 to Stream for $160,000. Of this balance, $77,000 was resold to outsiders during 2023, and the…Herbert, Inc., acquired all of Rambis Company's outstanding stock on January 1, 2020, for $622,000 in cash. Annual excess amortization of $11,300 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $465,000, an Rambis reported a $211,000 balance. Herbert reported internal net income of $43,500 in 2020 and $56,900 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $22,100 in 2020 and $35,500 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert's internal net income figures above do not include any income from the subsidiary. • If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? • What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? b. Under each of the following situations, what is…On January 1, 2023, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Incorporated, for $720,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.8 million and $772,000, respectively. A customer list compiled by Q-Video had an appraised value of $298,000, although it was not recorded on its books. The expected remaining life of the customer list was twenty five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $370,000 in 2023 and a net loss of $116,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders. During 2023, Q-Video sold inventory that had an original cost of $100,040 to Stream for $164,000. Of this balance, $82,000 was resold to outsiders during 2023, and…
- On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Determine the consolidated net income for 2020. compute for the Equity Shareholder's Net Income.On May 31, 2018, Armstrong Company paid $3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition: Current assets $ 900,000 Current liabilities $ 600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Stockholders' equity 2,500,000 Total liabilities and Total assets $3,600,000 stockholders' equity $3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was $3,100,000. At December 31, 2018, Hall reports the following balance sheet information: Current assets $ 800,000 Noncurrent assets (including goodwill recognized in purchase) 2,600,000 Current liabilities (700,000) Long-term liabilities (500,000) Net assets $2,200,000 It is determined that the fair value of the Hall division is $2,300,000. Instructions (a) Compute the amount of goodwill recognized, if any, on May 31, 2018. (b) Determine the…On January 1, 2019, Triple A Company acquired Bodyguard Company’s outstanding common stock for $842,000 in cash. As of that date the following information was acquired from Bodyguard, the subsidiary of Triple A: Building (12-year life) was undervalued on its balance sheet by $72,000 Equipment (10-year life) was undervalued by $10,000 Licensing agreement (20-year life) unrecorded, assessed at $40,000 Book value as at January 1, 2019 was $720,000 Net income reported during 2019 was $100,000 Dividends paid in 2019 $30,000 Earnings by Bodyguard (subsidiary) in 2020 $120,000 Dividends distributed by Bodyguard in 2020 $20,000 As of December 31, 2021Triple A and Bodyguard reported the following for the year: Triple A December 31, 2021 Bodyguard December 31, 2021 Debit Credit Debit Credit Buildings $1,540,000 $460,000 Cash and receivables 50,000 90,000 Common stock $900,000 $400,000 Dividends paid 70,000 10,000 Equipment…