Pesto Corporation acquired 75 percent of Sauce Corporation's common stock on January 1, 20X7, for $306,000 in cash. At the acquisition date, the book values and fair values of Sauce's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 25 percent of the total book value of Sauce. The stockholders' equity accounts of the two companies at the date of purchase are as follows: Common Stock ($10 par value) Additional Paid-In Capital Retained Earnings Total Stockholders' Equity Pesto Corporation $ 408,000 224,000 367,000 $ 999,000 Sauce Corporation $ 188,000 57,000 163,000 $ 408,000 Required: a. What amount will be assigned to the noncontrolling interest on January 1, 20X7, in the consolidated balance sheet? b. Prepare the stockholders' equity section of Pesto and Sauce's consolidated balance sheet as of January 1, 20X7.

Pesto Corporation acquired 75 percent of Sauce Corporation's common stock on January 1, 20X7, for $306,000 in cash. At the acquisition date, the book values and fair values of Sauce's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 25 percent of the total book value of Sauce. The stockholders' equity accounts of the two companies at the date of purchase are as follows: Common Stock ($10 par value) Additional Paid-In Capital Retained Earnings Total Stockholders' Equity Pesto Corporation $ 408,000 224,000 367,000 $ 999,000 Sauce Corporation $ 188,000 57,000 163,000 $ 408,000 Required: a. What amount will be assigned to the noncontrolling interest on January 1, 20X7, in the consolidated balance sheet? b. Prepare the stockholders' equity section of Pesto and Sauce's consolidated balance sheet as of January 1, 20X7.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 20X8, Ramon Corporation acquired 80 percent of Tester Company's voting common stock for $300,000. At the time of the combination, Tester reported common stock outstanding of $200,000 and retained earnings of $110,000, and the fair value of the noncontrolling interest was $75,000. The book value of Tester's net assets approximated market value except for patents that had a market value of $40,000 more than their book value. The patents had a remaining economic life of five years at the date of the business combination. Tester reported net income of $40,000 and paid dividends of $10,000 during 20X8. What is the amount of Total Excess Depreciation that will be recorded for 20X8? Group of answer choices $6,000 $5,000 $8,000 $40,000
Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,500 shares of its $15 par value common stock to acquire all of Staple Company’s assets. Palm shares currently are trading at $59, and Staple $10 par value shares are trading at $23 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows: Palm Corporation Staple Company Balance Sheet Item Book Value Fair Value Book Value Fair Value Assets Cash & Receivables $ 151,000 $ 151,000 $ 46,000 $ 46,000 Land 110,000 190,000 57,000 83,000 Buildings & Equipment (net) 313,000 411,000 176,000 230,000 Total Assets $ 574,000 $ 752,000 $ 279,000 $ 359,000 Equities Common Stock $ 200,000 $ 81,000 Additional Paid-In Capital 18,000 9,900 Retained Earnings…
Peace Computer Corporation acquired 75 percent of Symbol Software Company’s stock on January 2, 20X3, by issuing bonds with a par value of $85,250 and a fair value of $102,750 in exchange for the shares. Summarized balance sheet data presented for the companies just before the acquisition follow: Peace Computer Corporation Symbol Software Company Book Value Fair Value Book Value Fair Value Cash $ 216,000 $ 216,000 $ 62,000 $ 62,000 Other Assets 406,000 406,000 137,000 137,000 Total Debits $ 622,000 $ 199,000 Current Liabilities $ 82,000 82,000 $ 62,000 62,000 Common Stock 290,000 62,000 Retained Earnings 250,000 75,000 Total Credits $ 622,000 $ 199,000 Required: Prepare a consolidated balance sheet immediately following the acquisition.
Livermore Corporation acquired 90 percent of Tiger Corporation's voting stock on January 1,20X2, for $450,000. The fair value of the noncontrolling interest was $50,000 at the date of acquisition. Tiger reported common stock outstanding of $100,000 and retained earnings of $280,000. The differential is assigned to buildings with an expected life of 15 years at the date of acquisition. On December 31,20X4, Livermore had $30,000 of unrealized profits on its books from inventory sales to Tiger, and Tiger had $40,000 of unrealized profit on its books from inventory sales to Livermore. All inventory held at December 31, 20X4, was sold during 20 x5. On December 31,20 X5, Livermore had $18,000 of unrealized profit on its books from inventory sales to Tiger, and Tiger had unrealized profit on its books of 45,000 from inventory sales to Livermore. In 20x5 Tiger reported net income of $225,000. The amount Livermore will report as income from Tiger Company for year 20x5would be
Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, fr $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies Included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation. Investment in Scholar Corporation Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Professor Corporation $ 50,300 90,000 Scholar Corporation $21,000 44,000 130,000 75,000 60,000 30,000 410,000 250,000 (150,000) (80,000) 102,200 $ 692,500 $340,000 $ 152,500 $ 35,000 250,000 180,000 80,000 40,000 210,000 85,000 $ 692,500 $340,000 At the date of the business combination, the book values of Scholar's assets and liabilities approximated fair value except for Inventory, which had a fair value of $81,000, and…
On January 1, 2XX1, Bald Eagle Corporation purchased 100% of the common stock Ohio Enterprises for $1,800,000. This transaction is a "nontaxable" acquisition under the Internal Revenue Code. On the date of acquisition, Ohio had common stock of $600,000 and retained earnings of $840,000. The fair values of Ohio's net assets equal their respective book values except for equipment that is undervalued by $90,000 and an unrecorded brand name valued at $135,000. Assume that the tax bases of Ohio's pre-acquisition identifiable net assets equal their book values. Bald Eagle's tax effective tax rate is 30%. What is the amount of goodwill recorded in connection with this combination? Select one: O a. $135,000 O b. $202,500 O c. $67,500 d. $-0-
Public Corporation acquired 90 percent of Station Company's voting common stock on January 1, 20X1, for $504,900. At the time of the combination, Station reported common stock outstanding of $127,000 and retained earnings of $384,000, and the fair value of the noncontrolling interest was $56,100. The book value of Station's net assets approximated market value except for patents that had a market value of $50,000 more than their book value. The patents had a remaining economic life of five years at the date of the business combination. Station reported net income of $70,000 and paid dividends of $23,000 during 20X1. Required: a. What balance did Public report as its investment in Station at December 31, 20X1, assuming Public uses the equity method in accounting for its investment? Balance in investment account b. Prepare the consolidation entry or entries needed to prepare consolidated financial statements at December 31, 20X1. Note: If no entry is required for a transaction/event,…
Item Cash Pie Corporation acquired 75 percent of slice Company's ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of slice's net assets at acquisition was $92,000. The book values and fair values of Slice's assets and liabilities were equall, except for Slice's buildings and equipment, which were worth $18,400 more than book value. Accumulated depreciation on the buildings and equipment was $24,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Pie concluded at December 31, 20Xx8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $2,600. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. Trial balance data for Pie and Slice on December 31, 20X8, are as follows: Prepare a three-part consolidation…
First Boston Corporation acquired 80 percent of Gulfside Corporation common stock on January 1, 20X5. Gulfside holds 60 percent of the voting shares of Paddock Company, and Paddock owns 10 percent of the stock of First Boston. All acquisitions were made at underlying book value. The fair value of the noncontrolling Interest in Gulfside was equal to 20 percent of the book value of Gulfside when acquired by First Boston, and the fair value of the noncontrolling Interest in Paddock was equal to 40 percent of its book value when control was acquired by Gulfside. During 20X7, Income from the separate operations of First Boston, Gulfside, and Paddock was $58,000, $48,000, and $64,000, respectively, and dividends of $44,000, $34,000, and $24,000, respectively, were paid. The companies use the cost method of accounting for Intercorporate Investments and, accordingly, record dividends received as other (nonoperating) Income. Required: Compute the amount of consolidated net Income and the income…