Pisa Company owns 75 percent of the stock of Siena Company on January 1, 20X3. During 20X3, Siena purchased inventory for $35,000 and sold it to Pisa for $50,000. Of thisamount, Pisa reported $20,000 in ending inventory in 20X3 and later sold it in 20X4. In 20X4, Pisa sold inventory it had purchased for $40,000 to Siena for $60,000. Siena sold$45,000 of this inventory in 20X4. Assume Siena reported net income of $200,000 for 20X4, the amount Pisa will report as Income from Siena Company for year 20X4 would be:O $152,250.$149,500.$151,000.O $150,000.

A holding company is, by definition, "a business entity that exists to own other companies." A…

Answered: Pisa Company owns 75

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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9. Albert transfers land (basis of S140,000 and fair market value of $320,000) to Gold Corporation for 80% of its stock Albert's basis in stock received is . a. Albert has a recognized gain on the transfer of $140,000. b. Albert has a basis of $140,000 c. Albert has a basis of $320,000. d. Gold Corporation has a basis in the land of $220,000. e. None of the above. 10. Rhonda and Marta form Blue Corporation. Rhonda transfers land (basis of $60,00 and fair market value of $180,000) for 50 shares plus $20,000 cash. Marta transfers $160,000 cash for 50 shares in Blue Corporation. a. Rhonda's basis in the Blue Corporation stock is $60,00. b. Blue Corporation's basis in the land is $55,000. c. Blue Corporation's basis in the land is $180,000. d. Rhonda recognizes a gain on the transfer of $125,000. c. None of the above.
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When a company owns 50% or more of another company, accounting standards require that the owner (parent) consolidates its financial statements with the subsidiary. Explain the rationale and the reasons behind that requirement
Davis acquires 100% of Ramos on January 1, 2009, Ramos will be operated as a separate subsidiary. Davis will use the equity method to account for its investment in Ramos. In 2013, Davis has net income of $400,000 and pays dividends of $100,000. Ramos has net income of $200,000 and pays dividends of $75,000. At acquisition date, Davis has a building with a book value of $3,000,000 and a fair value of $4,000,000. At that date, Ramos had a building witha book value of $800,000 and fair value of $900,000. Both buildings have a remaining useful life of 5 years (assume straight line depreciation). At Dec. 3, 2013 Davis had book value of building of 5,000,000 and Fair Value of 6,000,000.Ramos had book value building of 2,000,000 and fair value of 1,500,000 a. Prepare consolidation worksheet "D" to reflect the necessary adjustment for dividends. b. How much are consolidated dividends for 2013 c. Prepare worksheet entry "A" at December 31, 2013 (assume there is no goodwill). d. How much is…
T2.
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Pizza Factory Company owns 100% controlling interest in its long held subsidiary; The Sugar Company and they use the Equity Method. Pizza Factor sells inventory to Sugar Company for a 25% Gross Profit. During 2019 and 2020, intercompany sales amounted to: Intercompany Sales: 2019 840,000 2020 930,000 At the end of 2019, Sugar Company had one-fifth of the goods purchased that year from Pizza Factory in its ending inventory. At the end of 2020, Sugar Company's 2020 ending inventory contained one-fourth of that year’s purchases from Pizza Factory. There were no intercompany sales prior to 2019. Prepare in general journal form all entries necessary on the consolidated statements…
Hoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 million
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