Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $146,000. On that date, the fair value of the noncontrolling interest was $36,500, and Slice reported retained earnings of $44,000 and had $92,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20X5, are as follows: Pizza Slice Products Company Debit $ 82,000 109,000 82,000 164,000 Corporation Debit Item Credit Credit Cash & Receivables Inventory Land Buildings & Equipment Investment in Slice Products Company Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings 88,000 277,000 82,000 507,000 176, 200 119, 000 20,000 10,000 44,000 44,000 10,000 6,000 22,000 $ 193,000 40,000 266,920 285,000 299,000 207,000 32,280 $1,323, 200 $1,323,200 $519,000 $519,000 $ 70,000 15,000 155,000 92,000 82,000 105,000 Sales Income from Slice Products Company Additional Information 1. On the date of combination, the fair value of Slice's depreciable assets was $46,500 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period. 2. There was $12.000 of intercorporate receivables and payables at the end of 20X5.
Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $146,000. On that date, the fair value of the noncontrolling interest was $36,500, and Slice reported retained earnings of $44,000 and had $92,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20X5, are as follows: Pizza Slice Products Company Debit $ 82,000 109,000 82,000 164,000 Corporation Debit Item Credit Credit Cash & Receivables Inventory Land Buildings & Equipment Investment in Slice Products Company Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings 88,000 277,000 82,000 507,000 176, 200 119, 000 20,000 10,000 44,000 44,000 10,000 6,000 22,000 $ 193,000 40,000 266,920 285,000 299,000 207,000 32,280 $1,323, 200 $1,323,200 $519,000 $519,000 $ 70,000 15,000 155,000 92,000 82,000 105,000 Sales Income from Slice Products Company Additional Information 1. On the date of combination, the fair value of Slice's depreciable assets was $46,500 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period. 2. There was $12.000 of intercorporate receivables and payables at the end of 20X5.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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