Police Corporation acquired 100 percent of Station Corporation's voting shares on January 1, 20X3, at underlying bookvalue. At that date, the book values and fair values of Station's assets and liabilities were equal. Police uses the equitymethod in accounting for its investment in Station. Adjusted trial balances for Police and Station on December 31, 20X4,are as follows:ItemCurrent AssetsDepreciable Assets (net)Investment in Station CorporationDepreciation ExpenseOther ExpensesDividends DeclaredCurrent LiabilitiesLong-Term DebtCommon StockRetained EarningsSalesIncome from Station CorporationPolice CorporationDebit$ 223,000320,000230,00024,000165,00062,000Credit$ 50,00093,000193,000414,000223,00051,000$ 1,024,000 $ 1,024,000Station CorporationDebitCredit$ 161,000212,00014,00082,00031,000$ 500,000$ 30,000113,00083,000127,000147,000$ 500,000Required:a. Prepare the consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.

Journal entry records the accounting transactions of a business in a journal book. All the business…

Answered: Police Corporation acquired 100 percent…

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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Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $60,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Corman Stock Retained Earnings Sales Income from Spirited Company Proud Corporation Debit $ 235,080 500,000 152,000 Credit Spirited Company Debit $ 150,000 Credit 900,080 25,000 15,088 150,000 90,000 58,800 15,000 $ 200,000 $ 98,000 50,000 180,000 128,008 200,000 284 898 230,000 138,000 70,000 148,008 28,000 $ 1,112,000…
Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $148,000. On that date, the fair value of the noncontrolling interest was $37,000, and Slice reported retained earnings of $45,000 and had $93,000 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: PizzaCorporation SliceProducts Company Item Debit Credit Debit Credit Cash & Receivables $ 86,000 $ 80,000 Inventory 270,000 94,000 Land 83,000 83,000 Buildings & Equipment 501,000 154,000 Investment in Slice Products Company 176,400 Cost of Goods Sold 115,000 45,000 Depreciation Expense 25,000 15,000 Inventory Losses 15,000 6,000 Dividends Declared 45,000…
Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $52,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Spirited Company $ Proud Corporation Debit 255,000 518,000 133,280 23,000 148,000 53,000 Credit $ 200,000 63,000 127,880 193,000 277,000 231,000 38,400 $1,130,280 $1,130,280 Spirited Company Credit Debit $169,000 311,000 13,000 85,000 25,400 $603,400 $ 78,000 43,000 192,400 87,000…
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
On December 31, Pacifica, Incorporated, acquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred to the owner of Seguros included 59,530 newly issued Pacifica common shares ($20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project completion goals by December 31 of the following year. Pacifica estimates a 50 percent probability that Seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money. Immediately prior to the acquisition, the following data for both firms were available: Revenues Expenses Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash Items Receivables and inventory Property, plant, and equipment Trademarks Total assets Liabilities Pacifica $ (2,150,000) 1,505,000 $ (645,000)…
On December 31, 20X1, Par Inc reported total assets of $860,203, while Sub Corp reported total assets of $171,991. The fair values of Sub's assets and liabilities on the same date were $214421 and $49,313 respectively. On the morning of January 1, 20x2, Par agreed to acquire 100% of Sub for a total value of 86.25% of Sub for a total value of $286,678 by paying cash. On the consolidated balance sheet immediately after the acquisition, what should be the total assets reported by the combined entity under the fair-value-enterprise (FVE) method? a. $955,218 b. $979,099 Oc. $1,002,979 Od. $1,026.860 O e. $931,338 On January 1, 20X1, Par inc acquires 79.05% of Sub Corp for $153,469 in cash. Immediately before the acquisition, the book value of Sub's identifiable net assets was $104,016 with a fair value of $116,806, while the book value of Par's net assets was $204.623. What will be the amount of total shareholders' equity on the consolidated balance sheet immediately after the acquisition…
Gadubhai
On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Sharp at that date. Pierce uses the equity method in accounting for its ownership of Sharp. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Sharp Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Subsidiary Required: Pierce Company Debit $ 200,000 300,000 139,500 30,000 100,000 30,000 $ 799,500 Credit $ 120,000 62,000 75,000 100,000 120,000 300,000 22,500 $ 799,500 Sharp Corporation Debit $ 120,000 225,000 25,000 60,000 10,000 $ 440,000 Credit $ 75,000 25,000 90,000 75,000 65,000 110,000 $ 440,000 1) Provide all consolidating entries required as of December 31, 20X4, to prepare…

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