Q Ltd., a Canadian corporation, owns 100% of the shares of R Ltd. The R shares have an ACB of $110,000 and are now worth $230,000. R's only asset is land having a cost of $80,000 and a current value of $230,000. The land was worth $110,000 when Q purchased R's shares. Both corporations have September 30 year-ends. On October 31 R is wound up into Q. What is the ACB of the land in Q after the wind-up? $ 80000
Q: During the year, P&B Construction Corp.distributed a crane used in its business to S, who owns 100…
A: Crane's worth = $10,000 Basis = $19,000 Land's worth = $70,000 Basis = $40,000 P&B Construction…
Q: Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield,…
A: Step 1: W.N Allocation and Annual Amortization Purchase Price (30% interest)$ 322,000 Net Book…
Q: Munson and Sons (MS) owns 32% of Harrington Corp. During 2022, Harrington reported a net income of…
A: The equity method is an accounting approach where an investor recognizes its share of an investee's…
Q: At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the…
A: Depreciation can be termed as a reduction in the value of an asset over its useful period when used…
Q: Beaver Shipping Corporation holds a 70% stake in Minty Foods Corporation's common stock. On January…
A: Intercompany transactions occur when related entities within a corporate group, such as a parent and…
Q: arent Imperial Corporation acquired a 90% interest in Sub Corporation in 20X0 when Sub's book values…
A: consolidating the financial information of the parent and its subsidiaries, it eliminates…
Q: a. On its 2024 comparative income statements, how much income would Belden report for 2023 and 2024…
A: Particulars Amount($)Purchase price of 30 percent interest320,000Net book value…
Q: Padre holds 100 percent of the outstanding shares of Sonora. On January 1, 2022, Padre transferred…
A: The equity method is the method used for accounting equity investments which claims a significant…
Q: Q Ltd, a Canadian corporation, owns 100% of the shares of R Ltd. The R shares have an ACB of $80,000…
A: ACB, defined as the Adjusted Cost Base of any acquired property, that can be building, plant,…
Q: Required: Prepare a worksheet to consolidate the financial statements of these two companies.
A: Consolidation worksheet is prepared in order to use the same for preparing the consolidation…
Q: Andre incorporated his sole proprietorship by transferring the following assets and debts to Raiders…
A: A sole proprietorship is an unincorporated business with only one owner who is responsible for…
Q: QRX, Inc., a C corporation owns 25% of the stock of ZZZ. This year QRX received a $50,000 dividend…
A: A taxable income is the income wherein one had to pay the tax on the income earned.Tax is an…
Q: Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield,…
A: The equity income generally arises when an entity invests in the common stock of another company.…
Q: On January 1, 2024, Cameron Incorporated bought 30% of the outstanding common stock of Lake…
A: The equity method of investment accounting is used when a corporation (the investor) purchases a…
Q: Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2018. On that date, Paar’s…
A: Consolidated balance: When one company acquires another company, then it records the combined amount…
Q: Pit Coporation owns 75% of Stop Company's outstanding common stock. On 01/01/21, Pit sold sold a…
A: Consolidated means the combination of two firms. When two firms join together into one. For example…
Q: Barney Company is an 80% owned subsidiary Hayes Inc. During 20X2, Hayes sold land to Barney for…
A: Consolidation of financial statements is a critical process for companies with subsidiaries,…
Q: Aaron owns 100 percent of the 12,000 shares of Veritable, Inc. The Investment in Veritable account…
A: Identify the appropriate answer for the given statement from the given choices. Option a. This…
Q: On January 1, Year 17, Devi Corp. sold to Charlottetown Ltd. equipment it had purchased for $300,000…
A: Inter-company transactions refers to the transactions which take place between two related companies…
Q: Fishing Tours Ltd. is a 75% owned subsidiary of Boat Rentals Ltd. On January 1, 2012, Fishing Tours…
A: Please fallow the answer below: Solution: Consolidated adjustments are as fallows Interest…
Q: On July 1, 2022, Livermore, Inc., acquired 60 percent of Rough Company for $420,000. The remaining…
A: Combining the assets, liabilities, and other financial components of two or more entities into one…
Q: KA. Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2019 when Park's book value was…
A: Answer:- Book value of an asset:- The net difference between a corporation's total assets and total…
Q: ABC owns 30% of MELY, which it purchased on 1 January 20X7 for $5,000,000. At that date, MELY had…
A: The corporation which has substantial amount of investment in other corporation is called parent…
Q: Par Corporation bought 100 percent of Kimmel, Incorporated, on January 1, 2021. On that date, Paar's…
A: The consolidated balance for the Equipment account represents the collective value of all equipment…
Q: Cerulean Corporation has two equal shareholders, Marco and Avery. Marco acquired his Cerulean stock…
A: The income of a distribution of cash may either be a non-taxable gain on principal or a taxable…
Q: At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the…
A: Depreciation can be termed as a reduction in the value of an asset over its useful life when used…
Q: Based on the preceding information, how much of the gain on sale of the equipment recorded by Mortar…
A: Mortar Corporation acquired 80 percent of Granite Corporation's voting common stock on January 1,…
Q: Harper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January 1,…
A: Journal Entry - It is record of each and every business transactions whether it is economic or non…
Q: Queen owns 100% of Royal Corporation. Royal Corporation was originally formed as a C corporation but…
A: S corporation is a special category of corporation provided under IRS. It is also referred as…
Q: The stock of Quail Corporation is held as follows: 85% by Pheasant Corpo- ration and 15% by Gisela,…
A: The following computations are done for Quail Corporation to record gain on sale on the FMV (fair…
Q: Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1,…
A:
Q: On January 1, 2018, Enron Company purchased for cash 40 percent of Walt Company’s 450,000 shares of…
A:
Q: Padre, Incorporated, buys 80 percent of the outstanding common stock of Sierra Corporation on…
A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…
Q: Lamberson Cookie Corporation purchased 40% of the 325,000 outstanding shares of HC's Fine Foods,…
A: Journal entry - It refers to the process where the business transactions are recorded in the books…
Q: What is the correcting entry for this? A machine worth 150, 000 was purchased on September 1, 2015…
A: Rectification Entry: If an error is made in the books of accounts, error is immediately identified…
Q: rnational purchased 70% of the outstanding common stock of Landon Chemical on December 31, 2021.…
A: Consolidation - The practise of combining the financial reports of the parent business with those…
Q: On January 1, 2021, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction…
A: According to the question given, we need to compute the required figures. Equity Method : The equity…
Q: Sonny Corporation has made paint and paint brushes for the past ten years. Sonny. Corporation is…
A: Answer - Reason : Because, Oak Corporation is a firm, therefore it is not entitled to any partial…
Q: Victor Co. owned 80% of the voting common stock of Wilson Co. On January 3, 20X2, Victor sold…
A: Depreciation is an accounting method used to reduce the book value of an asset over its useful life.…
Q: On January 1, 20X1, the Knight Corporation acquired 80% of the Red Company’s voting stock for…
A: Goodwill is an intangible asset that is created when one company acquires another company for more…
Q: Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2018. On that date, Paar's…
A: Consolidated balance means if a company owns another while preparing the financial statements the…
Q: Milani, Incorporated, acquired 10 percent of Seida Corporation on January 1, 2023, for $192,000 and…
A: Accounting for investmentInvestment accounting generally takes place when money is paid for an…
Q: Marty holds 75 percent of Clover's voting common shares. On January 1, 20X7, Marty Corporation sold…
A: Solution:Explanation:Book value of Equipment on date of sale :Accumulated depreciation = (180,000…
Q: Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield,…
A: Answer:- The equity income generally arises when an entity invests in the common stock of another…
Q: Pit Coporation owns 75% of Stop Company's outstanding common stock. On 01/01/21, Pit sold sold a…
A: Date Company Particulars Debit Credit Jan-01 Pit Bank 2,36,000…
Step by step
Solved in 2 steps
- At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $45 million. At the time of purchase, the carrying value of Sky Tech's net assets was $75 million. The fair value of Sky Tech's depreciable assets was $15 million in excess of their book value. For this year, Sky Tech reported a net income of $75 million and declared and paid $15 million in dividends.The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is:Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $802,720 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $1,003,400 although Sierra's book value was only $690,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Book Value Land $ 65,000 Fair Value $ 290,000 Buildings and equipment (10-year remaining life) 287,000 Copyright (20-year remaining life) Notes payable (due in 8 years) 122,000 (176,000) 263,000 216,000 (157,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Padre Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/21 Net income…Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield, Incorporated, on January 1, 2023, for $306,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $792,000 at January 1, 2023. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values, except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2023. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $160,000 in 2023 and $230,000 of net income during 2024. Dividends of $100,000 and $98,000 are declared and paid in 2023 and 2024, respectively. Belden uses the equity method. Required: a. On its 2024 comparative income statements, how much income would Belden report for 2023 and 2024 in connection with the company's investment in Sheffield? b. If Belden sells its…
- The stock in Ivory Corporation is owned by Gold Corporation (80%) and Imelda (20%). Gold Corporation purchased its shares in Ivory nine years ago at a cost of $650,000, and Imelda purchased her shares in Ivory four years ago at a cost of $175,000. Ivory Corporation has the following assets that are distributed in complete liquidation: Adjusted Basis Fair Market ValueCash $600,000 $600,000Inventory 80,000 200,000Equipment 350,000 200,000a. Assume that Ivory Corporation distributes the cash and inventory to Gold Corporation and the equipment to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?b. Assume that Ivory Corporation distributes the cash and equipment to Gold Corporation and the inventory to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?Cerulean Corporation has two equal shareholders, Marco and Avery. Marco acquired his Cerulean stock three years ago by transferring property worth $700,000 (basis of $300,000) for 70 shares of the stock. Avery acquired 70 shares in Cerulean Corporation two years ago by transferring property worth $660,000 (basis of $110,000). Cerulean Corporation's accumulated E & P as of January 1 (current year) is $350,000. On March 1 of the current year, the corporation distributed to Marco property that is worth $120,000, with a basis to Cerulean of $50,000. It distributed cash of $220,000 to Avery. On July 1 of the current year, Avery sold her stock to Harpreet for $820,000. On December 1 of the current year, Cerulean distributed cash of $90,000 each to Harpreet and Marco. Regarding this tax situation, classify each of the following as "Yes" a relevant tax issue or "No" not a tax issue. What basis do Marco and Avery have in their stock in Cerulean Corporation after their initial transfers for…Pit Coporation owns 75% of Stop Company's outstanding common stock. On 01/01/21, Pit sold sold a used piece of equipment to Stop in exchange for $236,000 cash. Pit's original cost of the equipment was $728,000 and accumulated depreciaiton of 01/01/21 was $447,000. The remaining useful life of the equipment is 10 years, and Stop will use that same usefull life. Both companies use the straight line method of depreciation. The Consolidation Entry would include:
- DeMilo, Inc., owns 100 percent of the 40,000 outstanding shares of Ricardo, Inc. DeMilo currently carries the Investment in Ricardo account at $490,000 using the equity method.Ricardo issues 10,000 new shares to the public for $15.75 per share. How does this transaction affect the Investment in Ricardo account that appears on DeMilo’s financial records?Pineburst Inc. acquired an 80% interest in Smallwood Company in January 1, 2003, for an amount equal to book value. Smallwood sold land to Pineburst in 2003 at a profit of $5,000. The land is held by the buying affiliate firm until 2005, when it is sold to an unaffiliated party for a profit of $6,000. Smallwood reported net income for 2003, 2004, and 2005 of $30,000, $40,000, and $50,000, respectively. Assume that the 2003 intercompany transfer of land was upstream from Smallwood to Pinehurst. Prepare the consolidation worksheet adjustment journal entry on December 31, 2005, concerning the intercompany sale of landOn January 1, 2024, Mel purchased 100% of Troy's outstanding shares in exchange for 100,000 shares of its $1 par common stock with a fair value of $17 per share. On this date, the book value of Troy's net assets was $1,200,000. The fair values of Troy's identifiable assets and liabilities were the same as their carrying amounts except for land which had a fair value of $300,000 more than its book value. The journal entry on Mel’s books to record the acquisition will include Question 2Select one: a debit to Goodwill for $500,000. a debt to Land for $300,000. a credit to Common Stock for $1,700,000. a debit to Investment in Sub for $1,700,000.
- PeopleMag sells a plot of land for $100,000 to Seven Star Company, its 100 percent owned subsidiary, on January 1, 20X7. The cost of the land was $75,000, when it was purchased in 20X6. In 20X9, Seven Star sells the land to Hot Properties Incorporated an unrelated entity, for $120,000. How is the land reported in the consolidated financial statements for 20X7, 20X8 and 20X9?Milani, Incorporated, acquired 10 percent of Seida Corporation on January 1, 2023, for $192,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2024, Milani purchased an additional 30 percent of Seida for $591,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,970,000 in total. Seida's January 1, 2024, book value equaled $1,820,000, although land was undervalued by $139,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2024, Seida reported income of $319,000 and declared and paid dividends of $100,000. Required: Prepare the 2024 journal entries for Milani related to its investment in Seida. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 2 3 4 5 Record collection of dividend…Parker, Inc., acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer’s outstanding shares continue to trade at a collective value of $174,000. On the acquisition date, Sawyer has the following accounts:The buildings have a 10-year remaining life. In addition, Sawyer holds a patent worth $140,000 that has a five-year remaining life but is not recorded on its financial records. At the end of the year, the two companies report the following balances:a. Assume that the acquisition took place on January 1. What figures would appear in a consolidated income statement for this year?b. Assume that the acquisition took place on April 1. Sawyer’s revenues and expenses occurred uniformly throughout the year. What amounts would appear in a consolidated income statement for this year?