Required information On January 1, 20X4, Potter Corporation acquired 90 percent of Shoemaker 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 Shoemaker at that date. Potter uses the fully adjusted equity method in accounting for its ownership of Shoemaker. On December 31, 20X5, the trial balances of the two companies are as follows: Current Assets Depreciable Assets Investment in Shoemaker Corporation Depreciation Expense other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common stock Retained Earnings Sales Income from Subsidiary Potter Company Debit $ 200,000 350,000 162,000 27,000 95,000 20,000 $ 854,000 Credit $ 110,000 100,000 100,000 100,000 150,000 250,000 16,000 $ 854,000 Shoemaker Corporation Debit $ 140,000 250,000 10,000 60,000 10,000 $ 470,000 Credit $80,000 80,000 50,000 50,000 100,000 110,000 $ 470,000 Based on the preceding information, what amount would be reported as total stockholders' equity in the consolidated balance sheet at Decem 31, 20X5?

Required information On January 1, 20X4, Potter Corporation acquired 90 percent of Shoemaker 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 Shoemaker at that date. Potter uses the fully adjusted equity method in accounting for its ownership of Shoemaker. On December 31, 20X5, the trial balances of the two companies are as follows: Current Assets Depreciable Assets Investment in Shoemaker Corporation Depreciation Expense other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common stock Retained Earnings Sales Income from Subsidiary Potter Company Debit $ 200,000 350,000 162,000 27,000 95,000 20,000 $ 854,000 Credit $ 110,000 100,000 100,000 100,000 150,000 250,000 16,000 $ 854,000 Shoemaker Corporation Debit $ 140,000 250,000 10,000 60,000 10,000 $ 470,000 Credit $80,000 80,000 50,000 50,000 100,000 110,000 $ 470,000 Based on the preceding information, what amount would be reported as total stockholders' equity in the consolidated balance sheet at Decem 31, 20X5?

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

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…
Jam Ltd acquired all the equity in Cab Ltd on 31 December 20X4 for $360 000. At the control date, the equity of Cab was recorded as Paid-up capital of $260 000 and Retained profits of $30 000. The purchase price was based on the agreed fair values of Cab's identifiable assets and liabilities on that date. The following items were not at fair value in Cab's financial statements on the control date. Inventory Property (Cost of $250 000, Accumulated depreciation of $40 000) Carrying amount ($) 32 000 210 000 Fair value ($) 24 000 252 000 Other information: • Both Cab and the group entity account for its property by the cost model, and apply straight-line depreciation to the property. The property in Cab Ltd is expected to have a remaining life of 21 years from 31 December 20X4, and no residual value. Cab sold goods to Jam for $5,000 during FY20X5, the cost of these inventories was 4,000. All these inventories were still on hand by Jam by 31 December 20X5, the year-end. . Required: Prepare…
Please Provide Correct Answer
On January 1, 2019, Monica Company acquired 80 percent of Young Company's outstanding common stock for $744,000. The fair value of the noncontrolling interest at the acquisition date was $186,000. Young reported stockholders' equity accounts on that date as follows: Common stock-$10 par value Additional paid-in capital Retained earnings In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $90,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years. $ 300,000 50,000 450,000 During the subsequent years, Young sold Monica inventory at a 20 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following: Year 2019 2020 2021 Transfer…
Equity Method Accounting, Second Year Palmetto Corporation acquired all of the voting stock of Steadman Company on January 2, 2021, by issuing stock with a fair value of $22,400,000. Steadman's book value was $7,000,000 at the date of acquisition, and its net assets were reported at amounts approximating fair value. However, Palmetto determined that Steadman had previously unreported identifiable intangibles with a fair value of $1,400,000 with a 4-year life. Steadman reported net income of $1,260,000 in 2021 and $1,750,000 in 2022 and declared and paid no dividends. There was no goodwill impairment in 2021, but impairment in 2022 was $560,000. Palmetto uses the compete equity method to report its investment in Steadman on its own books. Required a. Calculate equity in net income for 2022, reported on Palmetto's books. 0 b. Calculate the December 31, 2022, investment balance, reported on Palmetto's books 0
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-
Illustration 2. Non-Controlling InterestOn January 1, 2021, Inahan Co. acquired 75% of the voting shares of Bunso, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Bunso acquired by Inahan are shown below: On the negotiation for the business combination, Inahan Co. incurred the following transaction costs: P65,000.00 for legal fees; P 125,000.00 for due diligence costs and P 60,000.00 for the general administrative costs of maintaining an internal acquisitions department. Case 1: Non-Controlling Interest measured at fair valueInahan Co. elects the option to measure the non-controlling interest at fair value. The independent consultant engaged by Inahan Co. determined that the fair value of the 25% non-controlling interest in Bunso, Inc. is P600,000.00. Inahan paid P 1,500,000.00 cash and P750,000.00 land with fair value of P 1,000,000.00 as consideration for the 75% interest in Bunso, Inc. 1.How much is the transaction costs incurred during…
Penny Manufacturing Company acquired 75 percent of Saul Corporation stock at underlying book value. At the date of acquisitior fair value of the noncontrolling Interest was equal to 25 percent of Saul's book value. The balance sheets of the two companies fc January 1, 20X1, are as follows: Cash Accounts Receivable. Inventory Buildings and Equipment Less: Accumulated Depreciation Investment in Saul Corporation Total Assets PENNY MANUFACTURING COMPANY Balance Sheet January 1, 20x1 Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets $ 231,500 Accounts Payable 75,000 Bonds Payable. 113,000 Common Stock 618,000 Additional Paid-In Capital (139,000) Retained Earnings 233,250 $ 1,131,758 Total Liabilities and Equities $ 159,750 380,000 181,000 31,000 380,000 $ 1,131,750 SAUL CORPORATION Balance Sheet January 1, 20x1 $ 61,000 Accounts Payable 115,000 Bonds Payable 193,000 Common Stock ($10 par) 618,000 Additional Paid-In Capital (239,000)…
Assume that Pauly D Company obtains all of the outstanding common stock of Snooki Company on January 1, 2020. Pauly D acquires this stock for $1,000,000 in cash. The book values as well as the appraised fair values of Snooki's accounts follow: Book Values 1/1/20 Fair Values 1/1/20 Difference Current Assets 350,000 350,000 - Trademarks (indefinite life) 240,000 260,000 20,000 Patented technology (10 yr remaining life) 310,000 450,000 140,000 Equipment (5 year remaining life) 190,000 140,000 (50,000) Liabilities (400,000) (400,000) - Net book value $690,000 $800,000 $110,000 Common Stock $40 par value (270,000) Additional paid-in-capital (20,000) Retained earnings, 1/1/20 (400,000) Pauly D considers the economic life of Snooki's trademarks as having an indefinite life. For definite lived assets acquired in the combination, we assume straight-line amortization and depreciation with no salvage value. Step 1:Perform an Allocation of Purchase Price and identify if Pauly D should…
None
Sagar