Can you please give me correct answer the accounting question? Several years ago, a parent company acquired all of the outstandingcommon stock of its subsidiary for a purchase price of $275,000. On theacquisition date, this purchase price was $68,000 more than thesubsidiary's book value of Stockholders' Equity. The AAP was entirelyattributable to Goodwill. On the date of acquisition, the parent companymanagement believes that the goodwill only has a 10-year useful life.Since the date of acquisition, the subsidiary has reported a cumulativenet income of $234,000 and paid $97,000 of dividends to its parentcompany.Compute the balance of the Equity Investment account on the parent'sbalance sheet assuming that the Goodwill asset has not declined in valuesubsequent to the date of acquisition.

Computation:Equity Investment Balance = (Purchase Price + Cumulative Net Income - Cumulative…

Answered: Several years ago, a parent company…

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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On January 1, 2022, P Company purchased 64,000 shares of the 80,000 outstanding shares of S Company at a price of P1,200,000, with an excess of P30,000 over the book value of S Company's net assets. P13,000 of the excess is attributed to an undervalued equipment with a remaining useful life of eight years from the date of acquisition and the rest of the amount is attributed to goodwill. For the year 2022, P Company reported a net income of P750,000 and paid dividends of P180,000, while S Company reported a net income of P240,000 and paid dividends to P Company amounting to P39,000. The retained earnings of P Company at the end of 2022 per books is P1,025,000. P Company uses the cost method to account for its investment in S Company and elected to measure non-controlling interest at fair value on date of acquisition. How much is the consolidated net income attributable to controlling interests?
On March 31, 2021, JISOO Company purchased 32,000 shares of the 40,000 outstanding shares of ROSECompany at a price of P1,200,000 with an excess of P30,000 over the book value of ROSE Company’snet assets. P13,000 of the excess is attributed to an undervalued equipment with a remaining usefullife of 10 years from the date of acquisition and the rest of the amount is attributed to goodwill. Forthe year 2021, JISOO Company reported a net income of P750,000 and paid dividends of P180,000.While ROSE Company reported a net income of P240,000 which was evenly earned during the yearand paid dividends to JISOO Company amounting to P39,000. Goodwill was not impaired in 2021.The retained earnings of JISOO Company at the end of 2021 per books is P1,025,000. JISOO Companyuses the cost method to account for its investment in ROSE Company. Non-controlling interest ismeasured at fair market value. Requirement:Compute for the non-controlling interest in net assets on December 31, 2021.
On June 28, Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $5.2 million, patent; $4.2 million, developed technology; $3.2 million, indefinite-life trademark; $6.2 million, goodwill. Lexicon’s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life. What is the total amount of expenses (ignoring taxes) that would appear in Lexicon’s income statement for the year ended December 31 related to these items?
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The owners of Rainier Company are planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. Goodwill is measured by capitalizing excess earnings at 25% with normal earnings at 20%. The fair value of the net assets of the entity at current year-end was P10,000,000. What is the acquisition cost of the entity? A. 16,400,000 B. 14,000,000 C. 14,400,000 D. 15,200,000
4. At the date of acquisition, a subsidiary's inventory (LIFO, still held by the subsidiary) is overvalued by $600, its plant assets (10-year life, straight-line) are overvalued by $4,000, and it has previously unreported intangibles valued at $1,000 (2-year life, straight-line). Goodwill from the acquisition is not impaired. In the third year following acquisition, the subsidiary reports net income of $2,500. Using the complete equity method, in the third year the parent reports equity in the net income of the subsidiary of: 1. $3,500 2. $2,100 3. $2,400 4. $2,900
ABC Company acquired all of XYZ Corporation's assets and liabilities on June 30, 20X1. XYZ reported assets with a book value of P1,000,000 and liabilities of P550,000. ABC noted that XYZ included the amount P70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. ABC also determined that an old machine previously used by XYZ had a fair value of P150,000 but had not been recorded by XYZ. Except for machinery and equipment, all the other assets and liabilities of XYZ approximated their fair values. In recording the transfer of assets and liabilities in its books, ABC recorded goodwill of P420,000 and paid P1,050,000 to acquire XYZ's net assets. If the book value of XYZ's machinery and equipment was P520,000, what was their fair value? * Your answwer
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WebHelper Incorporated acquired 100% of the outstanding stock of Silicon Chips Corporation (SCC) for $45 million, of which $15 million was allocated to goodwill. At the end of the current fiscal year, an impairment test revealed the following: fair value of SCC, $44 million; book value of SCC’s net assets (including goodwill), $42 million. What amount of impairment loss should WebHelper report in its income statement? Note: Enter your answer in millions (i.e., 10,000,000 should be entered as 10). Impairment loss $______ million
A parent company purchased an 80% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $460,000 in excess of the subsidiary’s Stockholders’ Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $276,000 and to an unrecorded patent valued at $184,000. The building asset is being depreciated over a 16-year period and the patent is being amortized over an 8-year period, both on the straight-line basis with no salvage value. During the current year, the parent and subsidiary reported a total of $690,000 of intercompany sales. At the beginning of the current year, there were $48,300 of upstream intercompany profits in the parent’s inventory. At the end of the current year, there were $74,750 of downstream intercompany profits in the subsidiary’s inventory. During the current year, the subsidiary declared and paid $103,500 of dividends. The parent company…
On January 1, 20Y3, The Simmons Group, Inc., purchased the assets of NWS Insurance Co. for $40,610,000, a price reflecting an $4,061,000 goodwill premium. On December 31, 20Y9, The Simmons Group determined that the goodwill from the NWS acquisition was impaired and had a value of only $1,522,875. Determine the book value of the goodwill on December 31, 20Y9, prior to making the impairment adjustment.

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