The financial statements of Parent and Subsidiary are found in the table below. Assuming that Parent Inc acquires 90% of Sub Inc on August 1, 2019 for cash of $180,000.CashParentParentSubSub(carrying value) (fair value) (carrying value) (fair value)180,000180,000 36,00036,000Accounts Receivable100,00095,000 40,00040,000Inventory60,00068,000 24,00027,000Plant and Equipment (net) 200,000270,000 80,00093,000Goodwill08,000Trademark012,00015,000Total Assets540,000200,000Current Liabilities80,00081,000 50,00050,000Bonds Payable320,000350,000 20,00024,000Common Shares90,00080,000Retained Earnings50,00050,000Total Equity540,000200,000Required:Prepare the Consolidated Balance Sheet on the date of acquisition if the identifiable net assets (INA) method were used?

1. Consolidation of Assets and Liabilities: - Since Parent Inc. acquired 90% of Sub Inc., we…

Answered: The financial statements of Parent and…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 29E

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On 1 July 2020, Big Ltd acquired all the issued share capital of Small Ltd for cash for an amount of $1,050,000. On the date of the acquisition, the statements of the financial position of both entities are as follows: Big Ltd ($) Small Ltd ($) Assets Cash 21,000 10,500 Accounts receivable 315,000 115,500 Land 420,000 210,000 Plant 1,680,000 1,050,000 Investment in Small Ltd 1,050,000 3,486,000 1,386,000 Liabilities Accounts payable 126,000 63,000 Loans payable 840,000 315,000 Shareholders’ equity Share capital 2,100,000 420,000 Retained earnings 420,000 588,000 3,486,000 1,386,000 Required: a. Calculate the goodwill on acquisition assuming all net assets of small Ltd are recorded in fair value. b. Prepare consolidation journal entries. c.
A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…
A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…
The balance of the investment account at December 31,2021 is: a. P5,924,000b. P5,000,000c. P5,744,000d. P7,660,000
On January 2, 2021, the Statement of Financial Position of Parent and Subsidiary Company prior to the combination are: Parent Co. Subsidiary Co. Cash P 450,000 P 15,000 Inventories 300,000 30,000 Property and equipment (net) 750,000 105,000 Total Assets P 1,500,000 P 150,000 Current Liabilities P 90,000 P 15,000 Common Stock, P100 par 150,000 15,000 Additional Paid in Capital 450,000 30,000 Retained Earnings 810,000 90,000 Total Liabilities and Stockholders' Equity P 1,500,000 P 150,000 The fair value of Subsidiary Company's equipment is P153,000. Assuming Parent Company acquired 80% of the outstanding common stock of Subsidiary Company for P136,800 and NCI is measured at its proportionate share of subsidiary's net assets, how much is the consolidated stockholder's equity on the date of acquisition?
On 1/1/2020, X Company acquired 100% of Y Company's Net assets for $150,000 cash. The Book value of Y's Net assets was equal to the fair value of Y Company's net assets at the date of acquisition except for Land (included in fixed assets) its market value was less than the book value by $1,000, the balance sheet data at 1/1/2020, are as follows: item X co Y co cash 404,000 150,000 Fixed assets 100,000 66,000 Liabilities 144,000 72,000 Common stock 120,000 60,000 Retained earning 240,000 84,000 required: if the acquisition are merger record the journal entries and prepare x balance sheet after the merger
Qw.31.
On 1 July 2021, King Ltd acquired all the share capital of Queen Ltd for $1,800,000, and on that date Queen Ltd.'s equity were as follows: Share capital $1,200,000; Revaluation surplus $500,000 and Retained earnings $200,000. All the assets and liabilities of Queen Ltd. were recorded at fair value on 1 July 2021. During the financial year 2022, the following intragroup transactions occurred between King Ltd and Queen Ltd: Queen Ltd sold land to King Ltd for $400,000, which was $100,000 above cost. The land was still hold by King Ltd. King Ltd sold an equipment to Queen Ltd for $400,000. The carrying amount of equipment to King Ltd of $320,000. Both entities depreciate equipment at a rate of 10% p.a. on cost. Queen Ltd sold inventories costing $160,000 to King Ltd for $180,000. 1/4th of the inventories were still on hand with King Ltd. King Ltd received $15,000 of service revenue from Queen Ltd. Queen Ltd paid dividend of $30,000 and interest on loan of $8,000 to King Ltd. The tax rate…
1.) Prepare the Worksheet for the consolidated Statement of Cash Flows for 2020 using the indirect method 2.) Prepare a consolidated statement of cash flows for Demtex Corporation and its subsidiary for the year ended December 31, 2020.
Benjamin Inc. and Victor Inc. agreed to combine as of January 1, 2023. The book value and fair value of Victor's accounts on that date (prior to creating the combination) follow, along with the book value of Benjamin's accounts: Current assets Building and equipment (net) Liabilities Common Stock Additional paid-in capital Retained earnings, 1/1/2023 O $200,000. Benjamin Book Value $50,000. O $70,000. O $90,000. Victor Book Value $420,000 $170,000 $230,000 790,000 410.000 480,000 620,000 380,000 380,000 400,000 90,000 Victor Fair Value 70,000 30,000 120,000 80,000 Assume that Benjamin issued 10,000 shares of common stock with a $5 par value and a $40 fair value to obtain all of Victor's outstanding stock. In addition, Benjamin paid legal costs of $8,000 in connection with the acquisition and $4,000 in stock issue costs, which is not yet reflected in the information above. On its acquisition-date consolidated balance sheet, what amount should Beaver report as goodwill?
H
Requirements 1. How much is the consolidated net income for 2022? 2. How much is the consolidated net income for 2023? 3. Using the proportionate method, how much is the non-controlling interest as December 31, 2023? Philippians Company purchased 60% of Seth Company on January 2, 2022 for P3,930,000 when Seth's book, value was P6,300,000. On that day, the market value of the net assets of Seth equaled their book values. with the following exceptions: Buildings Equipment Book value P1,850,000 300,000 Market value Remaining life P1,600,000 20 years 500,000 10 years Seth Company reported the following for 2022 and 2023: Net income (loss) Dividends P.750,000 150,000 2022 2023 P100,000 50,000

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