Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date,the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheetdata:Assets$ 713,000 Accounts PayableBonds Payable$ 104,000195,000Common Stock128,000Total$ 713,000Retained EarningsTotal286,000$ 713,000Round reported net income of $79,000 for 20X2 and paid dividends of $26,000.Required:a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round usingthe equity method.b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.Complete this question by enter

When a company is acquired by another company many journal entries are recorded in the books of both…

Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 713,000 Accounts Payable Bonds Payable Common Stock $ 104,000 195,000 128,000 Retained Earnings 286,000 $ 713,000 Total $ 713,000 Total Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.

Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. At that date, the book values and fair values of Round's assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 713,000 Accounts Payable Bonds Payable Common Stock $ 104,000 195,000 128,000 Retained Earnings 286,000 $ 713,000 Total $ 713,000 Total Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements.

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

Purse Corporation acquired 70 percent of Scarf Corporation’s ownership on January 1, 20X8, for $140,000. At that date, Scarf reported capital stock outstanding of $120,000 and retained earnings of $80,000, and the fair value of the noncontrolling interest was equal to 30 percent of the book value of Scarf. During 20X8, Scarf reported net income of $30,000 and comprehensive income of $36,000 and paid dividends of $25,000. Required: Present all consolidation entries needed at December 31, 20X8, to prepare a complete set of consolidated financial statements for Purse Corporation and its subsidiary.
Paste Corporation acquired 70 percent of Stick Company's stock on January 1, 20X9, for $105,000. At that date, the fair value of the noncontrolling interest was equal to 30 percent of the book value of Stick Company. The companies reported the following stockholders’ equity balances immediately after the acquisition: Paste Corporation Stick Company Common Stock $ 120,000 $ 30,000 Additional Paid-in Capital 230,000 80,000 Retained Earnings 290,000 40,000 Total $ 640,000 $ 150,000 Paste and Stick reported 20X9 operating incomes of $90,000 and $35,000 and dividend payments of $30,000 and $10,000, respectively. Required: Compute the amount reported as net income by each company for 20X9, assuming Paste uses equity-method accounting for its investment in Stick. Compute consolidated net income for 20X9.
DC Company purchased 100% of the outstanding common shares of FA Company on December 31, 20X3 for $570,000. At that date, FA had $260,000 of outstanding common stock and retained earnings of $200,000. It was agreed that the net assets were fairly valued except that the fair value of the capital assets exceeded their net book value by $36,000 and the carrying value of the inventory exceeded its fair value by $24,000. The capital assets had a remaining useful life of 6 years as of the acquisition date and have no salvage value. Inventory turns over 2 times a year. In the FMV increment amortization elimination entries for the year ended December 31, 20x4, what is the dollar value of the adjustment that should be made to amortization expense for the difference in the capital asset valuation?
None
Payday Company acquired an 80% interest in Sunday Company for $272,000 cash on January 1, 2018. Sunday had the following Balance Sheet on the date of acquisition: Sunday Company Balance Sheet January 1, 2018 Assets ($) Liabilities ($) 90,000 Accounts Payable 200,000 Bonds Payable 50,000 Discount on Bonds Payable 10,000 Common Stock ($10 par) Retained Earnings 350,000 Total Liabilities & Equity Accounts Receivable 50,000 50,000 Depreciable Fixed Assets Land (1,620) 100,000 151,620 Goodwill Total Assets 350,000 The excess of the price paid over book value is attributable to the Depreciable Fixed Assets, which have a fair value of $260,000. The Depreciable Assets have a 10-year remaining life. Sunday sold a piece of Land to Payday for $60,000 on January 1, 2019. It cost Sunday $50,000 to purchase the land from an external party. On January 1, 2020, Sunday held merchandise acquired from Payday for $20,000. This beginning inventory had an applicable gross profit of 40%. During 2020, Payday…
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal reported the following net income and dividend payments: Dividends Paid Year Net Income 20X7 $ 45,000 $ 25,000 20X8 55,000 35,000 10,000 20X9 30,000 On January 1, 20X7, Steal had $250,000 of $6 par value common stock outstanding and retained earnings of $150,000, and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $23,500 and a market value of $31,000 and equipment with a book value of $335,000 and a market value of $375,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Steal. Increase in fair value
X Corporation acquired 80 percent of Y Corporation’s outstanding capital stock for $430,000 cash. Immediately before the purchase, the balance sheets of both corporations reported the following: XCO Y CO Assets $2,000,000 $750,000 Liabilities $ 750,000 $400,000 Common Stock 1,000,000 310,000 Retained Earnings 250,000 40,000 Liabilities & Stockholders’ Equity $2,000,000 $750,000 At the date of purchase, the fair value of Y assets was $50,000 more than the Book value amounts. In the consolidated balance sheet prepared immediately after the purchase,the non controlling interest should amount to Select one: a. 137,500 b. 215,000 c. 107,500 d. 86,000
On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years. Plus uses the equity method in accounting for its investment in Side. 1) Based on the preceding information, the increase in the fair value of patents held by Side is: A. $20,000 B. $25,000 C. $15,000 D. $5,000 2)…
Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor's net assets was equal to $370,000. Accumulated depreciation on this date was $24,000. Paper uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Paper and Scissor as of December 31, 20X9: Cash Accounts Receivable Inventory Investment in Scissor Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scissor Company Total Debit $ 232,000 165,000 193,000 515,000 250,000 875,000 278,000 65,000 312,000 90,000 $ 2,975,000 Paper Company Credit $ 630,000 85,000 150,000 625,000 498,000 880,000 107,000 $ 2,975,000 Scissor Company Debit $ 116,000 97,000 115,000 1-0 125,000 250,000 178,000 12,000…
On January 1, 20X1, Payne Corp. purchased 70% of Shayne Corp.'s $10 par common stock for $900,000. On this date, the carrying amount of Shayne's net assets was $1,000,000. The fair values of Shayne's identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net), which were $200,000 in excess of the carrying amount. For the year ended December 31, 20X1, Shayne had net income of $150,000 and paid cash dividends totaling $90,000. Excess attributable to plant assets is amortized over 10 years. In the December 31, 20X1, consolidated balance sheet, noncontrolling interest should be reported at ____. Check Number – Excess of FV over BV = $285,714 a. $282,714 b. $300,500 c. $397,714 d. $345,500
The Passers Co. acquired 70% of the net assets of Failures Co. for P1,100,000. The assets of Failures Co. have a book value of P1,200,000 and a fair market value of P1,300,000; its liabilities are P200,000. What is the amount of minority interest in the stockholders’ equity section of the consolidated balance sheet?
Gant Company purchased 30 percent of the outstanding shares of Temp Company for $74,000 on January 1, 20X6. The following results are reported for Temp Company: 20X6 Net income $ 46,000 20X7 $ 41,000 Dividends paid 20X8 $ 53,000 12,000 29,000 17,000 Fair value of shares held by Gant: January 1 74,000 93,000 90,000 December 31 93,000 90,000 101,000 Required: Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp: a. Carries the investment at fair value. b. Uses the equity method. Complete this question by entering your answers in the tabs below. Required A Required B Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the equity method in accounting for its investment…