Concept explainers
a.
To compute: The book value of all the assets transferred by the parent to subsidiary.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
b.
To compute: The amount that parent would report as investment in subsidiary.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
c.
To compute: The number of shares that subsidiary company issued to parent.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
d.
To discuss: The impact that transfer of assets and accounts payable would have on the amount reported by parent company as total assets.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
e.
To explain: The effect that transfer of assets and accounts payable would have, on the amount of outstanding shares, reported by the stand alone and consolidated financial statements of parent company.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
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Chapter 1 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
- Question 1 .Panther Corporation decided to establish Snake Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Snake issued 100,000 shares of $2 par value common stock. The following information is provided on the assets and liabilities transferred: Cash Accounts Receivable Patent Building & Equipment Land Accounts Payable Cost $50,000 80,000 70,000 200,000 60,000 20,000 Book Value $50,000 75,000 70,000 140,000 60,000 20,000 Required: a. Give the journal entry that Panther recorded for the transfer of assets and liabilities to Snake b. Give the journal entry that Snake recorded for the receipt of assets and liabilities from Pantherarrow_forwardPlease do not give solution in image format ?.arrow_forwardplease answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)arrow_forward
- Topic: Accounting How much is the indirect costs paid by the Parent?arrow_forwardDetermine the percentage owned by the parent On May 1, 20x1, ABC Inc acquired most of the outstanding shares of XYZ Co for cash. The incomplete working paper elimination entries on that date for the consolidated statement of financial position of ABC Inc and its subsidiary are shown below:arrow_forwardREQUIRED: Determine the percentage owned by the parentarrow_forward
- 17abarrow_forwardTRUE OR FALSE: Indicate whether the statements are true or false. 1. Worksheet elimination 1 will include only the subsidiary’s stock (par value and additional paid-in capital), Retained Earnings, and the parent’s Investment in Subsidiary account when the parent has acquired 100 percent of the subsidiary’s stock at book value at the beginning of the period. 2.arrow_forwardHow much is the total assets at the date of acquistion ?arrow_forward
- Please do not provide answer in image formate, thank you.arrow_forwardQuestion #10: Argossey Corp owns a 70% equity interest in Gramcercy a subsidiary company. During the current year, Argossey sold off a small portion of their stock in Gramercy to an outside company. Before recording this transaction, Argossey adjusted the book value of its investment account. a) What is the purpose of Argossey adjusting its book value? b) How should the parent company record the transaction and what disclosure, if any, is required in the financial sttements and; c) How would Argossey account for the remainder of its investment subsequent to the sale of their partial interest in Gramercyarrow_forwardplease answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)arrow_forward
