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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
Advanced Financial Accounting
- please 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_forwardThe December 31, 20x8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: Assets Cash and Receivables Inventory Buildings and Equipment (net) Investment in Saloon Company Total Assets Liabilities and Equity Accounts Payable Common Stock Retained Earnings Total Liabilities and Equity PINT CORPORATION AND SALOON COMPANY Balance Sheets December 31, 20x8 view transaction list Consolidation Worksheet Entries A B < Pint acquired the shares of Saloon Company on January 1, 20X7. On December 31, 20X8, assume Pint sold Inventory to Saloon during 20X8 for $105,000 and Saloon sold Inventory to Pint for $309,000. Pint's balance sheet contains Inventory Items purchased from Saloon for $100,000. The Items cost Saloon $60,000 to produce. In addition, Saloon's Inventory contains goods it purchased from Pint for $27,000 that Pint had produced for $16,200. Assume Saloon reported net Income of $72,000 and dividends of $14,400.…arrow_forwardHelp please get the ans accounting questionarrow_forward
- Subject-accountingarrow_forwardWhat is the profit attributable to equity holders of parent (or controlling interest in consolidated net income) on December 31?A. P 26,600 C. P 36,000B. P32,090 D. P 44,100arrow_forwardAccounting On January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for $320,000. On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. Net income and dividends for Subsidiary Company were $50,000 and $10,000, respectively. Parent Company has used the simple equity method for recording the Subsidiary income and dividends. On January 1, 2020, the only tangible assets of Subsidiary that were undervalued were inventory and equipment. Inventory was worth $5,000 more than cost. Equipment, which was worth $15,000 more than book value, has a remaining life of 5 years, and straight-line depreciation is used. Any remaining excess is goodwill. The following trial balances of the two companies are prepared on December 31, 2020. Parent Subsidiary Investment in Sub 352,000 Current Assets 132,000…arrow_forward
- What is the equity holders of parent (or controlling interest) retained earnings on January 1?arrow_forwardDuring a fiscal year, the balance of a parent company's Investment in Subsidiary ledger account for a wholly owned subsidiary, for which the parent company uses the equity method of accounting, increases the amount of the sibsidiary's A. Adjusted net income. B. Dividends. C. Adjusted net income plus dividends. D. Undistributed earnings.arrow_forwardExplain what effect does the dividend have on the retained earnings and non-controlling interest balances in the parent company’s consolidated balance sheet if a 70 percent owned subsidiary company declares and pays a cash dividend.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
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