Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 3, Problem 28P
a.
To determine
Identify how Company P computed the $210,000 Income of Company O balance. Discuss how the accounting method is determined which Company P uses for its investment in Company O.
b.
To determine
Determine and explain the totals to be reported for this business combination for the year ending December 31.
c.
To determine
Prepare a worksheet to determine the consolidated values to be reported on Company P’s financial statements.
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• Jenna sold goods to Cooper for $6 000 during FY20X5, the cost of these
inventories was $3 500.…
Patty Corporation acquired 100 percent of Oliver Company's outstanding common stock
on January 1, 20X1 for $639,000 in cash. Oliver reported net assets with a carrying
amount of $374,000 at that time. Some of Oliver's assets either were unrecorded (having
been internally developed) or had fair values that differed from book values as follows:
Book
Fair
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Customer relationships (5-
0 91,200
year remaining life)
Equipment (10-year
remaining life)
364,000 323,800
Any goodwill is considered to have an indefinite life with no impairment charges during
the year. Assume Patty applies the equity method to account for its investment in Oliver.
In year 2021, Oliver reported net income of $350,600 and declared dividend of $98,000.
The amount of Equity in Oliver Earnings reported on Patty's financial record before
consolidation would be:
336,380
328,340
252,600
350,600
Jam Ltd acquired all the equity in Cab Ltd on 31 December 20X4 for $370 000. At the control date, the equity of Cab was recorded as Paid-up capital of $250 000 and Retained profits of
$31 000. The purchase price was based on the agreed fair values of Cab's identifiable assets and liabilities on that date. The following items were not at fair value in Cab's financial
statements on the control date.
Carrying amount
($)
Fair value ($)
Inventory
31 000
40 000
Property (Cost of $350 000,
Accumulated depreciation of $100 000)
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300 000
Other information:
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remaining life of 20 years from 31 December 20X4, and no residual value.
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Required:…
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