Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
thumb_up100%
Chapter 3, Problem 3.4.2P
To determine
Consolidated Income Statement
Consolidated
Retained Earning
Retained earning are profit of a company has earned up to the date. Year end retained earning is calculated by adding opening balance of
Consolidated Balance Sheet Consolidated balance sheet represents aggregated financial position of holding and subsidiary company. In this statement company position is presented, about its assets and liabilities.
To calculate:
Prepare consolidated income statement, retained earning and balance sheet.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On July 1, 2017, Entity H acquired 25% of the shares of Oki, Inc. for P1,000,000. At the date, the equity of Oki was P4,000,000, with all the identifiable assets and liabilities being measured at amounts equal to fair value. The table below shows the profits and losses made by Oki during 2017 to 2021:
YEAR PROFIT(LOSS)
2017 P200,000
2018 (2,000,000)
2019 (2,500,000)
2020 160,000
2021 300,000
How much share of profit of assocaiate should Entity H report in its 2020 profit or loss?
a.Nil
b. P40,000
c. P60,000
d. P100,000
Jet Corp. acquired all of the outstanding shares of Nittle Inc. on January 1, 2016, for $644,000 in cash. Of this consideration transferred, $42,000 was attributed to equipment with a ten-year remaining useful life. Goodwill of $56,000 had also been identified. Jet applied the partial equity method so that income would be accrued each period based solely on the earnings reported by the subsidiary.
On January 1, 2019, Jet reported $280,000 in bonds outstanding with a book value of $263,200. Nittle purchased half of these bonds on the open market for $135,800.
During 2019, Jet began to sell merchandise to Nittle. During that year, inventory costing $112,000 was transferred at a price of $140,000. All but $14,000 (at Jet's selling price) of these goods were resold to outside parties by year's end. Nittle still owed $50,400 for inventory shipped from Jet during December.
The following financial figures were for the two companies for the year ended December 31, 2019.
Jet…
The following intragroup transactions took place during the period ended 30 June 2022:
Heart Ltd paid $25 000 during the period ended 30 June 2022 as management fees for services provided by Clear Ltd.
During the period ended 30 June 2022, Heart Ltd declared a final dividend of $12 000 out of post-acquisition profits.
Heart Ltd rented a spare warehouse to Clear Ltd starting from 31 December 2021 for 1 year. The total charge for the rental was $40 000, and Clear Ltd will pay this amount to Heart Ltd at 31 December 2022.
Required
In relation to the above intragroup transactions:
1. Prepare adjusting journal entries for the consolidation worksheet at 30 June 2022.
2. Explain in detail why you made each adjusting journal entry, whether there is a tax effect and if the NCI share of equity required adjustment.
Chapter 3 Solutions
Advanced Accounting
Ch. 3 - Prob. 1UTICh. 3 - Prob. 2UTICh. 3 - Prob. 3UTICh. 3 - Prob. 4UTICh. 3 - Prob. 5UTICh. 3 - Prob. 6UTICh. 3 - Prob. 7UTICh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3.1E
Ch. 3 - Prob. 3.2ECh. 3 - Prob. 3.3ECh. 3 - Prob. 3.4ECh. 3 - Prob. 3.5ECh. 3 - Equity method, second year, eliminations, income...Ch. 3 - Prob. 4.2ECh. 3 - Prob. 5.1ECh. 3 - Prob. 5.2ECh. 3 - Prob. 5.3ECh. 3 - Prob. 5.4ECh. 3 - Prob. 5.5ECh. 3 - Prob. 6.1ECh. 3 - Prob. 6.2ECh. 3 - Prob. 7.1ECh. 3 - Prob. 7.2ECh. 3 - Prob. 7.3ECh. 3 - Prob. 7.4ECh. 3 - Prob. 7.5ECh. 3 - Prob. 8.1ECh. 3 - Prob. 8.2ECh. 3 - Prob. 9ECh. 3 - Prob. 10.1ECh. 3 - Prob. 10.2ECh. 3 - Prob. 10.3ECh. 3 - Prob. 11ECh. 3 - Prob. 3B.1.1AECh. 3 - Prob. 3B.1.2AECh. 3 - Prob. 3B.1.3AECh. 3 - Prob. 3B.2.1AECh. 3 - Prob. 3B.2.2AECh. 3 - Prob. 3B.3AECh. 3 - Prob. 3.1.1PCh. 3 - Prob. 3.1.2PCh. 3 - Prob. 3.1.3PCh. 3 - Prob. 3.2.1PCh. 3 - Prob. 3.2.2PCh. 3 - Prob. 3.3.1PCh. 3 - Prob. 3.3.2PCh. 3 - Prob. 3.3.3PCh. 3 - Prob. 3.3.4PCh. 3 - Prob. 3.4.1PCh. 3 - Prob. 3.4.2PCh. 3 - Prob. 3.5.1PCh. 3 - Prob. 3.5.2PCh. 3 - Prob. 3.5.3PCh. 3 - Prob. 3.6.1PCh. 3 - Prob. 3.6.2PCh. 3 - Prob. 3.6.3PCh. 3 - Prob. 3.7.1PCh. 3 - Prob. 3.7.2PCh. 3 - Prob. 3.7.3PCh. 3 - Prob. 3.8.1PCh. 3 - Prob. 3.8.2PCh. 3 - Prob. 3.9.1PCh. 3 - Prob. 3.9.2PCh. 3 - Prob. 3.10.1PCh. 3 - Prob. 3.10.2PCh. 3 - Prob. 3.11.1PCh. 3 - Prob. 3.11.2PCh. 3 - Prob. 3.12.1PCh. 3 - Prob. 3.12.2PCh. 3 - Prob. 3.13.1PCh. 3 - Prob. 3.13.2PCh. 3 - Prob. 3.15.1PCh. 3 - Prob. 3.15.2PCh. 3 - Prob. 3.16.1PCh. 3 - Prob. 3.16.2PCh. 3 - Prob. 3.17.1PCh. 3 - Prob. 3.17.2PCh. 3 - Prob. 3.18.1PCh. 3 - Prob. 3.18.2PCh. 3 - Prob. 3A.1.1APCh. 3 - Prob. 3A.1.2APCh. 3 - Prob. 3A.2APCh. 3 - Prob. 3A.3APCh. 3 - Prob. 3B.1APCh. 3 - Prob. 3B.2APCh. 3 - Prob. 3B.3.1APCh. 3 - The trial balances of Campton Corporation and Dorn...Ch. 3 - The trial balances of Campton Corporation and Dorn...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On January 1, 2017, Bright Company acquired 80% of Animo Company's common stock for 280,000 cash. At that date, Animo reported common stock outstanding of 200,000 and retained earnings of 100,000 and the fair Animo's assets and liabilities were equal, except for other intangible assets, which has a fair value 50,000 greater than book value and an 8- year remaining life. Animo reported the following data for 2017 and 2018. Year Net Income Comprehensive Income 30,000 45,000 Dividends Paid 2017 2018 25,000 35,000 5,000 10,000 Bright reported separate net income from own operations of 100,000 and paid dividends of 30,000 for both years. Based on the preceding information, what is the amount of comprehensive attributable to the controlling interest in 2018?arrow_forwardSmith Company is acquired by Roan Corporation on July 1, 2015. Roan exchanges 60,000 shares of its $1 par stock, with a fair valueof $18 per share, for the net assets of Smith Company.Roan incurs the following costs as a result of this transaction:Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,000Stock registration and issuance costs. . . . . . . . . . . . . . . 10,000Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000The balance sheet of Smyth Company, on the day of the acquisition, is in the attachment: The appraised fair values as of July 1, 2015, is as follows:Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $270,000Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000Buildings . .…arrow_forwardOn January 2, 2022, S Company acquired 80% of the stocks of L Company for P2,000,000. On this date, L Company had P1,000.000 of Share Capital and P800,000 of Retained Earnings. The carrying values of the identifiable assets and liabilities of L are equal to their fair values. During the year. L ships merchandise to S costing P800.000 at 25% above cost. At the end of the year, records show the following: S Company L Company 120,000 Inv. beg 350,000 Inv. end 400,000 200,000 Sales 5,500,000 2,500,000 3,250,000 1,680,000 650,000 Purchases Operating Exp. Dividends paid 300,000 500,000 350,000 The ending inventory of S includes merchandise from L amounting to P50,000. The reported impairment of goodwill in 2022 is P20,000. The parent opted to measure NCI at fair value. How much is the Consolidated Inventory on December 31, 2022? a.590,000 b.560,000 c.587,500 d.600,000arrow_forward
- On January 2, 2022, S Company acquired 80% of the stocks of L Company for P2,000,000. On this date, L Company had P1,000.000 of Share Capital and P800,000 of Retained Earnings. The carrying values of the identifiable assets and liabilities of L are equal to their fair values. During the year. L ships merchandise to S costing P800.000 at 25% above cost. At the end of the year, records show the following: S Company L Company Inv. beg 350,000 120,000 Inv. end 400,000 5,500,000 2,500,000 3,250,000 1,680,000 200,000 Sales Purchases Operating Exp. Dividends paid 650,000 300,000 500,000 350,000 The ending inventory of S includes merchandise from L amounting to P50,000. The reported impairment of goodwill in 2022 is P20,000. The parent opted to measure NCI at fair value. In 2021, S Company sold inventory costing P50,000 to $ Company (90%- owned) for P100,000. By the end of the year, L sold 80% of the inventory. The elimination entries in 2022 would include: a. Credit to Cost of Sales, P100,000…arrow_forwardOn January 2, 2019, ABC Co. acquired 80% of the outstanding common stock of Shade Co. for ₱1,344,000 with no goodwill resulting from the acquisition. The following selected account balances were taken from the accounting records of XYZ Co. Details shown doe XYZ Co. in the image. The building has an estimated useful life of 10 years and the equipment is expected to last for 5 years. For the year 2019, ABC Co. reported net income from own operations of ₱2,240,000 and XYZ Co. reported ₱600,000 net income from own operations. ABC Co. accounts its investment in XYZ Co. using the cost method. What is the consolidated income statement for the year 2019. NCI in the consolidated FS for the year 2019.arrow_forwardOn August 1, 2017, Concord Corporation acquired Skysong, Inc. for a cash payment of $2.10 million. At the time of purchase, Skysong's balance sheet showed assets of $4,350,000, liabilities of $2,550,000, and owners' equity of $1,800,000. The fair value of Skysong's identifiable assets is estimated to be $4,326,000. Compute the amount of goodwill acquired by Concord. Value assigned to goodwill $arrow_forward
- Digos Company was organized on January 1, 2020. On the same date, 25,000, P100 par value, ardinary shares were issued in exchange for property, plant and equipment valued at P3,000,000 and cash of P1,000,000. The following data summarizes the activities for 2020: a. Profit for the year ended December 31, 2020 was P1,000,000. b. Raw materials on hand on December 31 were equal to 25% of raw materials purchased. c. Manufacturing costs were distributed as follows: Materials used 50% Direct labor 30% Factory overhead 20% (includes depreciation of building P100,000) d. Goods in process remaining in the factory on December 31 were equal to 1/3 of the goods finished and transferred to stock. e. Finished goods remaining in stock on December 31 were equal to 25% of the cost of goods sold. f. Operating expenses were 30% of sales. g. Cost of goods sold was 150% of the operating expenses. h. Ninety percent of sales were collected during 2020. The balance was considered collectible. i. Seventy five…arrow_forwardFollowing are selected account balances from Penske Company and Stanza Corporation as of December 31, 2018:On January 1, 2018, Penske acquired all of Stanza’s outstanding stock for $680,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $440,000 book value but a fair value of $560,000.a. As of December 31, 2018, what is the consolidated copyrights balance?b. For the year ending December 31, 2018, what is consolidated net income?c. As of December 31, 2018, what is the consolidated retained earnings balance?d. As of December 31, 2018, what is the consolidated balance to be reported for goodwill?arrow_forwardOn January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $662,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $463,400. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $96,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,500 dividend. Sedona recorded net income of $99,500 in 2016 and $110,300 in 2017. Selected account balances from the two companies’ individual records were as follows: Phoenix Sedona 2018 Revenues $ 544,000 $ 381,000 2018 Expenses 387,000 280,000 2018 Income from Sedona 63,350 Retained earnings 12/31/18 270,350 224,500 On its December 31, 2018, consolidated…arrow_forward
- On January 1, 2015, Bactin Corporation acquired 10% of Oakton Company for $100,000. On that date, the total book value and fair value of Oakton's net assets was $900,000. Any difference between cost and fair value is attributable to goodwill. In 2015, Oakton reported net income of $60,000 and paid dividends of $30,000. On January 1, 2016, Bactin Corporation bought another 10% of Oakton for $100,000, and on that date, the book value and fair value of Oakton's net assets still was $900,000 (the fair value of Oakton did not change during 2015). Bactin concluded that its 20% ownership now allowed it to significantly influence Oakton's operations. In 2016, Oakton reported net income of $80,000 and paid dividends of $40,000. Required: Prepare all journal entries for Bactin for 2015 and 2016, assuming no change in fair value of the Oakton stock during that time period.arrow_forwardOn January 1, 2015, Parson Company purchases 80% of the common stock of Salary Company for $450,000. On this date, Salary has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $140,000, and $220,000, respectively. Any excess of cost over book value is due to goodwill. In both 2015 and 2016, Parson has accounted for the investment in Salary using the cost method. On January 1, 2016, Salary purchases 1,000 shares (10%) of the common stock of Parson Company from outside investors for $100,000 cash. It is expected that the shares may be resold later. Salary uses the cost method in accounting for the investment. During the last quarter of 2016, Parson sells merchandise to Salary for $48,000, one-fourth of which is still held by Salary on December 31, 2016. Parson’s usual gross profit on intercompany sales is 40%. The trial balances for Parson and Salary on December 31, 2016, are as follows:(attached)Complete the worksheet for consolidated financial…arrow_forwardOn January 1, 2017, Lund Corporation purchases a 30% interest in Aluma-Boat Company for $200,000. At the time of the purchase, Aluma-Boat has total stockholders’ equity of $400,000. Any excess of cost over the equity purchased is attributed in part to machinery worth $50,000 more than book value with a remaining useful life of five years. Any remaining excess would be allocated to goodwill. Aluma-Boat reports the following income and dividend distributions in 2017 and 2018: 2017 2018 Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50,000 $45,000 Dividends declared and paid . . . . . . . . . . . . . 10,000 10,000 Lund sells its investment in Aluma-Boat Company on January 2, 2019, for $230,000. Record the sale of the investments assuming the use of the equity method. You may ignore income taxes. Carefully schedule the investment account balance at the time…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College