Advanced Accounting (Looseleaf)
Advanced Accounting (Looseleaf)
12th Edition
ISBN: 9780077632595
Author: Hoyle
Publisher: MCG
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Chapter 4, Problem 24P

a.

To determine

Find the amount which should be recognized by Company P as the total value of the acquisition in its January 1 consolidated balance sheet.

b.

To determine

Identify the valuation principle which should be used by Company P to report each of Company S’s identifiable assets and liabilities in its January 1 consolidated balance sheet.

c.

To determine

Explain the manner in which Company S’s identifiable assets and liabilities be valued in Company P’s consolidated financial statements for years subsequent to acquisition.

d.

To determine

Find the amount of goodwill resulted from Company P’s acquisition of Company S.

e.

To determine

Determine the consolidated net income for the year and the amounts which are allocated to the controlling and non-controlling interest.

f.

To determine

Find the non-controlling interest amount reported in the December 31 consolidated balance sheet.

g.

To determine

Explain the manner in which the reported amounts for Company S’s net assets change on Company P’s acquisition-date consolidated balance sheet.

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Sherrod, Incorporated, reported pretax accounting income of $84 million for 2024. The following information relates to differences between pretax accounting income and taxable income: a. Income from installment sales of properties included in pretax accounting income in 2024 exceeded that reported for tax purposes by $3 million. The installment receivable account at year-end 2024 had a balance of $4 million (representing portions of 2023 and 2024 installment sales), expected to be collected equally in 2025 and 2026. b. Sherrod was assessed a penalty of $4 million by the Environmental Protection Agency for violation of a federal law in 2024. The fine is to be paid in equal amounts in 2024 and 2025. c. Sherrod rents its operating facilities but owns one asset acquired in 2023 at a cost of $88 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight- line depreciation the…
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