Consolidation with negative retained earnings : When a parent acquires a subsidiary with a negative balance in retained earnings, it may not cause any problem in the consolidation process. Basic consolidation entries are the same, except the debit balance in retained earnings is eliminated by a credit entry. The consolidation entries required for consolidated balance sheet immediately after business combination.

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Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $1,862,400. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $150,000 more than its book value, an: unrecorded Patent that the parent valued at $300,000, and Goodwill of $450,000, 80% of which is allocated to the parent. The parent and the subsidiary report the balance sheets on the acquisition date in b. below: a. Prepare the consolidation entries on the acquisition date. Consolidation Worksheet Debit Description [E] Common stock APIC Retained earnings Equity investment Noncontrolling interest [A] PPE, net Patent Goodwill Equity investment Noncontrolling interest b. Prepare the consolidation Cash Accounts receivable Inventory Equity…

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5.17AE

To determine

Introduction:

Consolidation with negative retained earnings: When a parent acquires a subsidiary with a negative balance in retained earnings, it may not cause any problem in the consolidation process. Basic consolidation entries are the same, except the debit balance in retained earnings is eliminated by a credit entry.

The consolidation entries required for consolidated balance sheet immediately after business combination.

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Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $1,862,400. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $150,000 more than its book value, an: unrecorded Patent that the parent valued at $300,000, and Goodwill of $450,000, 80% of which is allocated to the parent. The parent and the subsidiary report the balance sheets on the acquisition date in b. below: a. Prepare the consolidation entries on the acquisition date. Consolidation Worksheet Debit Description [E] Common stock APIC Retained earnings Equity investment Noncontrolling interest [A] PPE, net Patent Goodwill Equity investment Noncontrolling interest b. Prepare the consolidation Cash Accounts receivable Inventory Equity…

Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued at $100,000, and Goodwill of $150,000, 80% of which is allocated to the parent. The parent and the subsidiary report the balance sheets on the acquisition date in b. below: a. Prepare the consolidation entries on the acquisition date. Consolidation Worksheet Debit Description [E] Common stock APIC Retained earnings Equity investment Noncontrolling interest [A] PPE, net Patent Goodwill Equity investment Noncontrolling interest 47,600 59,500 368,900 0 0 50,000 100,000 0 0 0 Credit 0 0 0 0 0 0 0 0 0 0

After the business combination on the basis of full-goodwill approach, what amount of consolidated retained earnings will be reported? a. P295,000 b. P268,000 c. P232,000 d. P205,000

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5.17AE

To determine

Introduction:

Consolidation with negative retained earnings: When a parent acquires a subsidiary with a negative balance in retained earnings, it may not cause any problem in the consolidation process. Basic consolidation entries are the same, except the debit balance in retained earnings is eliminated by a credit entry.

The consolidation entries required for consolidated balance sheet immediately after business combination.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5.17AE

To determine

Introduction:

Consolidation with negative retained earnings: When a parent acquires a subsidiary with a negative balance in retained earnings, it may not cause any problem in the consolidation process. Basic consolidation entries are the same, except the debit balance in retained earnings is eliminated by a credit entry.

The consolidation entries required for consolidated balance sheet immediately after business combination.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 5, Problem 5.17AE

To determine