Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 3Q
To determine
Determine the income which actually accrues to the consolidated entity from each of these companies after considering the various non-controlling interests.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Washburn Company owns 75 percent of Metcalf Company’s outstanding common stock. During the current year, Metcalf issues additional shares to outside parties at a price more than its per share consolidated value. How does this transaction affect the business combination? How is this impact recorded within the consolidated statements?
Smart owns 80% of Simple. Where is the noncontrolling interest in Simple’s positive net income reported on the consolidated income statement (under the acquisition method)?
Gardner Corp. owns 80% of the voting common stock of Lockhart Co. Lockhart owns 70% of Canning Co. Gardner and Lockhart both use the initial value method to
account for their investments. The following information is available from the financial statements and records of the three companies:
Separate company net income before investment income
Dividend income from investment in subsidiary
Deferral of intra-entity gains
Amortization expense related to excess fair value
over book value of investment
Gardner Lockhart
Corp.
Co.
$900,000 $650,000 $150,000
250,000 120,000
110,000
80,000
What amount should be reported for consolidated net income?
40,000
Canning
Co.
20,000
25,000
Separate company net income includes intra-entity gains before the consolidating deferral but does not include dividend income from investment in subsidiary.
Chapter 7 Solutions
Advanced Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - How does the presence of an indirect ownership...Ch. 7 - Prob. 5QCh. 7 - In accounting for mutual ownerships, what is the...Ch. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10Q
Ch. 7 - Prob. 11QCh. 7 - Jones acquires Wilson, in part because the new...Ch. 7 - Prob. 13QCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Which of the following is correct for two...Ch. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 26P
Knowledge Booster
Similar questions
- Panther Company is about to acquire a 100% interest in Snake Company. Snake has identifiable net assets with book and fair values of $300,000 and $500,000, respectively. As payment, Panther will issue common stock with a fair value of $750,000. How would the transaction be recorded if the acquisition is: a. An acquisition of net assets? b. An acquisition of Snake’s common stock and Snake remains a separate legal entity?arrow_forwardHippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the salearrow_forwardAaron owns 100 percent of the 12,000 shares of Veritable, Inc. The Investment in Veritable account has a balance of $588,000, corresponding to the subsidiary’s unamortized acquisition-date fair value of $49 per share. Veritable issues 3,000 new shares to the public for $50 per share. How does this transaction affect the Investment in Veritable account?a. It is not affected because the shares were sold to outside parties.b. It should be increased by $2,400.c. It should be increased by $3,000.d. It should be decreased by $117,600.arrow_forward
- Please answer with explanation. I will really upvotearrow_forwardSeseg Appliances owns 90% of the voting stock of Juan Co. Of the three following statements, which of the statements are true? Statements: (1) The financial statements of Seseg would be consolidated into Juan (2) Seseg would be considered the parent entity (3) Juan would be considered the parent entity A. 1 is true B. 2 is true C. 3 is true D. None of the above are truearrow_forwardCompany P owns 90% of Company S’s shares. Assume Company S then purchases 2% of Company P’s outstanding shares of common stock. When consolidating, what happens to the 2% holding in the consolidated financial statements?arrow_forward
- Q. Arryn, Inc. owns 90 percent of Stark Corporation’s voting stock. The acquisition price exceeded book and fair value by $105,900 and was appropriately attributed to goodwill. Stark holds 20 percent of Arryn’s voting stock. The price paid for the shares by Stark equaled 20 percent of the parent’s book value and net fair values of its assets and liabilities. During the current year, Arryn reported separate operating income of $170,000 and dividend income from Stark of $36,500. At the same time, Stark reported separate operating income of $53,400 and dividend income from Arryn of $17,000. What is the net income attributable to the noncontrolling interest under the treasury stock approach?arrow_forwardPepper owns 70% of Spray. Where is the noncontrolling interest in Spray's positive net income reported on the consolidated income statement (under the acquisition method)? As an addition to consolidated net income As a deduction from consolidated net income As an addition to Spray's dividends As a deduction from Spray's dividendsarrow_forwardPT K and PT L own 27 percent and 15 percent of the common shares of PT M, having voting rights at the shareholders general meeting. PT L also owns 80 percent of the common shares of PT K, having voting rights at the shareholders general meeting. It is determined that PT K is a subsidiary of PT L. Following an analysis, PT K and PT L do not control or jointly control PT M. Required: Determine whether PT K and PT L have significant influence over PT M. Please explain.arrow_forward
- How does joint control differ from control as applied on consolidation? Oceania Limited acquired 100% of the share capital of Broadwater Limited. Broadwater had total shareholder's equity of $500 000. The book values of Broadwater Limited's assets were: buildings $300 000, machinery $180 000. The fair values of these assets were: buildings $360 000, machinery $200 000. The tax rate is 30%. The fair value of the identifiable net assets is: a. $580 000 b. $420 000 c. $556 000 d. $444 444arrow_forwardAubergine Ltd. currently owns 12% of the outstanding common shares of Benz Ltd. Borchoi Ltd. and Brink Ltd. respectively own 52% and 23% of the outstanding common shares of Benz Ltd with remaining shares held by miscellaneous smaller shareholders. Benz Ltd. has had several years of large losses. What is the minimum percentage of additional common shares of Benz Ltd. that Aubergine Ltd. must purchase in order that there be an acquisition of control? (Enter in whole numbers; do not type the % sign).arrow_forwardMattoon, Inc., owns 80 percent of Effingham Company. For the current year, this combined entity reported consolidated net income of $674,750. Of this amount $625,000 was attributable to Mattoon’s controlling interest while the remaining $49,750 was attributable to the noncontrolling interest. Mattoon has 125,000 shares of common stock outstanding and Effingham has 33,000 shares outstanding. Neither company has issued preferred shares or has any convertible securities outstanding. On the face of the consolidated income statement, how much should be reported as Mattoon’s earnings per share?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
