Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 9, Problem 9.12Q
To determine
Introduction:
Multilevel ownership and control: A company may establish multiple corporate levels using which it can carry out diversified operations, i.e. a company may have a number of subsidiaries performing different activities for example one of the subsidiaries may be a retailer, one may be distributer. But when consolidated statements are prepared, the parent can include companies having only direct parental control and ownership, all the indirect investment can be reported indirectly using representative investment. The consolidation process will become complex because additional ownership levels are included. The elimination of intercompany transactions is carried out at each level of ownership.
The amount reported as consolidated net income and income assigned to controlling interest.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hot Plc owns 80% of the issued share capital of Warm Plc and 40% of the issued share capital of Cold Plc. In the individual accounts, the income tax expenses for the year are as follows:3Hot Plc GH¢20,000Warm Plc GH¢18,000Cold Plc GH¢10,000At what amount should the income tax expense appear in the consolidated statement of profit or loss? [Note: The share of profit of Associate is shown in the statement of profit or loss at a figure net of tax]
REQUIRED:
What is the amount of income attributable to the non-controlling interest in 20x1 if the non-controlling interest is to be stated at fair value?
On October 26, 20x1, Entity A acquired 100% interest in Entity B for P2,800,000. On this date, Entity B's identifiable assets and liabilities have fair values of P4,000,000 and P1,600,000, respectively. Included in Entity B's liabilities are cash dividends of P280,000 declared on October 1, 20x1, to shareholders of record on November 1, 20x1, and payable on December 1, 20x1.
Requirement: Compute for the goodwill.
Chapter 9 Solutions
Advanced Financial Accounting
Ch. 9 - Prob. 9.1QCh. 9 - Prob. 9.2QCh. 9 - Prob. 9.3QCh. 9 - Prob. 9.4QCh. 9 - Prob. 9.5QCh. 9 - Prob. 9.6QCh. 9 - Prob. 9.7QCh. 9 - Prob. 9.8QCh. 9 - Prob. 9.9QCh. 9 - Prob. 9.10Q
Ch. 9 - Prob. 9.11QCh. 9 - Prob. 9.12QCh. 9 - Prob. 9.13QCh. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Prob. 9.16QCh. 9 - Prob. 9.1CCh. 9 - Prob. 9.2CCh. 9 - Prob. 9.3CCh. 9 - Prob. 9.4CCh. 9 - Prob. 9.5CCh. 9 - Multiple-Choice Questions on Preferred Stock...Ch. 9 - Prob. 9.1.3ECh. 9 - Multiple-Choice Questions on Preferred Stock...Ch. 9 - Prob. 9.2.1ECh. 9 - Prob. 9.2.2ECh. 9 - Prob. 9.2.3ECh. 9 - Prob. 9.2.5ECh. 9 - Prob. 9.3ECh. 9 - Prob. 9.4ECh. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Prob. 9.8ECh. 9 - Prob. 9.9ECh. 9 - Prob. 9.10ECh. 9 - Prob. 9.11ECh. 9 - Subsidiary Stock Dividend Lake Company reported...Ch. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Multiple-Choice Questions on Preferred Stock...Ch. 9 - Prob. 9.17.2PCh. 9 - Multiple-Choice Questions on Preferred Stock...Ch. 9 - Prob. 9.17.4PCh. 9 - Prob. 9.17.5PCh. 9 - Prob. 9.18PCh. 9 - Prob. 9.19PCh. 9 - Prob. 9.20PCh. 9 - Prob. 9.21PCh. 9 - Prob. 9.22PCh. 9 - Prob. 9.23PCh. 9 - Prob. 9.24PCh. 9 - Prob. 9.25PCh. 9 - Prob. 9.26PCh. 9 - Prob. 9.27P
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
- 7. What amount of non-controlling interest is to be presented in the consolidated statement of financial position on December 31, 2x19? 8. How much is the consolidated retained earnings attributable to Parent’s shareholder equity on December 31, 2x19? 9. How much is the total consolidated assets on December 31, 2x19?arrow_forwardOn January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for $320,000. · On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. · Net income and dividends for Subsidiary Company were $50,000 and $10,000, respectively. · Parent Company has used the simple equity method for recording the Subsidiary income and dividends. · On January 1, 2020, the only tangible assets of Subsidiary that were undervalued were inventory and equipment. Inventory was worth $5,000 more than cost. Equipment, which was worth $15,000 more than book value, has a remaining life of 5 years, and straight-line depreciation is used. Any remaining excess is goodwill. The following trial balances of the two companies are prepared on December 31, 2020. d. Prepare the consolidated worksheet. e. Prepare the 2020 consolidated income statement and balance sheet.arrow_forwardOn January 1, 2020, Parent Company purchased 80% of the common stock of Subsidiary Company for $320,000. · On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. · Net income and dividends for Subsidiary Company were $50,000 and $10,000, respectively. · Parent Company has used the simple equity method for recording the Subsidiary income and dividends. · On January 1, 2020, the only tangible assets of Subsidiary that were undervalued were inventory and equipment. Inventory was worth $5,000 more than cost. Equipment, which was worth $15,000 more than book value, has a remaining life of 5 years, and straight-line depreciation is used. Any remaining excess is goodwill. The following trial balances of the two companies are prepared on December 31, 2020. a. Prepare the Value Analysis table and the Determination and Distribution of Excess schedule table. b. Prepare all the eliminations…arrow_forward
- A Parent Company owns 100 percent of its Subsidiary. During 2021, the Parent company reports net income (by itself, without any investment income from its Subsidiary) of $1,840,000 and the subsidiary reports net income of $736,000. The parent had a bond payable outstanding on December 31, 2021, with a carrying value equal to $1,545,600. The Subsidiary acquired the bond on December 31, 2021, for $1,453,600. During 2021, the Parent reported interest expense (related to the bond) of $128,800 while the Subsidiary reported no interest income (related to the bond). What is consolidated net income for the year ended December 31, 2021? b. $2,668,000 d. $2,796,800arrow_forwardP Inc. owns S Corp. For the current year, P reports net income (without consideration of its investment in S) of $185,000, and the subsidiary reports $105,000. The parent had a bond payable outstanding on January 1 with a carrying amount of $209,000. The subsidiary acquired the bond on that date for $196,000. During the current year, P reported interest expense of $18,000 while S reported interest income of $19,000 both related to the intra-entity bond payable. What is consolidated net income?arrow_forwardParent Corporation acquired 80% of the outstanding shares of Subsidiary Company on June 1, 2021 for P3,517,500. Subsidiary Company’s stockholder’s equity components at the end of this year are as follows: Ordinary shares, P100 par, P1,500,000, Share premium P675,000 and Retained Earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of Subsidiary Company were fairly valued, except for inventories, which are overstated by P66,000, and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of Parent Corporation on January 1, 2021 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year end. Net Income for the first year of parent is P450,000 and the net income of Subsidiary Company from the date of acquisition is P255,000. Dividends declared at the end of the year…arrow_forward
- What is the non-controlling interest (in net assets) on December 31, 20x2, assuming that the net income and dividends of subsidiary amounted to P200,000 and P70,000, respectively:A. 208,000 B. 209,200 C. 235,300 D. 222,400arrow_forwardParent owned 5,000 shares (80%) of the outstanding 20%, $50 par, peferred stock and 70% of the outstanding common stock of Sub. Assuming there are no excess amortization or intra-entity transactions, and Sub reports net income of $330,000, what is the noncontrolling interest in the subsidiary's income? Would the following be correct? 5,000 * $50 = $250,000 $330,000 - $250,000 = $80,000 $80,000 * 70% = $56,000 5,000 * 20% = $1,000 $56,000 * 30% = $16,800 Noncontrolling interest in subsidiary's income = $17,800arrow_forwardEduardo, a large entity, owns 50% and 20% of Letecia Corporation’s ordinary and preference shares, respectively. Letecia’s shares outstanding at December 31, 2021 follow: Ordinary share, P5,000,000 10% non-cumulative preference share, P1,200,000 Letecia reported net income of P750,000 for the year ended December 31, 2021. What amount should Eduardo report as total revenue related to its investment in Letecia Company for the year ended December 31, 2021?arrow_forward
- House Plc owns 80% of the issued share capital of Window Plc and 25% of the issued share capital of Door Plc. The revenues for the year are as follows:House Plc GH¢1,500,000Window Plc GH¢1,000,000Door Plc GH¢160,000What amount for revenue should appear in the consolidated statement of profit or loss for the year?arrow_forward1. The Profit Attributable to Equity Holders of Parent/ Controlling Interest (Parent’s Interests) in ConsolidatedNet income for 20x42. The Non-controlling interest in net income for 20x43. The Consolidated/Group Net Income for 20x4arrow_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
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
