Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss. Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction Requirement 1 Computation of balance in the investment account reported by S on January 1, 20X5

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Answer 1

Question

Chapter 9, Problem 9.13E

a. Calculate balance of investment.

To determine

Sale of subsidiary sales by parent:when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 1

Computation of balance in the investment account reported by S on January 1, 20X5

b.Journal entry to record sale of shares

To determine

Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 2

The entries recorded by S when it sold the A’s shares

c.Consolidation entries

To determine

Consolidation entry: the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts. Consolidation is the process of combining the financials of subsidiary with financials of parent company. This is typically done when parent holds more than 50 percent of shares of another entity.

Requirement 3

The preparation of consolidation entries for 20X5.

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Kling Company was organized in December Year 1 and began operations on January 2, Year 2. Prior to the start of operations, it incurred the following costs: Costs of hiring new employees Attorney's fees in connection with the organization of the company Improvements to leased offices prior to occupancy (10-year lease) Costs of pre-opening advertising Required: 1. What amount should the company expense in Year 1? 600 $3,000 12,000 6,000 5,000 Chapter 12 Homework assignment take frame Start-Up Costs What amount should the company expense in Year 2? +A $

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Answer 2

Question

Chapter 9, Problem 9.13E

a. Calculate balance of investment.

To determine

Sale of subsidiary sales by parent:when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 1

Computation of balance in the investment account reported by S on January 1, 20X5

b.Journal entry to record sale of shares

To determine

Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 2

The entries recorded by S when it sold the A’s shares

c.Consolidation entries

To determine

Consolidation entry: the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts. Consolidation is the process of combining the financials of subsidiary with financials of parent company. This is typically done when parent holds more than 50 percent of shares of another entity.

Requirement 3

The preparation of consolidation entries for 20X5.

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Answer 3

Question

Chapter 9, Problem 9.13E

a. Calculate balance of investment.

To determine

Sale of subsidiary sales by parent:when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 1

Computation of balance in the investment account reported by S on January 1, 20X5

b.Journal entry to record sale of shares

To determine

Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 2

The entries recorded by S when it sold the A’s shares

c.Consolidation entries

To determine

Consolidation entry: the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts. Consolidation is the process of combining the financials of subsidiary with financials of parent company. This is typically done when parent holds more than 50 percent of shares of another entity.

Requirement 3

The preparation of consolidation entries for 20X5.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 9.13E

a. Calculate balance of investment.

To determine

Sale of subsidiary sales by parent:when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 1

Computation of balance in the investment account reported by S on January 1, 20X5

b.Journal entry to record sale of shares

To determine

Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 2

The entries recorded by S when it sold the A’s shares

c.Consolidation entries

To determine

Consolidation entry: the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts. Consolidation is the process of combining the financials of subsidiary with financials of parent company. This is typically done when parent holds more than 50 percent of shares of another entity.

Requirement 3

The preparation of consolidation entries for 20X5.

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Answer 5

Chapter 9, Problem 9.13E

a. Calculate balance of investment.

To determine

Sale of subsidiary sales by parent:when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 1

Computation of balance in the investment account reported by S on January 1, 20X5

b.Journal entry to record sale of shares

To determine

Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 2

The entries recorded by S when it sold the A’s shares

c.Consolidation entries

To determine

Consolidation entry: the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts. Consolidation is the process of combining the financials of subsidiary with financials of parent company. This is typically done when parent holds more than 50 percent of shares of another entity.

Requirement 3

The preparation of consolidation entries for 20X5.

Answer 6

Chapter 9, Problem 9.13E

a. Calculate balance of investment.

To determine

Sale of subsidiary sales by parent:when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 1

Computation of balance in the investment account reported by S on January 1, 20X5

Answer 7

Chapter 9, Problem 9.13E

a. Calculate balance of investment.

To determine

Sale of subsidiary sales by parent:when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 1

Computation of balance in the investment account reported by S on January 1, 20X5

Answer 8

b.Journal entry to record sale of shares

To determine

Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 2

The entries recorded by S when it sold the A’s shares

Answer 9

b.Journal entry to record sale of shares

To determine

Sale of subsidiary sales by parent: when parent sales share of subsidiary, parent has to recognize a gain or loss on the difference between selling price and the change in the carrying amount of its investment. Form consolidation viewpoint, when subsidiary reacquires its share from parent, the transaction represents an internal transfer and does not give rise to a gain or loss.

Because the gain or loss will be eliminated in consolidation process. A better approach is for the parent to adjust additional paid-in capital rather than record gain or loss on the transaction

Requirement 2

The entries recorded by S when it sold the A’s shares

Answer 10

c.Consolidation entries

To determine

Consolidation entry: the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts. Consolidation is the process of combining the financials of subsidiary with financials of parent company. This is typically done when parent holds more than 50 percent of shares of another entity.

Requirement 3

The preparation of consolidation entries for 20X5.

Answer 11

c.Consolidation entries

To determine

Consolidation entry: the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts. Consolidation is the process of combining the financials of subsidiary with financials of parent company. This is typically done when parent holds more than 50 percent of shares of another entity.

Requirement 3

The preparation of consolidation entries for 20X5.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 9 - Prob. 9.1Q Ch. 9 - Prob. 9.2Q Ch. 9 - Prob. 9.3Q Ch. 9 - Prob. 9.4Q Ch. 9 - Prob. 9.5Q Ch. 9 - Prob. 9.6Q Ch. 9 - Prob. 9.7Q Ch. 9 - Prob. 9.8Q Ch. 9 - Prob. 9.9Q Ch. 9 - Prob. 9.10Q

Solution Summary: The author explains that the basic consolidation entry removes the investment in parent company stock account and subsidiary’s stockholders equity accounts.

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Chapter 9 Solutions