Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent. The computation of balance in P’s investment in S products company stock on December 31, 20X8.

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Answer 1

Question

Chapter 9, Problem 9.14E

To determine

Purchase of additional shares from non-affiliate:a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X8.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X9.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The consolidation entries needed for December 31, 20X9.

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KIARA LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: ASSETS Property, plant and equipment (cost) Accumulated depreciation Long-term investments Inventory Accounts receivable Company tax paid in advance Bank EQUITY AND LIABILITIES 2024 2023 R R 2 490 000 1 620 000 (630 000) 660 000 1 050 000 1 230 000 30 000 (480 000) 450 000 1 290 000 900 000 0 750 000 660 000 5 580 000 4 440 000 Ordinary share capital 2 700 000 2 000 000 Retained income 1 500 000 1 158 000 Long-term loan from Kip Bank (15%) 900 000 1 000 000 Accounts payable 480 000 228 000 Company tax payable 0 54 000 5 580 000 4 440 000 ADDITIONAL INFORMATION All purchases and sales are on credit. Interim dividends paid during the year amounted to R150 750. Credit terms of 3/10 net 60 days are granted by creditors.

Accounting Question

REQUIRED Study the information given below and answer the following questions. Where discount factors are required use only the four decimals present value tables that appear after the formula sheet or in the module guide. Ignore taxes. 5.1 Calculate the Accounting Rate of Return on average investment of the second alternative (expressed to two decimal places). 5.2 Determine which of the two investment opportunities the company should choose by calculating the Net Present Value of each alternative. Your answer must include the calculation of the present values and NPV. 5.3 Calculate the Internal Rate of Return of the first alterative (expressed to two decimal places). Your answer must include two net present value calculations (using consecutive rates/percentages) and interpolation. INFORMATION The management of Bentall Incorporated is considering two investment opportunities: (5 marks) (9 marks) (6 marks) The first alternative involves the purchase of a new machine for R900 000 which…

Answer 2

Question

Chapter 9, Problem 9.14E

To determine

Purchase of additional shares from non-affiliate:a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X8.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X9.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The consolidation entries needed for December 31, 20X9.

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Answer 3

Question

Chapter 9, Problem 9.14E

To determine

Purchase of additional shares from non-affiliate:a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X8.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X9.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The consolidation entries needed for December 31, 20X9.

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Answer 4

Question

Chapter 9, Problem 9.14E

To determine

Purchase of additional shares from non-affiliate:a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X8.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X9.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The consolidation entries needed for December 31, 20X9.

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Answer 5

Chapter 9, Problem 9.14E

To determine

Purchase of additional shares from non-affiliate:a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X8.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X9.

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The consolidation entries needed for December 31, 20X9.

Answer 6

Chapter 9, Problem 9.14E

To determine

Purchase of additional shares from non-affiliate:a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X8.

Answer 7

Chapter 9, Problem 9.14E

To determine

Purchase of additional shares from non-affiliate:a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X8.

Answer 8

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X9.

Answer 9

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The computation of balance in P’s investment in S products company stock on December 31, 20X9.

Answer 10

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The consolidation entries needed for December 31, 20X9.

Answer 11

To determine

Purchase of additional shares from non-affiliate: a parent company may purchase the common stock of a subsidiary at different points in time. Once control is achieved, the entire investment is valued based on fair values at the date control achieved. A subsidiary can change the parent’s ownership percentage by selling additional shares to or repurchasing shares from non-affiliates or through stock transactions with parent.

The consolidation entries needed for December 31, 20X9.

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 analyzes the calculation of balance in P's investment in S products company stock on December 31, 20X8.

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Chapter 9 Solutions