Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company. The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates. Requirement 1 Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

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Answer 1

Question

Chapter 9, Problem 9.16E

a. Calculate change in book value of parent equity as a result of repurchase

To determine

Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 1

Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

b. Journal entry to recognize the change in equity book value

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 2

The entry to be recorded by P advertising to recognize the change in book value of the shares held.

c. Consolidation entries

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 3

The preparation of consolidation entries immediately following the issuance of additional shares

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Riverstone Company began the year with inventory worth $87,500. During the year, they purchased additional inventory for $325,000. At the end of the year, a physical count showed inventory worth $93,200. Calculate the Cost of Goods Sold (COGS) for the period using the periodic inventory system.

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Answer 2

Question

Chapter 9, Problem 9.16E

a. Calculate change in book value of parent equity as a result of repurchase

To determine

Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 1

Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

b. Journal entry to recognize the change in equity book value

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 2

The entry to be recorded by P advertising to recognize the change in book value of the shares held.

c. Consolidation entries

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 3

The preparation of consolidation entries immediately following the issuance of additional shares

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Answer 3

Question

Chapter 9, Problem 9.16E

a. Calculate change in book value of parent equity as a result of repurchase

To determine

Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 1

Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

b. Journal entry to recognize the change in equity book value

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 2

The entry to be recorded by P advertising to recognize the change in book value of the shares held.

c. Consolidation entries

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 3

The preparation of consolidation entries immediately following the issuance of additional shares

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Answer 4

Question

Chapter 9, Problem 9.16E

a. Calculate change in book value of parent equity as a result of repurchase

To determine

Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 1

Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

b. Journal entry to recognize the change in equity book value

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 2

The entry to be recorded by P advertising to recognize the change in book value of the shares held.

c. Consolidation entries

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 3

The preparation of consolidation entries immediately following the issuance of additional shares

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Answer 5

Chapter 9, Problem 9.16E

a. Calculate change in book value of parent equity as a result of repurchase

To determine

Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 1

Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

b. Journal entry to recognize the change in equity book value

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 2

The entry to be recorded by P advertising to recognize the change in book value of the shares held.

c. Consolidation entries

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 3

The preparation of consolidation entries immediately following the issuance of additional shares

Answer 6

Chapter 9, Problem 9.16E

a. Calculate change in book value of parent equity as a result of repurchase

To determine

Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 1

Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

Answer 7

Chapter 9, Problem 9.16E

a. Calculate change in book value of parent equity as a result of repurchase

To determine

Sale of shares subsidiary’s to non-affiliate:when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 1

Computation of change in the book value of shares held by P as a result of S issuance of additional shares.

Answer 8

b. Journal entry to recognize the change in equity book value

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 2

The entry to be recorded by P advertising to recognize the change in book value of the shares held.

Answer 9

b. Journal entry to recognize the change in equity book value

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 2

The entry to be recorded by P advertising to recognize the change in book value of the shares held.

Answer 10

c. Consolidation entries

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 3

The preparation of consolidation entries immediately following the issuance of additional shares

Answer 11

c. Consolidation entries

To determine

Sale of shares subsidiary’s to non-affiliate: when subsidiary sells shares to a party outside the economic entity increases total stockholders’ equity of the consolidated entity by the amount received by the subsidiary from sale. Such as sale increases the subsidiary’s total shares outstanding and reduces the percentage ownership held by the parent company.

The amount assigned to non-controlling interest and controlling interest is also affected by two factors 1. The number of shares sold to non-affiliates and 2. The price at which the shares are sold to non-affiliates.

Requirement 3

The preparation of consolidation entries immediately following the issuance of additional shares

Answer 12

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Answer 13

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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 the calculation of change in the book value of shares held by P as a result of S issuance of additional shares.

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Chapter 9 Solutions