ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
12th Edition
ISBN: 9781260824292
Author: Christensen
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 9, Problem 9.2.4E
To determine
Multilevel ownership and control:if a company establish multiple corporate levels through which they carryout diversified operations, i.e. a company may have a number of subsidiaries one of which is a retailer. When consolidated statements are prepared, they include companies in which the parent has only indirect investment along with direct ownership. The complexity of consolidation process increases as additional ownership levels are included. The amount of income and net assets assigned to controlling and non-controlling interest, and unrealized
To choose:the correct amount of income assigned to the non-controlling interest of R corporation from given choices.
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Required Information
[The following information applies to the questions displayed below.]
Apple Corporation acquires 80 percent of Berry Corporation's common shares on January 1, 20X2. On
January 2, 20X2, Berry acquires 60 percent of Coco Corporation's common stock. Information on company
book values on the date of purchase and operating results for 20X2 is as follows:
Company
Apple Corporation
Berry Corporation
Coco Corporation
Required:
Select the correct answer for each of the following questions.
Multiple Choice
The fair values of the noncontrolling interests of Berry and Coco at the dates of acquisition were $60,000 and
$80,000, respectively.
O $22,000.
Book Value
$ 800,000
300,000
200,000
O $46,000.
Purchase Price
$ 240,000
120,000
4. The amount of income assigned to the noncontrolling interest in the 20X2 consolidated income statement is:
O $42.000.
$20,000.
28X2 Operating Income
$ 100,000
80,000
50,000
hf.
Darnell Ltd. acquired 60 percent of Tisha Co. The acquisition calls for Darnell to issue an additional 100 shares to Tisha in one year if Tisha meets a predetermined sales goal. This contingent consideration
a. should be reported only in the notes to the financial statement.
b. should be valued at its fair value as of the acquisition date.
c. should be valued at fair value as of the acquisition date and revalued at the year-end.
d. should not be reported unless the goal is met.
Step Acquisition: Press Company acquires 15 percent of Secretary Company's common stock for P600,000 cash and carries the investment using the cost model. A few months later, Press purchases another 60 percent of Secretary Company's stock for P2,592,000. At that date, Secretary Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Secretary Company is P1,080,000.Determine the following (at full fair value)GoodwillNon-Controlling Interest (NCI)
Chapter 9 Solutions
ADVANCED FINANCIAL ACCT.(LL) >CUSTOM<
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 - Prob. 9.1.1ECh. 9 - Prob. 9.1.2ECh. 9 - Prob. 9.1.3ECh. 9 - Prob. 9.1.4ECh. 9 - Prob. 9.2.1ECh. 9 - Prob. 9.2.2ECh. 9 - Prob. 9.2.3ECh. 9 - Prob. 9.2.4ECh. 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 Stake Company reported...Ch. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Prob. 9.15ECh. 9 - Prob. 9.16ECh. 9 - Prob. 9.17.1PCh. 9 - Prob. 9.17.2PCh. 9 - Prob. 9.17.3PCh. 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
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- Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Phone Corporation Smart Corporation Cash $ 52,300 $ 39,000 Accounts Receivable 99,000 59,000 Inventory 136,000 92,000 Land 66,000 49,000 Buildings & Equipment 417,000 268,000 Less: Accumulated Depreciation (151,000) (73,000) Investment in Smart Corporation 98,000 Total Assets $ 717,300 $ 434,000 Accounts Payable $ 141,500 $ 27,000 Mortgage Payable 300,800 288,000 Common Stock 72,000 40,000 Retained Earnings 203,000 79,000 Total Liabilities & Stockholders’ Equity $ 717,300 $ 434,000 At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of…arrow_forwardPhone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Phone Corporation Smart Corporation Cash $ 52,300 $ 39,000 Accounts Receivable 99,000 59,000 Inventory 136,000 92,000 Land 66,000 49,000 Buildings & Equipment 417,000 268,000 Less: Accumulated Depreciation (151,000) (73,000) Investment in Smart Corporation 98,000 Total Assets $ 717,300 $ 434,000 Accounts Payable $ 141,500 $ 27,000 Mortgage Payable 300,800 288,000 Common Stock 72,000 40,000 Retained Earnings 203,000 79,000 Total Liabilities & Stockholders’ Equity $ 717,300 $ 434,000 At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of…arrow_forwardPurchase at More than Book Value Ramrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January1 20X2, in exchange for 4,000 shares of Ramrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows: Stafford Industries Ramrod Manufacturing Book Value Fair Value Fair Value Balance Sheet Items Book Value $ 30,000 60,000 160,000 30,000 350,000 $ 30,000 60,000 100,000 40,000 400,000 (150,000) $ 480,000 $ 10,000 150,000 $ 70,000 100,000 200,000 50,000 600,000 (250,000) $770,000 70,000 100,000 375,000 80,000 540,000 Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation } $630,000 $ 10,000 145,000 Total Assets $1,165,000 Accounts Payable Bonds Payable Common Stock: $ 50,000 300,000 $ 50,000 310,000 200,000 $20 par value $5 par value Additional Paid-In Capital Retained Earnings 100,000 20,000 40,000 180,000 $770,000 200,000 $ 480,000 Total Liabilities & Equities %$4…arrow_forward
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