Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Chapter 9, Problem 9.27P
To determine
Introduction:
Reciprocal ownership: A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the
Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from the parent.
The consolidated net income and the income assigned to the non-controlling shareholders of G and P for 20X7 using treasury stock method.
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First Boston Corporation acquired 80 percent of Gulfside Corporation common stock on January 1, 20X5. Gulfside holds 60 percent of the voting shares of Paddock Company, and Paddock owns 10 percent of the stock of First Boston. All acquisitions were made at underlying book value. The fair value of the noncontrolling interest in Gulfside was equal to 20 percent of the book value of Gulfside when acquired by First Boston, and the fair value of the noncontrolling interest in Paddock was equal to 40 percent of its book value when control was acquired by Gulfside. During 20X7, income from the separate operations of First Boston, Gulfside, and Paddock was $46,000, $36,000, and $52,000, respectively, and dividends of $32,000, $22,000, and $12,000, respectively, were paid. The companies use the cost method of accounting for intercorporate investments and, accordingly, record dividends received as other (nonoperating) income.
Required:
Compute the amount of consolidated net income and the…
First Boston Corporation acquired 80 percent of Gulfside Corporation common stock on January 1, 20X5. Gulfside holds 60 percent of
the voting shares of Paddock Company, and Paddock owns 10 percent of the stock of First Boston. All acquisitions were made at
underlying book value. The fair value of the noncontrolling Interest in Gulfside was equal to 20 percent of the book value of Gulfside
when acquired by First Boston, and the fair value of the noncontrolling Interest in Paddock was equal to 40 percent of its book value
when control was acquired by Gulfside. During 20X7, Income from the separate operations of First Boston, Gulfside, and Paddock was
$58,000, $48,000, and $64,000, respectively, and dividends of $44,000, $34,000, and $24,000, respectively, were paid. The
companies use the cost method of accounting for Intercorporate Investments and, accordingly, record dividends received as other
(nonoperating) Income.
Required:
Compute the amount of consolidated net Income and the income…
Holder Inc acquired 150,000 $1 ordinary shares in Sub Inc on 1 July 20X6 at a cost of
$300,000. Sub Inc's reserves at 1 July 20X6 were $36,000 and its issued ordinary share
capital was $200,000. The fair value of the non-controlling interest at acquisition was
$100,000.
At 30 June 20X9 Sub Inc's reserves were $16,000.
What is the goodwill arising on consolidation?
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
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