In 2006, A acquired a 100% equity interest in B for cash consideration of $125,000. B’s identifiable net assets at fair value were $100,000. Goodwill of $5,000 was identified and recognized. In the subsequent years, B increased net assets by $20,000 to $120,000. This is reflected in equity attributable to the parent. A then disposed of 30% of its equity interest to non- controlling interests for $40,000. Required: Calculate the increase or decrease to be recorded in equity
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In 2006, A acquired a 100% equity interest in B for cash
consideration of $125,000. B’s identifiable net assets at fair value
were $100,000.
In the subsequent years, B increased net assets by $20,000 to
$120,000. This is reflected in equity attributable to the parent.
A then disposed of 30% of its equity interest to non- controlling
interests for $40,000.
Required:
Calculate the increase or decrease to be recorded in equity.
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- At the beginning of the current year, FFF Company acquired 20% of the outstanding ordinary shares of Vee Company for P8,000,000. This investment gave FFF the ability to exercise significant influence over Vee. The carrying amount of the acquired shares was P6,000,000. The excess of cost over carrying amount was attributed to a depreciable asset which was undervalued on Vee's statement of financial position and which had a remaining useful life of 10 years. The investee reported net income of P1,800,000 and paid cash dividends of P400,000 and thereafter issued 5% share dividend during the current year. What is the carrying amount of the investment in associate at year-end?17) In 2011 Ace Inc. acquired a 100% equity interest in Beauty Co. for cash consideration of $125,000. Beauty's identifiable net assets at fair value were $100,000. Goodwill of $5,000 was identified and recognized. In the subsequent years Beauty increased net assets by $20,000 to $120,000. This is reflected in equity attributable to the parent. Ace then dispose of 30% of its equity interest to non-controlling interest for $40,000. What is the increase or decrease to be recorded in equity? Select one: O a. Positive $5,000 Ob. Negative $4,000 O C. Positive $4,000 O d. Negative $5,000At the beginning of the current year, FFF Company acquired 20% of the outstanding ordinary shares of Vee Company for P8,000,000. This investment gave FFF the ability to exercise significant influence over Vee. The carrying amount of the acquired shares was P6,000,000. The excess of cost over carrying amount was attributed to a depreciable asset which was undervalued on Vee's statement of financial position and which had a remaining useful life of 10 years. The investee reported net income of P1,800,000 and paid cash dividends of P400,000 and thereafter issued 5% share dividend during the current year. What amount should be reported as investment income for the current year?
- Matrix, Incorporated, acquired 25% of Neo Enterprises for $2,000,000 on January 1, 2024. The fair value and book value of 25% of Neo's identifiable net assets was $2,000,000 and $1,600,000 on that date, and the difference was attributable to assets that would be depreciated over 10 years. During 2024 Neo recognized net income of $500,000 and paid dividends of $400,000. Neo had a total fair value of $10,000,000 as of December 31, 2024. Required: 1. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix accounts for that investment as an equity-method investment. 2. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix elects the fair value option.Tall acquires 80% of Short on May 1, 2010. For the first 4 months of 2010, Short has total revenues of $1,000,000 and total expenses of $600,000. For the last & months of the year, Short has total revenues of $1,800,000 and total expenses of $800,000. a. How much is the noncontrolling interest in Short net income in 2010 b. How much subsidiary net income is allocated to the controlling interestClark Corp. owned 75% of the voting common stock of Andrew Co. On January 3, 2020, Andrew sold a parcel of land to Clark. The land had a book value of $36,000 and was sold to Clark for $52,000. Andrew’s reported net income for 2020 was $123,000. Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, what is net income attributable to the noncontrolling interest?
- Pineburst Inc. acquired an 80% interest in Smallwood Company in January 1, 2003, for an amount equal to book value. Smallwood sold land to Pineburst in 2003 at a profit of $5,000. The land is held by the buying affiliate firm until 2005, when it is sold to an unaffiliated party for a profit of $6,000. Smallwood reported net income for 2003, 2004, and 2005 of $30,000, $40,000, and $50,000, respectively. Assume that the 2003 intercompany transfer of land was upstream from Smallwood to Pinehurst. Prepare the consolidation worksheet adjustment journal entry on December 31, 2005, concerning the intercompany sale of land6. On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. What is the Noncontrolling interest's share in the Net income of the subsidiary?Reyes Corp. owned 70% of the voting common stock of Lee Co. During 2021, Lee sold a parcel of land to Reyes. The land had a book value of $87,000 and was sold to Reyes for $138,000. Lee's reported net income for 2021 was $127,000. Required: Assuming there are no other intra-entity transactions nor excess amortizations, what was the net income attributable to the noncontrolling interest of Lee? Due to the sale of land being an upstream sale, and not sold to an external entity the Gain would be deferred each year.
- Echo, Inc., purchased 10 percent of ProForm Corporation on January 1, 2017, for $345,000 and accounted for the investment using the fair-value method. Echo acquires an additional 15 percent of ProForm on January 1, 2018, for $580,000. The equity method of accounting is now appropriate for this investment. No intra-entity sales have occurred.a. How does Echo initially determine the income to be reported in 2017 in connection with its ownership of ProForm?b. What factors should have influenced Echo in its decision to apply the equity method in 2018?c. What factors could have prevented Echo from adopting the equity method after this second purchase?d. What is the objective of the equity method of accounting?e. What criticisms have been leveled at the equity method? f. In comparative statements for 2017 and 2018, how would Echo determine the income to be reported in 2017 in connection with its ownership of ProForm? Why is this accounting appropriate?g.…5. On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Determine the consolidated net income for 2020.3. On January 1, 2021, Jessa Company acquired 40% of the ordinary shares of an associate. On such date, assets and liabilities of the investee were reported at fair value and the acquisition showed that goodwill of P1,000,000 was acquired. The investee reported net income of P8,000,000 for 2021. On January 1, 2021, the investee sold an equipment to Jessa Company with carrying amount of P2,500,000 for P4,000,000. The remaining life of the equipment is 5 years. In December 2021, the investee sold inventory costing P3,000,000 to Jessa Company for P5,000,000. The inventory remained unsold by Jessa Company on December 31, 2021. The fair value of the investment at the end of the year is P800,000 higher than its acquisition cost on January 1, 2021. 3. How much investment income should be reported by Jessa Company for 2021?