On January 1, 20x1, ABC Company acquired 80% of XYZ Company’s common stock for 275,000 cash. At that date, XYZ reported common stock outstanding of 200,000 and retained eamings of 100,000 and the fair and book value of XYZ's assets and liabilities were equal, except for other intangible assets, which has a fair value 50,000 greater than book value and an 8-year remaining life. XYZ reported the following data for 20x1 and 20x2. Year Net Income Comprehensive Income 30,000 45,000 Dividends Paid 20x1 20x2 25,000 35,000 5,000 10,000 Bright reported separate net income from own operations of 100,000 and paid dividends of 30,000 for both years.
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- On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares of Soriano, Inc., in exchange for $31.25 per share cash. The remaining 20 percent of Soriano’s shares continued to trade for $30 both before and after Patterson’s acquisition. At January 1, Soriano’s book and fair values were as follows: Book Values Fair Values Remaining Life Current assets $ 80,000 $ 80,000 Buildings and equipment 1,250,000 1,000,000 5 years Trademarks 700,000 900,000 10 years Patented technology 940,000 2,000,000 4 years $ 2,970,000 Current liabilities $ 180,000 $ 180,000 Long-term notes payable 1,500,000 1,500,000 Common stock 50,000 Additional paid-in capital 500,000 Retained earnings 740,000 $ 2,970,000 In addition, Patterson assigned a $600,000 value to certain unpatented technologies recently developed…On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares of Soriano, Inc., in exchange for $31.25 per share cash. The remaining 20 percent of Soriano’s shares continued to trade for $30 both before and after Patterson’s acquisition. At January 1, Soriano’s book and fair values were as follows: Book Values Fair Values Remaining Life Current assets $ 80,000 $ 80,000 Buildings and equipment 1,250,000 1,000,000 5 years Trademarks 700,000 900,000 10 years Patented technology 940,000 2,000,000 4 years $ 2,970,000 Current liabilities $ 180,000 $ 180,000 Long-term notes payable 1,500,000 1,500,000 Common stock 50,000 Additional paid-in capital 500,000 Retained earnings 740,000 $ 2,970,000 In addition, Patterson assigned a $600,000 value to certain unpatented technologies recently developed…On January 1, 2022, Pop Co. acquired 75% of the outstanding common shares of Soda Inc. for $161,250 cash. On that date, Soda had common shares of $156,250 and retained earnings of $31,250. At acquisition, the identifiable assets and liabilities of Soda had fair values that were equal to carrying amounts except for inventory, which had fair value $8,000 greater than carrying amount and plant and equipment, which had fair values $10,000 greater than carrying amounts. The plant and equipment had a remaining useful life of 5 years on January 1, 2022.Any goodwill will be tested yearly for impairment. Balance sheets as of December 31, 2022 are presented below: Cash Accounts receivable Inventory Land Plant & Equipment, net Investment in Soda Inc. - equity Current liabilities Bonds payable Common shares Retained earnings Pop Co. $ 10,000 Soda Inc. $ 5,000 38,750 42,250 75,250 62,500 50,000 100,000 150,000 175,000 168,500 $384,750 $492,500 $ 45,500 - 338,000 109,000 $492,500 $ 47,125 128,125…
- On January 1, 20x8, Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash. At that date, Animation reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Animation's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Animation reported the following data for 20x8 and 20x9: Year Comprehensive Income Dividends Paid20x8 $30,000 $5,00020x9 $45,000 $10,000 Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years. What is the amount of consolidated comprehensive income reported for 20x9? What is the amount of comprehensive income attributable to the controlling interest for 20x8? What is the…On January 1, 20x8, Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash. At that date, Animation reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Animation's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Animation reported the following data for 20x8 and 20x9: Year Comprehensive Income Dividends Paid20x8 $30,000 $5,00020x9 $45,000 $10,000 Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years. 1. Based on the preceding information, what is the amount of consolidated comprehensive income reported for 20x8? 2. What is the amount of consolidated comprehensive income reported for…On May 1, Burns Corporation acquired 100 percent of the outstanding ownership shares of Quigley Corporation in exchange for $728,000 cash. At the acquisition date, Quigley's book and fair values were as follows: Cash Receivables Inventory Land Building and equipment (net) Patented technology Total assets Accounts payable Long-term liabilities Common stock ($5 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders equity Total assets Assets Book Value $ 112,000 $ 218,000 232,000 $ 177,000 323,000 0 $1,062,000 $ 162,500 $ 638,000 210,000 90,000 (38,500) $1,062,000 Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue. Consequently, Quigley will issue a set of financial statements separate from that of its new parent to support its request for debt and accompanying regulatory filings. Quigley elects to apply pushdown accounting in order to show recent fair valuations for its assets. Prepare a separate…
- On May 1, Burns Corporation acquired 100 percent of the outstanding ownership shares of Quigley Corporation in exchange for $733,000 cash. At the acquisition date, Quigley's book and fair values were as follows: Cash Receivables Inventory Land Building and equipment (net) Patented technology Total assets Accounts payable Long-term liabilities Common stock ($5 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders equity Total assets Book Value Fair Value $ 101,000 $ 101,000 229,000 229,000 254,000 323,000 157,500 118,500 330,000 409,000 0 220,000 Assets $1,071,500 $ 1,400,500 $ 146,000 $ 666,000 210,000 90,000 (40,500) $1,071,500 Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue. Consequently, Quigley will issue a set of financial statements separate from that of its new parent to support its request for debt and accompanying regulatory filings. Quigley elects to apply pushdown accounting in order to…On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shares with a market price of P45 per share. The book value of Luna Corp.’s identifiable net assets approximate its fair value, except for the following: • Merchandise inventory’s fair value is lower than the book balance by 150,000. • Equipment-A, with 2 years remaining useful life, costing P300,000 is understated by P50,000. • Land with a fair value of P500,000 is recognized in the books amounting to P350,000. The following events happened to Luna Corp. • Equipment-A was sold in June 30, 2023 for P320,000. • 60% of merchandise inventory were sold in 2022. • There is no movement as to the ordinary shares of Luna Corp during the year. The unadjusted trial balance as of December 31, 2022 were as follows: Lucas Company Luna Corp Cash 2,240,000 1,800,000 Trade Receivables 1,000,000 960,000 Merchandise Inventory…Play Company acquired 70 percent of Screen Corporation's shares on December 31, 20X5, at underlying book value of $98,000. At that date, the fair value of the noncontrolling interest was equal to 30 percent of the book value of Screen Corporation. Screen's balance sheet on January 1, 20X8, contained the following balances: Cash Accounts Receivable Inventory Buildings and Equipment 300,000 Less: Accumulated Depreciation (100,000) Retained Earnings Total Assets $50,000 35,000 40,000 Accounts Payable Bonds Payable Common Stock Additional Paid-In Capital O $135,625. O $185,000. $ 325,000 Total Liabilities and Equities $ 325,000 On January 1, 20X8, Screen acquired 5,000 of its own $2 par value common shares from Nonaffiliated Corporation for $6 per share. $155,000. O $165,625. $ 40,000 100,000 50,000 75,000 60,000 Based on the preceding information, in the consolidating entry needed in preparing a consolidated balance sheet immediately following the acquisition of shares, Investment in…
- On January 1, 2022, Sun Company acquired 85% of outstanding shares of Moon Corp. The consideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shares with a market price of P45 per share. The book value of Moon Corp.’s identifiable net assets approximate its fair value, except for the following: Merchandise inventory’s fair value is lower than the book balance by 150,000. Equipment-A, with 2 years remaining useful life, costing P300,000 is understated by P50,000. Land with a fair value of P500,000 is recognized in the books amounting to P350,000. The following events happened to Moon Corp. Equipment-A was sold in June 30, 2023 for P320,000. 60% of merchandise inventory were sold in 2022. There is no movement as to the ordinary shares of Moon Corp during the year. The unadjusted trial balance as of December 31, 2022 were as follows: Sun Company Moon Corp Cash 2,240,000 1,800,000 Trade Receivables 1,000,000 960,000…At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the time of purchase, the carrying value of Sky Tech's net assets was $80 million. The fair value of Sky Tech's depreciable assets was $20 million in excess of their book value. For this yeat, Sky Tech reported a net income of $80 million and declared and paid S20 million in dividends. The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is: Multiple Choice $6.0 million. $20 million. $30 million. None of these answer choices are correct.At the beginning of current year, Cinnamon Company purchased 40% of the ordinary shares of another entity for P3,000,000 when the net assets acquired amounted to P6,000,000.At acquisition date, the carrying amounts of the identifiable assets and liabilities of the investee were equal to their fair value, except for the equipment for which the fair value was P1,500,000 greater than carrying amount and inventory whose fair value was P500,000 greater than cost.The equipment has a remaining life of 4 years and the inventory was all sold during the current year.The investee reported net income of P4,000,000 and paid P1,000,000 dividends during the current year.Required;1. Prepare journal entries for the current year2. compute the investment income for the current year.