Preston Company acquired 80% of Sparkle Corporation's stock for $2,170 in cash on January 1, 2020,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Preston Company acquired 80% of Sparkle Corporation's stock for $2,170 in cash on January 1, 2020, when Sparkle Corporation's book value was $500, consisting of $50 in capital stock, $435 in retained earnings, and $15 in accumulated other comprehensive income. The fair value of the noncontrolling interest was $430 at the date of acquisition. Preston uses the complete equity method to account for the investment on its own books. At the time of acquisition, all of Sparkle's assets and liabilities were reported at fair value, except for unreported identifiable intangible assets with a fair value of $300. These intangibles are appropriately recorded as assets per ASC Topic 805, and have a remaining life of 2 years, straight- line as of the date of acquisition. Goodwill arising from this acquisition is tested annually for impairment, and impairment for 2020 is $300. It is now December 31, 2020, and you are preparing the consolidated financial statements. Sparkle reported net income of $750, an other comprehensive loss of $10, and declared and paid dividends of $100 for 2020. Required Calculate total goodwill at the date of acquisition and its allocation to the controlling and noncontrolling interest. Calculate equity in net income of Sparkle for 2020, as reported on Preston's separate books, and noncontrolling interest in net income of Sparkle for 2020, as reported on the consolidated income statement. Prepare the eliminating entries, in journal form, to consolidate Preston and Sparkle's trial balances at December 31, 2020. a. b. C. Preston Company acquired 80% of Sparkle Corporation's stock for $2,170 in cash on January 1, 2020, when Sparkle Corporation's book value was $500, consisting of $50 in capital stock, $435 in retained earnings, and $15 in accumulated other comprehensive income. The fair value of the noncontrolling interest was $430 at the date of acquisition. Preston uses the complete equity method to account for the investment on its own books. At the time of acquisition, all of Sparkle's assets and liabilities were reported at fair value, except for unreported identifiable intangible assets with a fair value of $300. These intangibles are appropriately recorded as assets per ASC Topic 805, and have a remaining life of 2 years, straight- line as of the date of acquisition. Goodwill arising from this acquisition is tested annually for impairment, and impairment for 2020 is $300. It is now December 31, 2020, and you are preparing the consolidated financial statements. Sparkle reported net income of $750, an other comprehensive loss of $10, and declared and paid dividends of $100 for 2020. Required Calculate total goodwill at the date of acquisition and its allocation to the controlling and noncontrolling interest. Calculate equity in net income of Sparkle for 2020, as reported on Preston's separate books, and noncontrolling interest in net income of Sparkle for 2020, as reported on the consolidated income statement. Prepare the eliminating entries, in journal form, to consolidate Preston and Sparkle's trial balances at December 31, 2020. a. b. C.
Expert Answer:
Answer rating: 100% (QA)
Total goodwill 2170 430 500 300 1800 Goodwill to controlling interest 2170 80 x 500 300 1530 85 Good... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The U.S. parent company is preparing its consolidated financial statements for December 31, 20X4. The foreign companys local currency (LCU) is the functional currency. Information is presented in...
-
Accumulated other comprehensive income relations Selected information based on the comparative balance sheets for Solaronx Company (Solaronx), a U.S. defense manufacturer, appears in the following...
-
Accumulated other comprehensive income relations Selected information based on the comparative balance sheets for MosTechi Corporation (MosTechi), a Japanese electronics manufacturer; appear neat for...
-
Simplify each expression. Assume that all variables represent nonzero real numbers. 52
-
The rate of heat transfer to the steam in the boiler is nearest: (A) 20.6 MJ/s (B) 27.1 MJ/s (C) 31.9 MJ/s (D) 43.2 MJ/s Figure 8.29 Figure 8.30 Q B Boiler Pump Turbine W. Condenser Qc 15 MPa Boiler...
-
What is the line integral of B between points i and f in FIGURE EX29.20? (cm) 50- Integration path 3 0.10 T -x (cm) 50 FIGURE EX29.20
-
10.A company contracted with a marketing firm to construct software and create a business website. A quote was requested and accepted. Sometime later, the business asked for updates and revisions but...
-
Prince Electronics, a manufacturer of consumer electronic goods, has five distribution centers in different regions of the country. For one of its products, a high- speed modem priced at $350 per...
-
A certain substance has a mass per mole of 53 g/mol. When 312 J is added as heat to a 26.0 g sample, the sample's temperature rises from 21.0C to 45.0C. What are the (a) specific heat and (b) molar...
-
P has been a 100 percent shareholder a calendar year S corporation since 1998. At the beginning of 2012, P's stock basis is $20,000. At the end of 2003, she receives a cash distribution of $96,000....
-
Excerpts from Nationwide Company's December 31, 2024 and 2023, financial statements are presented below: Accounts receivable Inventory Net sales Cost of goods sold Total assets Total stockholders'...
-
An array A is declared: #define L 5 #define M 3 #define N 2 int A[L][M][N]; Assuming the starting address of A is 100. What is &A[3] [1] [1]? You can use an expression if that is useful.
-
As soon as you answer a phone call from your mom, you notice her tense tone of voice. When you say, "It sounds like you're angry at me," you are engaging in
-
CX Enterprises has the following expected dividends: $1.04 in one year, $1.17 in two years, and $1.27 in three years. After that, its dividends are expected to grow at 4.1% per year forever (so that...
-
"What are the distinctions between lysogenic expression and lytic growth expression in viral life cycles?"
-
How do you access the income statement for 19X1? List three points of comparison comparing 19X1 to 19X0
-
Let zy 1 and Find dr dy 21 dt when 1 P
-
In the simple quantity theory of money, what will lead to an increase in aggregate demand? In monetarism, what will lead to an increase in aggregate demand?
-
Fleet Limousine Service Inc. began operations in late March 2019. At the end of 2019, the following balance sheet was prepared for Fleet. Fleet Limousine Service Inc. Balance Sheets December 31, 2019...
-
Why do companies invest their cash in short-term investments?
-
On January 1, 2019, Brock & Co. issued $600,000 of bonds payable at par. The bonds have a 9% stated rate, pay interest on March 31, June 30, September 30, and December 31, and mature on December 31,...
-
Water is to be cooled at the rate of \(10 \mathrm{~kg} / \mathrm{s}\) from \(317 \mathrm{~K}\) to \(300 \mathrm{~K}\) in a countercurrent cooling tower under conditions such that \(H_{t O G}=2.5...
-
In a plant for the recovery of acetone which has been used as a solvent, the acetone is evaporated into a stream of nitrogen gas. A mixture of acetone vapor and nitrogen flows through a duct, 0.3 by...
-
In the cooling tower of Example 8.7, to what temperature would the water be cooled if, after the tower was built and operated at the design water and air rates, the air entered at a dry-bulb...
Study smarter with the SolutionInn App