PROBLEM Answer in the space provided. (40 Marks) On January 1, 2015, Parent Co. purchased 100%...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
PROBLEM Answer in the space provided. (40 Marks) On January 1, 2015, Parent Co. purchased 100% of the outstanding common shares of Child Ltd. for $900,000 in shares and $350,000 in cash. Parent Co. and Child Ltd.'s December 31, 2014 statements of financial position are provided below (in 000s): Cash Accounts receivable Inventory Property, plant, and equipment, net Accounts payable Long-term liabilities Common shares Retained earnings Book Value Parent $ 420 380 700 2,820 $4,320 S 380 1,990 600 1,350 $4,320 Fair Value $ 420 395 650 2,540 $ 380 1,500 $ Book Value 150 510 320 1,860 $2,840 $ 260 1,540 600 440 $ 2,840 Child Fair Value $ 150 560 400 1950 $ 300 1,540 Property, plant, and equipment for Child Ltd. is depreciated using the straight-line method. It has a remaining useful life of 5 years. During 2015, the following transactions between Parent and Child occurred: 1. Child Ltd. purchased merchandise for $300,000 from Parent Co. Parent's gross margin is 30% of the selling price. Child Ltd. sold 65% of this merchandise prior to December 31, 2015. 2 Parent Co. purchased merchandise for $120,000 from Child Ltd. Child's gross margin is 25% of the selling price. Parent had 10% of the inventory remaining at year end. Required: 1. Prepare the consolidated statement of financial position at the date of acquisition. Show all of your work. (21 Marks) Assets: Cash Accounts receivable Inventory Property, plant, and equipment, net. TOTAL ASSETS Liabilities: Accounts payable Long-term liabilities Parent Co. Consolidated Statement of Financial Position January 1, 2015 (in 000s) Shareholders' equity: Common shares Retained earnings TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2. Provide the eliminations and adjustments related to the 2015 transactions between Parent and Child for 2015. (10 Marks) Debit Credit 3. Provide any necessary eliminations and adjustments related to the 2015 transactions between Parent Child for 2016. (4 Marks) Debit Credit 4. Prepare the amortization table for 2015. (5 Marks) PROBLEM Answer in the space Provided. (40 Marks) On January 1, 1014, Maple Co., a publicly traded company, purchased 8,000 shares of Oak Inc. for $108,000. Oak has 40,000 shares issued and outstanding. While Maple purchased these shares for strategic purposes, Oak has blocked all attempts made by Maple to gain representation on the board of directors. Maple is considering selling the shares since they are concerned that their inability to influence Oak will result in variations in their earnings that are outside of their control. During the next two years, the following information was available for Oak. Year End 2014 2015 Net income (loss) Dividends declared $35,000 $20,000 $25,000 $25,000 Maple sold all of its 8,000 shares in Oak on December 31, 2015. Share price $17.50 $12,25 Required: 1. What method should Maple Co. use to account for its investment in Oak Inc.? Justify your answer using the information provided above. (4 Marks) 3. Assuming Maple Co. classifies this investment as FVTPL, prepare the journal entries for the two years related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (13 Marks) Debit Date Credit 4. Assuming Maple Co. classifies this investment using Equity method, prepare the journal entries for the two years related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (13 Marks) Debit Date Credit 5. Assuming Maple Co. classifies this investment using Cost method, prepare the journal entries for the two years related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (13 Marks) Date Debit Credit 6. Assuming Maple records the investment using the cost method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 6. Assuming Maple records the investment using the cost method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 7. Assuming Maple records the investment using the equity method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 8. Assuming Maple records the investment using the FVTPL method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 9. Assuming Maple records the investment using the FVTOCI method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 10. Assuming Maple did not sell the investment in Oak and records using the cost method, but reports using the equity method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 11. Assuming Maple did not sell the investment in Oak and records using the equity method, but reports using the cost method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 12. Assuming Maple did not sell the investment in Oak and records using the FVTPL method, but reports using the FVTOCI method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 13. Assuming Maple did not sell the investment in Oak and records using the FVTOCI method, but reports using the FVTPL method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 14. Assuming Maple did not sell the investment in Oak and records using the cost method, and reports using the cost method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 15. Assuming Maple did not sell the investment in Oak and records using the equity method, and reports using the equity method, prepare the adjustment entries for the two years related this investment. (10 Marks) For 2014: For 2015: Debit Credit 16. Assuming Maple did not sell the investment in Oak and records using the FVTPL method, and reports using the FVTPL method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 17. Assuming Maple did not sell the investment in Oak and records using the FVTOCI method, but reports using the FVTOCI method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 18. Assuming Maple did not sell the investment in Oak and reports using the equity method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks) 2014 (2 Marks): 2015 (2 Marks): 19. Assuming Maple did not sell the investment in Oak and reports using the cost method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks) 2014 (2 Marks): 2015 (2 Marks): 20. Assuming Maple did not sell the investment in Oak and reports using the FVTPL method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks) 2014 (2 Marks): 2015 (2 Marks): 21. Assuming Maple did not sell the investment in Oak and reports using the FVTOCI method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks) PROBLEM Answer in the space provided. (40 Marks) On January 1, 2015, Parent Co. purchased 100% of the outstanding common shares of Child Ltd. for $900,000 in shares and $350,000 in cash. Parent Co. and Child Ltd.'s December 31, 2014 statements of financial position are provided below (in 000s): Cash Accounts receivable Inventory Property, plant, and equipment, net Accounts payable Long-term liabilities Common shares Retained earnings Book Value Parent $ 420 380 700 2,820 $4,320 S 380 1,990 600 1,350 $4,320 Fair Value $ 420 395 650 2,540 $ 380 1,500 $ Book Value 150 510 320 1,860 $2,840 $ 260 1,540 600 440 $ 2,840 Child Fair Value $ 150 560 400 1950 $ 300 1,540 Property, plant, and equipment for Child Ltd. is depreciated using the straight-line method. It has a remaining useful life of 5 years. During 2015, the following transactions between Parent and Child occurred: 1. Child Ltd. purchased merchandise for $300,000 from Parent Co. Parent's gross margin is 30% of the selling price. Child Ltd. sold 65% of this merchandise prior to December 31, 2015. 2 Parent Co. purchased merchandise for $120,000 from Child Ltd. Child's gross margin is 25% of the selling price. Parent had 10% of the inventory remaining at year end. Required: 1. Prepare the consolidated statement of financial position at the date of acquisition. Show all of your work. (21 Marks) Assets: Cash Accounts receivable Inventory Property, plant, and equipment, net. TOTAL ASSETS Liabilities: Accounts payable Long-term liabilities Parent Co. Consolidated Statement of Financial Position January 1, 2015 (in 000s) Shareholders' equity: Common shares Retained earnings TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2. Provide the eliminations and adjustments related to the 2015 transactions between Parent and Child for 2015. (10 Marks) Debit Credit 3. Provide any necessary eliminations and adjustments related to the 2015 transactions between Parent Child for 2016. (4 Marks) Debit Credit 4. Prepare the amortization table for 2015. (5 Marks) PROBLEM Answer in the space Provided. (40 Marks) On January 1, 1014, Maple Co., a publicly traded company, purchased 8,000 shares of Oak Inc. for $108,000. Oak has 40,000 shares issued and outstanding. While Maple purchased these shares for strategic purposes, Oak has blocked all attempts made by Maple to gain representation on the board of directors. Maple is considering selling the shares since they are concerned that their inability to influence Oak will result in variations in their earnings that are outside of their control. During the next two years, the following information was available for Oak. Year End 2014 2015 Net income (loss) Dividends declared $35,000 $20,000 $25,000 $25,000 Maple sold all of its 8,000 shares in Oak on December 31, 2015. Share price $17.50 $12,25 Required: 1. What method should Maple Co. use to account for its investment in Oak Inc.? Justify your answer using the information provided above. (4 Marks) 3. Assuming Maple Co. classifies this investment as FVTPL, prepare the journal entries for the two years related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (13 Marks) Debit Date Credit 4. Assuming Maple Co. classifies this investment using Equity method, prepare the journal entries for the two years related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (13 Marks) Debit Date Credit 5. Assuming Maple Co. classifies this investment using Cost method, prepare the journal entries for the two years related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (13 Marks) Date Debit Credit 6. Assuming Maple records the investment using the cost method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 6. Assuming Maple records the investment using the cost method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 7. Assuming Maple records the investment using the equity method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 8. Assuming Maple records the investment using the FVTPL method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 9. Assuming Maple records the investment using the FVTOCI method, prepare the journal entries for the two year related to this investment. I Mark will be deducted for each unnecessary journal entry included in the solution (9 Marks) Date Debit Credit 10. Assuming Maple did not sell the investment in Oak and records using the cost method, but reports using the equity method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 11. Assuming Maple did not sell the investment in Oak and records using the equity method, but reports using the cost method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 12. Assuming Maple did not sell the investment in Oak and records using the FVTPL method, but reports using the FVTOCI method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 13. Assuming Maple did not sell the investment in Oak and records using the FVTOCI method, but reports using the FVTPL method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 14. Assuming Maple did not sell the investment in Oak and records using the cost method, and reports using the cost method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 15. Assuming Maple did not sell the investment in Oak and records using the equity method, and reports using the equity method, prepare the adjustment entries for the two years related this investment. (10 Marks) For 2014: For 2015: Debit Credit 16. Assuming Maple did not sell the investment in Oak and records using the FVTPL method, and reports using the FVTPL method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 17. Assuming Maple did not sell the investment in Oak and records using the FVTOCI method, but reports using the FVTOCI method, prepare the adjustment entries for the two years related to this investment. (10 Marks) For 2014: For 2015: Debit Credit 18. Assuming Maple did not sell the investment in Oak and reports using the equity method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks) 2014 (2 Marks): 2015 (2 Marks): 19. Assuming Maple did not sell the investment in Oak and reports using the cost method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks) 2014 (2 Marks): 2015 (2 Marks): 20. Assuming Maple did not sell the investment in Oak and reports using the FVTPL method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks) 2014 (2 Marks): 2015 (2 Marks): 21. Assuming Maple did not sell the investment in Oak and reports using the FVTOCI method, provide the investment in Oak's carrying value for year end 2014 and 2015. (4 Marks)
Expert Answer:
Answer rating: 100% (QA)
The provided text contains several accounting problems related to the preparation of financial state... View the full answer
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
Students also viewed these accounting questions
-
On December 31, 19X9, Hari Company (Hari) purchased 70% of the outstanding common shares of Amin Limited (Amin) for $ 7,000. On that date, Amins shareholders equity consisted of common shares of $...
-
On January 1, 20X2, Porter Inc. purchased 80% of the outstanding voting shares of Sloan Ltd. for $ 3,000,000 in cash. On this date, Sloan had common shares outstanding in the amount of $ 2,200,000...
-
On January 1, 2011, Press Company acquires 90% of the common stock of Soap Company for $324,000. On this date, Soap has total owners equity of $270,000, including retained earnings of $100,000. On...
-
A woman is 5'6" and 150 lbs. pre-pregnancy. Calculate the healthy weight range (lowest to highest) you expect to see just prior to delivery. Include all math to show how you found the answer. A woman...
-
First Bank Financial Services is considering two plans for raising $800,000 to expand operations. Plan A is to borrow at 10%, and plan B is to issue 200,000 shares of common stock at $4.00 per share....
-
What are the major benefits of business ownership?
-
What do you think might cause a company to reject a proposed capital project even though it promises a return significantly higher than the cost of capital?
-
The Ombudsman Foundation is a private not-for-profit organization providing training in dispute resolution and conflict management. The Foundation had the following pre-closing trial balance at...
-
Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $26,525....
-
A centrifugal pump delivers water through a 40-cm-diameter, 1,000-m-long commercial steel pipe from reservoir A to B with EA = 920.5 m and 8 = 935.5 m. Friction losses vary according to the Moody...
-
Each box plot summarizes the number of miles driven each day for 30 days in each month. The box plots represent, in order, the months of August, September, October, November, and December. Arrange...
-
The Board of Directors of MNP Bank Limited desires to approve the proposed name change in its coming AGM which will be held on May, 2023. Do you think, is it possible to approve the special agendum...
-
This year Randy paid $29,050 of interest on his residence. (Randy borrowed $464,000 to buy his residence, which is currently worth $514,000.) Randy also paid $2,850 of interest on his car loan and...
-
Kingbird Company has 23,000 shares of $1 par common stock issued and outstanding. The company also has 3,400 shares of $100 par 3% cumulative preferred stock outstanding. The company did not pay the...
-
When a femoropopliteal vein segment is harvested in conjunction with a coronary artery bypass graft, what additional code(s) should be assigned (if any)?
-
Refer to the information below for CakePops Inc. a. Calculate the profit or loss for 2023. b. What caused common shares to change during 2023? Show your calculations. c. What caused the change in...
-
I can choose anyone for this activity: Activity 1 LGBTQIA+ clients have experienced discrimination from some counselors and that has been supported by some state legislators. On p. 125, I want your...
-
What is beacon marketing? What are digital wallets?
-
Multiple Choice Questions 1. Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2012. On that date, Paars equipment (10-year remaining life) has a book value of $420,000 but a fair...
-
Multiple Choice Questions 1. Which of the following statements is correct about the reporting of governmental funds? a. Fund financial statements measure revenues and expenditures based on modified...
-
In governmental accounting, what is the difference between an acquisition and a merger?
-
B Arkwright started in business on 1 January 19X5 with 10,000 in a bank account. Unfortunately he did not keep proper books of account. He is forced to submit a calculation of profit for the year...
-
A J Kirkwood is a dealer who has not kept proper books of account. At 31 August 19X6 his state of affairs was as follows: During the year to 31 August 19X7 his drawings amounted to 7,560. Winnings...
-
25.4 P Balance Sheet as at 31 December 19X5 Investment in S: 30,000 shares bought 31.12.19X4 53,400 Fixed assets 60,000 Less Depreciation for year 6,000 54,000 Current assets 10,600 118,000 Share...
Study smarter with the SolutionInn App