Son Corporation's recorded assets and liabilities are equal to their fair values on July 1, 2017, when

Question:

Son Corporation's recorded assets and liabilities are equal to their fair values on July 1, 2017, when Pop Corporation purchases 36,000 shares of Son common stock for $900,000. Identifiable net assets of Son on this date are $855,000, and Son's stockholders' equity consists of $400,000 of $10 par common stock and $455,000 retained earnings.

Son has net income for 2017 of $40,000 earned evenly throughout the year and declares no dividends.

REQUIRED

1. Determine the total value of Son's net assets at July 1, 2017, under entity theory.

2. Determine goodwill that would appear in a consolidated balance sheet of Pop Corporation and Subsidiary at July 1, 2017, under (a) entity theory and (b) parent-company theory.

3. Determine Pop's investment income from Son on an equity basis for 2017.

4. Determine noncontrolling interest in Son that will be reported in the consolidated balance sheet at December 31, 2017, under entity theory.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...