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modern advanced accounting

Advanced Accounting 8th Edition Dennis M. Bline, Mary L. Fischer, Ted D. Skekel - Solutions

Exercise 1 (LO 1) Subsidiary stock dividend. On January 1, 20X1, Tiger Company purchased 90% of the outstanding stock of Lily Company for $800,000. At the time of the acquisition, Lily Company had the following stockholders’ equity:Common stock ($10 par) . . . . . . . . . . . . . . . . $300,000
Problem 7A-3 (LO 5) Balance sheet worksheet, intercompany inventory, bonds and capital lease. On January 1, 20X1, Press Company acquired 90% of the common stock of Solid Company for $317,000. On this date, Solid had total owners’ equity of $270,000, including retained earnings of $100,000.
Problem 7A-2 (LO 5) Balance sheet worksheet, mid-year purchase, intercompany bonds and inventory. Book Inc. acquired all of the outstanding $25 par common stock of Cray Inc. on June 30, 20X4, in exchange for 40,000 shares of its $25 par common stock. On June 30, 20X4, Book Inc. common stock closed
Problem 7A-1 (LO 5) Balance sheet worksheet, blocks, control with first, inventory, fixed asset sales. The December 31, 20X9 post-closing trial balances of Moot Corporation and its subsidiary, Ferris Corporation, are as follows:Moot Ferris Corporation Corporation Cash . . . . . . . . . . . . . . .
Problem 7-9 (LO 4) Worksheet, 2 subsidiaries, preferred stock, intercompany merchandise and fixed assets, bonds. The following information pertains to Titan Corporation and its two subsidiaries, Boat Corporation and Motor Corporation:a. The three corporations are all in the same industry and their
Problem 7-7 (LO 2, 3, 4) Analysis of block acquisitions, sale of interest, preferred stock. The following information is available regarding the investments of Billings Corporation in Chassel Company for the years 20X1–20X5:Date Transaction Interest Price 1/1/X1 . . . . . . . . . . . . . . . . .
Problem 7-5 (LO 2) Worksheet, blocks, control with first block, loans, fixed asset sales, intercompany merchandise. During 20X7, Away Company acquired a controlling interest in Stallman Inc. Trial balances of the companies at December 31, 20X7, are as follows:Away Stallman Company Inc.Cash . . . .
Problem 7-3 (LO 2) Worksheet, blocks, control with second block. On January 1, 20X4, Madden Company purchased a 20% interest in Clayton Company for $100,000. Two years subsequent to this purchase, Madden Company acquired an additional 45% interest in Clayton Company for $250,000.Balance sheets of
Problem 7-1 (LO 2) Worksheet, blocks, control with first block. The following determination and distribution of excess schedule was prepared on January 1, 20X2, the date on which Parish Company purchased a 60% interest in Sharper Company:Price paid . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise 10 (LO 4) Cost to equity conversion with preferred stock. On December 31, 20X4, Zigler Corporation purchased an 80% interest in the common stock of Kip Company for $420,000. The stockholders’ equity of Kip Company on December 31, 20X4, was as follows:8% cumulative preferred stock (2,000
Exercise 9 (LO 4) Equity adjustments with preferred stock. Acme Construction Company had the following stockholders’ equity on January 1, 20X1, the date on which Russell Company purchased an 80% interest in the common stock for $700,000:8% cumulative preferred stock (5,000 shares, $100 par) . . .
Exercise 8 (LO 4) D&D with preferred stock. On January 1, 20X2, Boelter Company purchased 80% of the outstanding common stock of Miller Corporation for $280,000. On this date, Miller Corporation stockholders’ equity was as follows:6% preferred stock (1,000 shares, $100 par) . . . . . . . . . . .
Exercise 7 (LO 3) Sale of interest, alternative remaining interests. Cecil Inc. purchased 24,000 shares of Browning Corporation, which equated to an 80% interest, on January 1, 20X5. The following determination and distribution of excess schedule was prepared:Price paid for investment in Browning .
Exercise 5 (LO 3) Sale of interest, loss of control. Rob Company purchased a 90% interest in Venlo Company for $415,000 on January 1, 20X3. Any excess of cost over book value was attributed to equipment, which is being depreciated over 20 years. Both companies end their reporting periods on
Exercise 4 (LO 2) Block purchase, influence, then control. Cleft Company purchased a 20% interest in Key Industries on January 1, 20X2, for $100,000 and another 60% interest on January 1, 20X4, for $360,000. Key had the following stockholders’ equity balances immediately prior to each
Exercise 2 (LO 2) Block purchase, control with first block. Barker Corporation purchased a 60% interest in Hard Knock Company on January 1, 20X1, for $150,000. On that date, Hard Knock Company had the following stockholders’ equity:Common stock ($10 par) . . . . . . . . . . . . $100,000 Retained
Exercise 1 (LO 1) Purchase of shares directly from subsidiary. Prior to January 2, 20X4, Peeple and Simple were separate corporations. Simple Corporation was contemplating a major expansion and sought to be purchased by a larger corporation with available cash. Peeple Corporation issued $1,200,000
5. Company S has the following stockholders’ equity on January 1, 20X5:Common stock, $1 par, 100,000 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 6% Preferred stock, $100 par, 2,000 shares . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 Paid-in capital in
4. Company P purchased an 80% interest (8,000 shares) in Company S for $800,000 on January 1, 20X1. Company S’s equity on that date was $900,000. Any excess of cost over book value was attributed to equipment with a 10-year life. On January 1, 20X5, Company S’s equity was $1,200,000. Company S
3. Company P purchases an 80% interest in Company S on January 1, 20X1, for $500,000.Company S had an equity of $450,000 on that date. On July 1, 20X6, Company P purchased another 10% interest for $150,000. Company S’s equity was $550,000 on January 1, 20X6, and it earned $50,000 evenly during
Problem 6-14 (LO 5) Equity income, taxation, inventory, fixed asset sale. On January 1, 20X6, Ashland Company purchased a 25% interest in Cramer Company for $195,000.Ashland Company prepared the following determination and distribution of excess schedule:Price paid for investment . . . . . . . . .
Problem 6-13 (LO 5) Equity income, inventory, fixed asset sale. Heinrich Company purchased an influential 25% interest in Fink Company on January 1, 20X6, for $320,000. At that time, Fink’s stockholders’ equity was $1,000,000.Fink Company assets had fair value similar to book value except for a
Problem 6-12 (LO 4) Worksheet, separate tax, simple equity, inventory, fixed asset sale, analyze price, later year. Refer to the preceding facts for Penstar’s acquisition of Solar common stock. Penstar accounts for its investment in Solar using the simple equity method, including income tax
Problem 6-11 (LO 4) Worksheet, separate tax, simple equity, inventory, fixed asset sale, analyze price. Refer to the preceding facts for Penstar’s acquisition of Solar common stock. Penstar uses the simple equity method to account for its investment in Solar. During 20X2, Solar sold $30,000 worth
Problem 6-10 (LO 4) Worksheet, separate tax, simple equity, inventory, fixed asset sale. On January, 1, 20X1, Pike Company acquired 70% of the common stock of Sun Company for $340,400 in a taxable combination. On this date, Sun had total owners’ equity of$422,000, including retained earnings of
Problem 6-9 (LO 3) Worksheet, consolidated taxation, simple equity, inventory, fixed asset sale, analyze price, later year. Refer to the preceding facts for Penstar’s acquisition of Solar common stock. Penstar uses the simple equity method to account for its investment in Solar. During 20X3,
Problem 6-7 (LO 3) Worksheet, consolidated taxation, simple equity, inventory, fixed asset sale. On January 1, 20X1, Pillar Company purchased an 80% interest in Stone Company for $890,000. On the date of acquisition, Stone had total owners’ equity of $800,000.Buildings, which have a 20-year life,
Problem 6-5 (LO 3) Consolidated income statement, affiliated firm for tax. On January 1, 20X1, Delta Corporation exchanged 12,000 shares of its common stock for an 80%interest in Moore Company. The stock issued had a par value of $10 per share and a fair value of $20 per share. On the date of
Problem 6-4 (LO 2) Consolidated EPS. On January 1, 20X2, Peanut Corporation acquired an 80% interest in Sunny Corporation. Information regarding the income and equity structure of the two companies as of the year ended December 31, 20X4, is as follows:
Problem 6-3 (LO 1) Comprehensive cash flow, direct method. Presented below are the consolidated workpaper balances of Bush Inc. and its subsidiary, Dorr Corporation, as of December 31, 20X6 and 20X5:Net Change Assets 20X6 20X5 Incr. (Decr.)Cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise 12 (LO 5) Sale of equity method investment. On January 1, 20X7, Lund Corporation purchased a 30% interest in Aluma-Boat Company for $200,000. At the time of the purchase, Aluma-Boat had total stockholders’ equity of $400,000. Any excess of cost over the Problem 6-1 (LO 1) Cash flow, year
Excess of cost over book value attributable to equipment (10-year life) . . . $ 32,000 During 20X5, Spancrete purchased $200,000 of goods from Werl. $20,000 of these purchases were in the December 31, 20X5 ending inventory. During 20X6, Spancrete purchased $250,000 of goods from Werl. $30,000 of
Exercise 10 (LO 5) Equity income with intercompany profits. Spancrete Corporation acquired a 30% interest in the outstanding stock of Werl Corporation on January 1, 20X5. At that time, the following determination and distribution of excess schedule was prepared:Price paid . . . . . . . . . . . . .
Exercise 9 (LO 5) Equity method investment with intercompany profits. Turf Company purchased a 30% interest in Minnie Company for $90,000 on January 1, 20X1, when Minnie had the following stockholders’ equity:Common stock ($10 par) . . . . . . . . . . . . . . . . $100,000 Paid-in capital in
Excess of cost over book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,000 Less excess attributable to equipment, 25% $40,000 (10-year life) . . . 10,000 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000 Like Company earned
Exercise 8 (LO 5) Equity income recording. Trailer Corporation purchased a 25% interest in Like Company for $110,000 on January 1, 20X7. The following determination and distribution of excess schedule was prepared:Price paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise 7 (LO 4) Tax allocation with separate taxation. The separate income statements of Cooper Company and its 60%-owned subsidiary, Vacant Company, for the year ended December 31, 20X7, are as follows:Cooper Vacant Company Company Sales . . . . . . . . . . . . . . . . . . . . . . . . $520,000
Exercise 5, but with separate taxation.) Decker Company purchased an 80% interest in the common stock of Ferris Company for $850,000 on January 1, 20X7. The price was $75,000 in excess of the book value of the underlying equity, and the excess was attributed to a patent with a 10-year life.During
Exercise 6 (LO 4) Separate taxation, intercompany transactions. (This is the same as
Exercise 5 (LO 3) Consolidated taxation, intercompany profits. Deko Company purchased an 80% interest in the common stock of Farelly Company for $850,000 on January 1, 20X7. The price was $75,000 in excess of the book value of the underlying equity, and the excess was attributed to a patent with a
Exercise 4 (LO 3) Taxation as consolidated company. On May 1, 20X6, Tuft Company purchased a 70% interest in Masat Company for $340,000. Tuft also paid $30,000 in direct acquisition costs. The following determination and distribution of excess schedule was prepared:Price paid for investment . . . .
Exercise 3 (LO 1) Cash flow, subsequent to year of purchase. Paridon Motors purchased an 80% interest in Super Battery Company on January 1, 20X2, for $700,000 cash. At that date, Super Battery Company had the following stockholders’ equity:Common stock ($10 par) . . . . . . . . . . . . . . . .
Exercise 2 (LO 1) Cash flow, issue stock, year of purchase. Duckworth Corporation purchased an 80% interest in Poladna Corporation on January 1, 20X3, in exchange for 5,000 Duckworth shares (market value of $18) plus $155,000 cash. The appraisal showed that some of Poladna’s equipment, with a
Exercise 1 (LO 1) Cash flow, cash payment, year of purchase. Batton Company purchased an 80% interest in Ricky Company for $500,000 cash on January 1, 20X3. Any excess of cost over book value was attributed to goodwill. To help pay for the acquisition, Batton Company issued 5,000 shares of its
11. Company R purchased a 25% interest in Company E on January 1, 1990, at its book value of $20,000. From 1990 until 1994, Company E earned a total of $200,000. From 1995 until 1999, it lost $300,000. In 20X0, Company E reported net income of $30,000. What is Company R’s investment income for
10. Company E reported net income of $100,000 for 20X1. Assume the income was earned evenly throughout the year. Dividends of $10,000 were paid on December 31. What will Company R report as investment income under the following ownership situations, if:a. Company R owned a 10% interest from 7/1 to
9. Company R owns a 30% interest in Company E, which it acquired at book value. Company E reported net income of $50,000 for 20X1 (ignore taxes). There was an intercompany sale of equipment at a gain of $20,000 on January 1, 20X1. The equipment has a 5-year life. What is Company R’s investment
8. Company R paid $200,000 for a 30% interest in Company E on January 1, 20X1. Company E’s total stockholders’ equity on that date was $500,000. The excess price was attributed to equipment with a 10-year life. During 20X1, Company E reported net income of $40,000 and paid total dividends of
7. Company S is an 80%-owned subsidiary of Company P. On January 1, 20X1, Company P sold equipment to Company S at a $50,000 profit. Assume a 30% corporate tax rate and an 80% dividend exclusion. The equipment has a 5-year life. The question is, would taxes have been paid on this profit and what
5. Company P had internally generated net income of $200,000 (excludes share of subsidiary income). Company P has 100,000 shares of outstanding common stock. Subsidiary Company S has a net income of $60,000 and 40,000 shares of outstanding common stock. Company P owns 100% of the Company S shares.
4. Company P had internally generated net income of $200,000 (excludes share of subsidiary income). Company P has 100,000 shares of outstanding common stock. Subsidiary Company S has a net income of $60,000 and 40,000 shares of outstanding common stock. What is consolidated basic EPS, if:a. Company
3. (Issue 1 with a noncontrolling interest). P Company acquired 80% of the common stock of the S Company for an agreed-upon price of $640,000. The book value of the net assets is$600,000, which includes $50,000 of subsidiary cash equivalents. How will this transaction affect the cash flow statement
2. What will be the effect of the above purchase on cash flow statements prepared in periods after the year of the purchase?
1. P Company acquired 100% of the common stock of the S Company for an agreed-upon price of $800,000. The book value of the net assets is $600,000, which includes $50,000 of subsidiary cash equivalents. How will this transaction affect the cash flow statement of the consolidated firm in the period
Problem 5A-2 (LO 7) Eliminations only, sales-type lease with unguaranteed residual value. Penn Company leased a production machine to its 80%-owned subsidiary, Smith Company. The lease agreement, dated January 1, 20X1, requires Smith to pay $18,000 each January 1 for three years. There is an
Problem 5-16 (LO 4,5,6) 80%, cost, operating, sales-type and financing leases. Patter Inc. purchased an 80% interest in Swampy Company for $480,000 on January 1, 20X1, when Swampy had the following stockholders’ equity:Common stock ($10 par) . . . . . . . . . . . . $100,000 Additional paid-in
Problem 5-14 (LO 5,6) 80%, equity, sales-type lease, merchandise, later year. Refer to the preceding facts for Press’s acquisition of Sabre common stock. Press uses the simple equity method to account for its investment in Sabre. On January 1, 20X3, Press held merchandise acquired from Sabre for
Problem 5-13 (LO 5,6) 80%, equity, sales-type lease, merchandise. Refer to the preceding facts for Press’s acquisition of Sabre common stock. Press uses the simple equity method to account for its investment in Sabre. On January 1, 20X2, Press held merchandise acquired from Sabre for $10,000.
Problem 5-12 (LO 5) 80%, equity, financing lease, merchandise, later year. Refer to the preceding facts for Press’ acquisition of Sabre common stock. Press uses the simple equity method to account for its investment in Sabre. On January 1, 20X3, Press held merchandise acquired from Sabre for
Problem 5-11 (LO 5) 80%, equity, financing lease, merchandise. Refer to the preceding facts for Press’s acquisition of Sabre common stock. Press uses the simple equity method to account for its investment in Sabre. On January 1, 20X2, Press held merchandise acquired from Sabre for $10,000. During
Problem 5-10 (LO 4) 100%, cost, operating lease. Sym Corporation, a wholly owned subsidiary of Paratec Corporation, leased equipment from its parent company on August 1, 20X6.The terms of the agreement clearly do not require the lease to be accounted for as a capital lease.Both entities are
Problem 5-7 (LO 2) 80%, equity, effective interest bonds purchased last year, inventory profits. Refer to the preceding facts for Postman’s acquisition of 80% of Sparkle’s common stock. Postman uses the simple equity method to account for its investment in Sparkle.On January 1, 20X6, Postman
Problem 5-5 (LO 2) 80%, equity, straight-line bonds purchased last year, inventory profits. Refer to the preceding facts for Packard’s acquisition of 80% of Stackner’s common stock. Packard uses the simple equity method to account for its investment in Stackner. On January 1, 20X6, Stackner
Problem 5-3 (LO 2) 80%, cost method, straight-line bonds, fixed asset sale. On January 1, 20X3, Warehouse Outlets had the following balances in its stockholders’ equity accounts: Common Stock ($10 par), $800,000; Paid-In Capital in Excess of Par, $625,000; and Retained Earnings, $450,000. General
Problem 5-1 (LO 2) Eliminations, equity, 100%, bonds with straight-line. Since its 100% acquisition of Drew Corporation stock on December 31, 20X2, Justin Corporation has maintained its investment under the equity method. However, due to Drew’s earning potential, the price included a $40,000
Exercise 8 (LO 5) Direct-financing lease eliminations. On January 1, 20X1, Traylor Company, an 80%-owned subsidiary of Parker Electronics Inc., signed a 4-year direct-financing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1
Exercise 7 (LO 4) Operating lease, entries, and eliminations. Grande Machinery Company purchased, for cash, a $60,000 custom machine on January 1, 20X1. The machine has an estimated 5-year life and will be straight-line depreciated with no salvage value. The machine was then leased to Sunshine
Exercise 6 (LO 2) Bond calculations, effective interest. Lift Industries, a 90%-owned subsidiary of Shark Incorporated, issued $100,000 of 12-year, 8% bonds on January 1, 20X5, to yield 7% interest. Interest is paid annually on January 1. The effective interest method is used to amortize the
Exercise 5 (LO 2) Bond eliminations, partial purchase. Carlton Company is an 80%-owned subsidiary of Mirage Company. On January 1, 20X1, Carlton sold $100,000 of 10-year, 7% bonds for $101,000. Interest is paid annually on January 1. The market rate for this type of bond was 9% on January 2, 20X3,
Exercise 4 (LO 2) Bond eliminations, effective interest. On January 1, 20X4, Dunbar Corporation, an 85%-owned subsidiary of Garfield Industries, received $48,055 for $50,000 of 8%, 5-year bonds it issued when the market rate was 9%. When Garfield Industries purchased these bonds for $47,513 on
Exercise 2 (LO 1) Effect of intercompany bonds on income. Dennis Company is an 80%-owned subsidiary of Kay Industries. Dennis Company issued 10-year, 8% bonds in the amount of $1,000,000 on January 1, 20X1. The bonds were issued at face value, and interest is payable each January 1. On January, 1,
Exercise 1 (LO 1) Options to lower interest cost. Marcus Engineering is a large corporation with the ability to obtain financing by selling its bonds at favorable rates. Currently, it pays 7% interest on its 10-year bond issues. In the past year, Marcus purchased an 80% interest in a subsidiary,
7. A parent company is a producer of production equipment, some of which is acquired and used by the parent’s subsidiary companies. The parent offers a discount to the subsidiaries but still earns a significant profit on the sales of equipment to a subsidiary. Is there any difference in the
6. A parent company may want to shift profits to the controlling interest and may use intercompany capital leases to accomplish that end. Is there an opportunity to do that with both direct financing and sales-type leases? What are the differences between the two types of leases with respect to
5. Your friend is a noncontrolling interest shareholder in a large company. He knows that the subsidiary company leases most of its assets from the parent company under operating leases.He further believes that the lease rates are in excess of market rates. He made his concern known to the parent
4. Company P purchased $100,000 of subsidiary Company S’s bonds for $95,000 on January 1, 20X1. The bonds were issued at face value, pay interest at 10% annually, and have 5 years to maturity. What will the impact of this transaction be on consolidated net income for the current and future 4
3. Subsidiary Company S has $1,000,000 of bonds outstanding at 12% annual interest. The bonds have 10 years to maturity. If the parent, Company P, is able to purchase the bonds at a price that reflects 10% annual interest, how will the noncontrolling interest be affected in the current and future
Problem 4A-2 (LO 2, 3, 7) Vertical worksheet, 80%, cost, several excess distributions, merchandise, equipment sales. (This is similar to Problem 4-11; it uses the simple equity method and vertical worksheet format.) On January 1, 20X1, Peanut Company acquired 80% of the common stock of Sam Company
Problem 4A-1 (LO 2, 3, 7) Vertical worksheet, 100%, cost, fixed asset and merchandise sales. Arther Corporation acquired all of the outstanding $10 par voting common stock of Trent Inc. on January 1, 20X2, in exchange for 50,000 shares of its $10 par voting common stock. On December 31, 20X1, the
Problem 4-15 (LO 2, 3) 80%, equity, several excess distributions, inventory, fixed assets, parent and subsidiary sales. Refer to the preceding facts for Purple’s acquisition of Simple common stock. On January 1, 20X3, Simple held merchandise sold to it from Purple for$12,000. This beginning
Problem 4-14 (LO 2, 3) 80%, equity, several excess distributions, inventory, fixed assets, parent and subsidiary sales. Refer to the preceding facts for Purple’s acquisition of Simple common stock. On January 1, 20X2, Simple held merchandise sold to it from Purple for$14,000. This beginning
Problem 4-12 (LO 2, 3) 80%, cost, several excess distributions, merchandise, equipment sales. (This is the same as Problem 4-11 except for use of the cost method.) On January 1, 20X1, Peanut Company acquired 80% of the common stock of Sam Company for $200,000.On this date, Sam had total owners’
Problem 4-11 (LO 2, 3) 80%, equity, several excess distributions, merchandise, equipment sales. On January 1, 20X1, Peanut Company acquired 80% of the common stock of Sam Company for $200,000. On this date, Sam had total owners’ equity of $200,000. During 20X1 and 20X2, Peanut has appropriately
Problem 4-10 (LO 2, 5) 90%, cost, merchandise, note payable. The December 31, 20X2 trial balances of the Pettie Corporation and its 90%-owned subsidiary Sunny Corporation are as follows:Pettie Sunny Corporation Corporation Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Problem 4-9 (LO 2, 3, 4) 100%, cost, merchandise sales, percentage-of-completion contracts. Pardon Inc. purchased 100% of the common stock of Slarno Corporation for$150,000 in cash on June 30, 20X1. At that date, Slarno’s stockholders’ equity was as follows:Common stock ($1 par) . . . . . . . .
Problem 4-8 (LO 3) 80%, equity, several excess distributions, fixed asset sale by parent and subsidiary. Refer to the preceding facts for Polka’s acquisition of Salsa common stock. On January 1, 20X2, Salsa held merchandise sold to it from Polka for $20,000. During 20X2, Polka sold merchandise to
Problem 4-7 (LO 3) 80%, equity, several excess distributions, fixed asset sale. Refer to the preceding facts for Polka’s acquisition of Salsa common stock. On January 1, 20X2, Polka held merchandise sold to it from Salsa for $12,000. This beginning inventory had an applicable gross profit of 25%.
Problem 4-6 (LO 3) 80%, equity, fixed asset sales by subsidiary and parent. On September 1, 20X1, Parcel Corporation purchased 80% of the outstanding common stock of Sack Corporation for $152,000. On that date, Sack’s net book values equaled fair values, and there was no excess of cost or book
Problem 4-5 (LO 2) 80%, equity, beginning and ending inventory, writedown, note. On January 1, 20X1, Silvio Corporation exchanged on a 1-for-3 basis common stock it held in its treasury for 80% of the outstanding stock of Jenkins Company. Silvio Corporation common stock had a market price of $40
Problem 4-4 (LO 2) 70%, equity, beginning and ending inventory, parent and subsidiary seller. Refer to the preceding facts for Panther’s acquisition of Spider common stock.On January 1, 20X2, Panther held merchandise acquired from Spider for $10,000. This beginning inventory had an applicable
Problem 4-3 (LO 2) 70%, equity, beginning and ending inventory, subsidiary seller. Refer to the preceding facts for Panther’s acquisition of Spider common stock. On January 1, 20X2, Panther held merchandise acquired from Spider for $8,000. This beginning inventory had an applicable gross profit
Problem 4-2 (LO 2) 80%, cost, beginning and ending inventory. On April 1, 20X1, Baxter Corporation purchased 80% of the outstanding stock of Crystal Company for $425,000.A condensed balance sheet of Crystal Company at the purchase date follows:All book values approximated fair values on the
Problem 4-1 (LO 2) 100%, equity, ending inventory. On January 1, 20X1, 100% of the outstanding stock of Solid Company was purchased by Plaid Corporation for $3,200,000. At that time, the fair value and book value of Solid’s net assets equaled $2,800,000. The excess is attributable to equipment
Exercise 11 (LO 5) Intercompany note. Saratoga Company owns 80% of the outstanding common stock of Windsor Company. On May 1, 20X3, Windsor Company arranged a 1-year,$50,000 loan from Saratoga Company. The loan agreement specified that interest would accrue at the rate of 6% per annum and that all
Exercise 10 (LO 2, 3) Merchandise and fixed asset sale. Peninsula Company owns an 80% controlling interest in the Sandbar Company. Sandbar regularly sells merchandise to Peninsula, which then sold to outside parties. The gross profit on all such sales is 40%. On January 1, 20X1, Peninsula sold land
Exercise 9 (LO 3) Fixed asset sales by parent and subsidiary. The separate income statements of Dark Company and its 90%-owned subsidiary, Light Company, for the year ended December 31, 20X2, are as follows:
Exercise 8 (LO 4) Percentage-of-completion method. Apple Contractors, an 80%-owned subsidiary, is constructing a warehouse for its parent, Plum Corporation. The following information is available on December 31, 20X1:Apple uses the percentage-of-completion method to account for its long-term
Exercise 7 (LO 4) Completed-contract method. Janis Company contracted with its 80%-owned subsidiary, Essuman Equipment Company, for the construction of two stamping machines.The first machine was completed and put into operation on July 1, 20X1. It cost Essuman $60,000 and has a 5-year estimated
Exercise 6 (LO 3) Resale of intercompany asset. Hilton Corporation sold a press to its 80%-owned subsidiary, Agri Fab Inc., for $5,000 on January 1, 20X2. The press originally was purchased by Hilton on January 1, 20X1, for $20,000, and $6,000 of depreciation for 20X1 had been recorded. The fair
Exercise 5 (LO 3) Land and building profit. Wavemasters Inc. owns an 80% interest in Sayner Development Company. In a prior period, Sayner Development purchased for $50,000 a parcel of land for $50,000. During 20X1, it constructed a building on the land at a cost of$500,000. The land and building

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