On January 1, 20X5, Pan Corp. purchased 85% of the outstanding voting common shares of Spoon...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 20X5, Pan Corp. purchased 85% of the outstanding voting common shares of Spoon Inc. for $850,000 cash. On this date, Spoon reported common shares of $400,000 and retained earnings of $500,000. Spoon's identifiable assets and liabilities had fair values equal to their carrying values. Additional information: • The investment in the subsidiary was found to be impaired by $10,000 in 20X7. The entire impairment loss was allocated to goodwill. • On January 1, 20X6, Spoon sold a trademark to Pan for $80,000. On this date, the trademark had a carrying value of $70,000 on the books of Spoon and a remaining useful life of five years. On September 1, 20X8, Pan sold land to Spoon at a $30,000 loss. Spoon still owns this land as of December 31, 20X8. The land asset was not impaired at time of sale. • During 20X8, Pan's inventory sales to Spoon were $70,000. Spoon still had $20,000 of this inventory on hand at December 31, 20X8. Inventory purchased from Pan and still on hand at December 31, 20X7, was $7,000. Pan prices intercompany sales to yield a 25% gross margin. • During 20X8, Spoon's inventory sales to Pan were $40,000. Pan still had $8,000 of this inventory on hand at December 31, 20X8. Inventory purchased from Spoon and still on hand at December 31, 20X7, was $4,000. Spoon's gross margin on sales is 30% for all intercompany transactions. Pan paid dividends of $15,000 and Spoon paid dividends of $20,000 in 20X8. Pan uses the cost method to record its investment in Spoon. Pan applies the fair value entity method (FVE) for goodwill calculations. • Spoon has not had any changes to its common share account since acquisition. The following are the statements of comprehensive income for the year ended December 31, 20X8, for Pan and Spoon: Statements of comprehensive income For the year ended December 31, 20X8 Pan $840,000 630,000 68.000 142,000 56.800 S 85,200 Spoon $710,000 497,000 54,000 159,000 63.600 $ 95.400 Sales and other income Cost of goods sold Amortization expense Income tax expense (40%) Net income and comprehensive income Selected statement of financial position accounts at December 31, 20X8, are as follows: Inventory Property, plant, and equipment (net) (includes land) Trademark (net) Retained eamings Pan $ 95,000 416,000 32,000 984,000 Spoon $ 58,000 397,000 748,000 1. What is the consolidated net income for the year ended December 31, 20X8? a) $144,130 b) $170,130 c) $178,930 d) $180,130 2. What amount would be reported on the consolidated statement of financial position for trademarks at December 31, 20X8? a) $22,000 b) $28,000 c) $36,000 d) $38,000 3. What amount would be reported on the consolidated statement of financial position for inventory? a) $145,600 b) $148,550 c) $148,560 d) $160,400 On January 1, 20X5, Pan Corp. purchased 85% of the outstanding voting common shares of Spoon Inc. for $850,000 cash. On this date, Spoon reported common shares of $400,000 and retained earnings of $500,000. Spoon's identifiable assets and liabilities had fair values equal to their carrying values. Additional information: • The investment in the subsidiary was found to be impaired by $10,000 in 20X7. The entire impairment loss was allocated to goodwill. • On January 1, 20X6, Spoon sold a trademark to Pan for $80,000. On this date, the trademark had a carrying value of $70,000 on the books of Spoon and a remaining useful life of five years. On September 1, 20X8, Pan sold land to Spoon at a $30,000 loss. Spoon still owns this land as of December 31, 20X8. The land asset was not impaired at time of sale. • During 20X8, Pan's inventory sales to Spoon were $70,000. Spoon still had $20,000 of this inventory on hand at December 31, 20X8. Inventory purchased from Pan and still on hand at December 31, 20X7, was $7,000. Pan prices intercompany sales to yield a 25% gross margin. • During 20X8, Spoon's inventory sales to Pan were $40,000. Pan still had $8,000 of this inventory on hand at December 31, 20X8. Inventory purchased from Spoon and still on hand at December 31, 20X7, was $4,000. Spoon's gross margin on sales is 30% for all intercompany transactions. Pan paid dividends of $15,000 and Spoon paid dividends of $20,000 in 20X8. Pan uses the cost method to record its investment in Spoon. Pan applies the fair value entity method (FVE) for goodwill calculations. • Spoon has not had any changes to its common share account since acquisition. The following are the statements of comprehensive income for the year ended December 31, 20X8, for Pan and Spoon: Statements of comprehensive income For the year ended December 31, 20X8 Pan $840,000 630,000 68.000 142,000 56.800 S 85,200 Spoon $710,000 497,000 54,000 159,000 63.600 $ 95.400 Sales and other income Cost of goods sold Amortization expense Income tax expense (40%) Net income and comprehensive income Selected statement of financial position accounts at December 31, 20X8, are as follows: Inventory Property, plant, and equipment (net) (includes land) Trademark (net) Retained eamings Pan $ 95,000 416,000 32,000 984,000 Spoon $ 58,000 397,000 748,000 1. What is the consolidated net income for the year ended December 31, 20X8? a) $144,130 b) $170,130 c) $178,930 d) $180,130 2. What amount would be reported on the consolidated statement of financial position for trademarks at December 31, 20X8? a) $22,000 b) $28,000 c) $36,000 d) $38,000 3. What amount would be reported on the consolidated statement of financial position for inventory? a) $145,600 b) $148,550 c) $148,560 d) $160,400
Expert Answer:
Related Book For
Advanced Accounting
ISBN: 978-0133451863
12th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
Posted Date:
Students also viewed these accounting questions
-
A surveyor wants to know the length of a tunnel built through a mountain. According to his equipment, he is located 54 meters from one entrance of the tunnel, at an angle of 56 to the perpendicular....
-
Pan Corporation purchased 80 percent of the outstanding voting common stock of Sal Corporation on January 2, 2011, for $1,200,000 cash. Sal's balance sheets on this date and on December 31, 2011, are...
-
The Ralston Company owns 35% of the outstanding voting shares of Purina Inc. Under what circumstances would Ralston determine that it is inappropriate to report this investment using the equity...
-
Write a detailed executive summary about the appropriation and advancement of Information and Communication Technology (ICT)
-
Consider the graph of the normal distribution in Figure 5.13, which shows the relative frequencies in a distribution of IQ scores. The distribution has a mean of 100 and a standard deviation of 16....
-
Listed below are the numbers of years it took for a random sample of college students to earn bachelors degrees (based on data from the National Center for Education Statistics). Use a 0.01...
-
The Single Audit Act evolved because: a. The GAO was overburdened with grant audits. b. Congress preferred that governmental auditors emphasize grant contracts rather than financial statements. c....
-
Arantxa Corporation has outstanding 20,000 shares of $5 par value common stock. On August 1, 2010, Arantxa reacquired 200 shares at $80 per share. On November 1, Arantxa reissued the 200 shares at...
-
Let x, y and z be integers. Prove that (e) if x and y are odd, then x + y is even. (g) if x and y are odd, then xy is odd.
-
Legendary for his business and investment acumen, Warren Buffett is frequently called the Oracle of Omaha after his birthplace in Omaha, Nebraska. As one of the worlds wealthiest business...
-
Heisenberg's uncertainty principle tells us that _____. the more accurately we know the position of a particle, theless accurately we can know the velocity of that particle the de Broglie wavelength...
-
Draft a letter to the publisher inviting the newspaper to host a public forum on Acme's proposed tank farm. For an Acme Petroleum letterhead, make up a mailing address, phone, and website address....
-
lamp corporation produced and sells a single producT. Data concerning that product appear below :selling price 1 1 0 : variable expense 2 9 . 7 0 : fixed expense per month 3 4 5 2 9 0 . Assume the...
-
What is a relational turning point that you or someone you know has encountered that may seem unusual? Why are relational turning points so subjective? Are there any that you think are universal?
-
Using Newton-Raphson method, x-2 is chosen as the first point to find the root of 3x+3=2x, what is the next x?
-
1. Compute the frequency of an EM wave with a wavelength of 0.0542 m. 2. How much more energy would a black body radiate at 900 K vs 300 K? 3. What wavelength of light do humans mostly radiate if the...
-
Rite Time Lighting has made the decision to "go public" through an initial public stock offering (IPO). Rite Time Lighting undertook this process to
-
Archangel Corporation prepared the following variance report. Instructions Fill in the appropriate amounts or letters for the question marks in the report. ARCHANGEL CORPORATION Variance...
-
Separate-company financial statements for Pun Corporation and its subsidiary, Son Company, at and for the year ended December 31, 2012, are summarized as follows (in thousands): ADDITIONAL...
-
The pretax accounting incomes of Pit Corporation and its 100 percent-owned subsidiary, Sol Company, for 2011 are as follows (in thousands): Pit Sol Sales ........................... $2,000...
-
Rit Corporation paid $686,000 for a 30 percent interest in Tel Corporation's outstanding voting stock on April 1, 2011. At December 31, 2010, Tel had net assets of $2,000,000 and only common stock...
-
A floating 40-in.-thick piece of ice sinks 1 in. with a \(500-\mathrm{lb}\) polar bear in the center of the ice. What is the area of the ice in the plane of the water level? For seawater, \(S=1.03\).
-
Obtain a photograph/image of a situation in which Archimedes's principle is important. Print this photo and write a brief paragraph that describes the situation involved.
-
A spherical balloon filled with helium at \(40^{\circ} \mathrm{F}\) and \(20 \mathrm{psia}\) has a 25 - \(\mathrm{ft}\) diameter. What load can it support in atmospheric air at \(40^{\circ}...
Study smarter with the SolutionInn App