Assume that a parent company acquired 80% of the outstanding voting common stock of a subsidiary...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Assume that a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2012. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approximated their recorded book values except for a patent, which had a fair value of $100,000 and no recorded book value. On the date of acquisition, the patent had 5 years of remaining useful life and the parent company amortizes its intangible assets using straight line amortization. During the year ended December 31, 2013, the subsidiary recorded sales to the parent in the amount of $110,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent's inventory at December 31, 2013. The following summarized pre-consolidation financial statements are for the parent and the subsidiary for the year ended December 31, 2013: Income statement: Revenues Equity income Expenses Net income Retained earnings statement: BOY retained earnings Net income Dividends declared EOY retained earnings Balance sheet: Current assets Equity investment. Noncurrent assets Investor Investee $2,400,000 $322,000 107,000 (1,600,000) (160,000) $907,000 $162,000 0 $752,000 $40,000 907,000 162,000 (64,000) (40,000) $1,595,000 $162,000 $800,000 $102,000 235,000 4,000,000 300,000 $5,035,000 $402,000 Total assets Liabilities $2,640,000 $160,000 Common stock & APIC 800,000 80,000 Retained earnings 1,595,000 162,000 Total liabilities & stockholders' equity $5,035,000 $402,000 Based on this information, determine the balance for Noncontrolling Interest: O$32,400 O$24,200 O$58,750 O$18,750 Assume that a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2012. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approximated their recorded book values except for a patent, which had a fair value of $100,000 and no recorded book value. On the date of acquisition, the patent had 5 years of remaining useful life and the parent company amortizes its intangible assets using straight line amortization. During the year ended December 31, 2013, the subsidiary recorded sales to the parent in the amount of $110,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent's inventory at December 31, 2013. The following summarized pre-consolidation financial statements are for the parent and the subsidiary for the year ended December 31, 2013: Income statement: Revenues Equity income Expenses Net income Retained earnings statement: BOY retained earnings Net income Dividends declared EOY retained earnings Balance sheet: Current assets Equity investment. Noncurrent assets Investor Investee $2,400,000 $322,000 107,000 (1,600,000) (160,000) $907,000 $162,000 0 $752,000 $40,000 907,000 162,000 (64,000) (40,000) $1,595,000 $162,000 $800,000 $102,000 235,000 4,000,000 300,000 $5,035,000 $402,000 Total assets Liabilities $2,640,000 $160,000 Common stock & APIC 800,000 80,000 Retained earnings 1,595,000 162,000 Total liabilities & stockholders' equity $5,035,000 $402,000 Based on this information, determine the balance for Noncontrolling Interest: O$32,400 O$24,200 O$58,750 O$18,750
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Assume that a parent company acquired a subsidiary on January 1, 2013. The purchase price was $500,000 million in excess of the subsidiary's book value of Stockholders' Equity on the acquisition...
-
Assume a parent company acquires 80% of the outstanding voting common stock of a subsidiary on January 1, 2018. One the acquisition date, the identifiable net assets of the subsidiary had fair value...
-
The Pizza Company acquired 90% of the outstanding voting common stock of the Salsa Company on June 30, 2017. The Pizza Company had effective control over the Salsa Company, however, the Pizza Company...
-
The JoFe Computers and Accessory Company produces two types of laptop computer bags. Version A costs $32, takes 4 hours of labor, and sells for $50. Version B costs $38, takes 6 hours of labor, and...
-
If a new venture has its choice between long-term debt and equity financing, which would you recommend? Why?
-
Many measures of association for two-way frequency tables consisting of two ordinal variables are based on the numbers of concordant and discordant pairs. To compute such indices, it is important to...
-
You are newly employed by Silver and Gold Ltd to promote their environmental approach to mining for minerals. In their annual report and promotional material, Silver and Gold Ltd states that...
-
Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Sales for the first quarter of the year after this one are projected at $120 million. Accounts receivable at...
-
The nutrition label on a bottle of cola reports that a 8.0 fl oz serving contains 34g of sugar. How many kilograms of sugar are in a 2.00L bottle of cola? Use the conversion 1 L = 33.8 fl oz.
-
Sketch a set of equidistant 113 planes in a cubic unit cell.
-
The foundation for a cylindrical water tank is a cylinder 27 ft in diameter and 3 ft high. How many cubic ft of concrete are needed to build the foundation?
-
Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) Useful life Salvage value...
-
Do you have any accounting experience? There is a strong demand for Certified Public Accountants (CPAs) and Accounting jobs. Please watch at least two of these https://www.orcpa.org/become-a-cpa How...
-
The line tangent to the graph of f(x) = sin x at (0,0) is y=x. What does this imply? Choose the correct answer below. A. The line y = x is the best straight line approximation to the graph of f for...
-
You are attending a county fair with your friend from your physics class. While walking around the fairgrounds, you discover a new game of skill. A thin rod of mass M = 0.530 kg and length = 2.25 m...
-
What output would you expect from the following program? Explain why output looks like that! #include int main (void) { } int n = 7; printf ("si", ++n); printf ("i ", n++); printf ("1", n--); printf...
-
The following information pertains to Junction Ltd Corporation: Income from continuing operations: $1,238,000 Loss from discontinued operations: $133,000 Gain on sale from discontinued operations:...
-
Does log 81 (2401) = log 3 (7)? Verify the claim algebraically.
-
Fund A transfers $20,000 to Fund B. For each of the following, indicate whether the statement is true or false and, if false, explain why. a. If Fund A is the general fund and Fund B is an enterprise...
-
In this project, you are to provide an analysis of alternative accounting methods for controlling interest investments and subsequent effects on consolidated reporting. The project requires the use...
-
In accounting for foreign currency transactions, which of the following approaches is used in the United States? a. One-transaction perspective; accrue foreign exchange gains and losses. b....
-
If youd like to have $5,000,000 at retirement in 45 years and you expect to earn 10 percent annually, which is around the average return over the past 50 years, what lump sum would you have to invest...
-
Obaidullah Hamzah, who recently sold his Ford Mustang, placed $15,000 in a savings account paying annual compound interest of 7 percent. a. Calculate the amount of money that will be accrued if he...
-
How many years will the following take? a. \($550\) to grow to \($1,049.50\) if invested at 6 percent compounded annually b. \($37\) to grow to \($63.87\) if invested at 9 percent compounded annually...
Study smarter with the SolutionInn App