On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $524,000....

 

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On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $524,000. Birch reported a $520,000 book value, and the fair value of the noncontrolling interest was $131,000 on that date. Then, on January 1, 2020, Birch acquired 80 percent of Cedar Company for $120,000 when Cedar had a $105,000 book value and the 20 percent noncontrolling interest was valued at $30,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life. These companies report the following financial information. Investment income figures are not included. Sales: Aspen Company Birch Company Cedar Company Expenses: Aspen Company Birch Company Cedar Company Dividends declared: Aspen Company Birch Company Cedar Company 2019 2020 $ 567,500 $ 640,000 269, 250 324,750 206, 100 Not available $ 502,500 $ 590,000 228,000 250,000 Not available 189,000 2021 Assume that each of the following questions is independent: $910,000 565, 200 264,400 $682,500 487,500 226,000 20,000 $ 40,000 $50,000 5,000 20,000 Not available 2,000 20,000 10,000 a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2021? c. What is the net income attributable to the noncontrolling interest in 2021? d. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year: What is the accrual-based net income of Birch in 2020 and 2021, respectively? Date Amount 12/31/19 $11,500 12/31/20 24, 200 12/31/21 33,200 a. b C. Complete this question by entering your answers in the tabs below. Req A to C a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2021? c. What is the net income attributable to the noncontrolling interest in 2021? Req D Investment in Birch at December 31, 2020 Consolidated net income Noncontrolling interests' share of the consolidated net income < Req A to C Amount Req D > Show less On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $524,000. Birch reported a $520,000 book value, and the fair value of the noncontrolling interest was $131,000 on that date. Then, on January 1, 2020, Birch acquired 80 percent of Cedar Company for $120,000 when Cedar had a $105,000 book value and the 20 percent noncontrolling interest was valued at $30,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life. These companies report the following financial information. Investment income figures are not included. Sales: Aspen Company Birch Company Cedar Company Expenses: Aspen Company Birch Company Cedar Company Dividends declared: Aspen Company Birch Company Cedar Company 2019 2020 $ 567,500 $ 640,000 269, 250 324,750 206, 100 Not available $ 502,500 $ 590,000 228,000 250,000 Not available 189,000 2021 Assume that each of the following questions is independent: $910,000 565, 200 264,400 $682,500 487,500 226,000 20,000 $ 40,000 $50,000 5,000 20,000 Not available 2,000 20,000 10,000 a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2021? c. What is the net income attributable to the noncontrolling interest in 2021? d. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year: What is the accrual-based net income of Birch in 2020 and 2021, respectively? Date Amount 12/31/19 $11,500 12/31/20 24, 200 12/31/21 33,200 a. b C. Complete this question by entering your answers in the tabs below. Req A to C a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2020, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2021? c. What is the net income attributable to the noncontrolling interest in 2021? Req D Investment in Birch at December 31, 2020 Consolidated net income Noncontrolling interests' share of the consolidated net income < Req A to C Amount Req D > Show less

Answer rating: 100% (QA)

SOLUTION a If all companies use the equity method for internal reporting purposes the December 31 2020 balance in Aspens Investment in Birch Company a... View the full answer