Peter Company acquired 90 % of Steven Corporation on 1/2018. Fair values of Steven's assets and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Peter Company acquired 90 % of Steven Corporation on 1/2018. Fair values of Steven's assets and liabilities approximated book values on that date. Peter uses the initial value method to account for its investment in Steven. On 1/2019, Peter bought equipment from Steven for $60,000 that had originally cost Steven $120,000 and had $ 110,000 of Accumulated depreciation at the time. The equipment had a five-year remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2020 fiscal year. a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2020? (this is the amount you will need for the "TA entry at 1/2020.) c. Which company's Retained earnings account will be adjusted in the "TA entry in part a? (Which company was the "initiator" of the transaction?) d. How much excess depreciation will there be in each of the first five years after the transfer? e. Peter's 2020 net income, without including any investment income, was $ 440,000 and Steven reported net income of $ 137,000 in 2020. What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f. What will the noncontrolling interest's share of the subsidiary's net income be for 2020? (Consider whether the equipment sale had been upstream or downstream.) A a. Upstream b. C. e. f. B Book value (120,000 - 110,000) Transfer price Unrealized gain Excess depreciation Unrealized Net Gain Steven Corporation d. Carrying Value before sale Useful Life Depreciation before no transfer Transfer Value Useful Life Depreciation after transfer Excess Depreciation (12,000 -2,000) Peter's 2020 net income Steven's 2020 net income Excess Depreciation Total Consolidated Income 10,000 60,000 50,000 10,000 $ 40,000 $ C Noncontrolling interest income (127,000 * 10%) $ 10,000 5 $2,000 60,000 5 $12,000 10,000 137,000 -10,000 12,700 $ D 440,000 127,000 567,000 E Peter Company acquired 90 % of Steven Corporation on 1/2018. Fair values of Steven's assets and liabilities approximated book values on that date. Peter uses the initial value method to account for its investment in Steven. On 1/2019, Peter bought equipment from Steven for $60,000 that had originally cost Steven $120,000 and had $ 110,000 of Accumulated depreciation at the time. The equipment had a five-year remaining life and was being depreciated using the straight line method. You are preparing the worksheet for the 2020 fiscal year. a. Was this equipment sale upstream or downstream? b. How much unrealized net gain from the equipment transfer remains at the beginning of 2020? (this is the amount you will need for the "TA entry at 1/2020.) c. Which company's Retained earnings account will be adjusted in the "TA entry in part a? (Which company was the "initiator" of the transaction?) d. How much excess depreciation will there be in each of the first five years after the transfer? e. Peter's 2020 net income, without including any investment income, was $ 440,000 and Steven reported net income of $ 137,000 in 2020. What consolidated income will be reported before removing the noncontrolling interest's share of the subsidiary's net income? (This includes the effect of the ED entry.) f. What will the noncontrolling interest's share of the subsidiary's net income be for 2020? (Consider whether the equipment sale had been upstream or downstream.) A a. Upstream b. C. e. f. B Book value (120,000 - 110,000) Transfer price Unrealized gain Excess depreciation Unrealized Net Gain Steven Corporation d. Carrying Value before sale Useful Life Depreciation before no transfer Transfer Value Useful Life Depreciation after transfer Excess Depreciation (12,000 -2,000) Peter's 2020 net income Steven's 2020 net income Excess Depreciation Total Consolidated Income 10,000 60,000 50,000 10,000 $ 40,000 $ C Noncontrolling interest income (127,000 * 10%) $ 10,000 5 $2,000 60,000 5 $12,000 10,000 137,000 -10,000 12,700 $ D 440,000 127,000 567,000 E
Expert Answer:
Answer rating: 100% (QA)
a The equipment sale is downstream because Peter Company the parent company acquired the equipment f... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
Students also viewed these accounting questions
-
A government uses the purchases method to account for both inventories and prepaid assets. Its General Fund balance sheet includes Inventory of Materials of $35,000 and Prepaid Insurance of $40,000....
-
1. The sequence above is part of an alpha helix found in a cytosolic protein. Add the amino acids from the given sequence to the helical wheel projection. 2. Estimate the number of turns this alpha...
-
Taft Corporation uses the equity method to account for its 25% investment in Flame, Inc., which it made on January 1, 2014. During 2014, Taft received dividends of $30,000 from Flame and recorded...
-
Write the surface x 2 + y 2 z 2 = 2 (x + y) as an equation r = (, z) in cylindrical coordinates.
-
During 2010, an estate generated income of $20,000: Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,000 Interest income . . . . . . . . . . . . . . . . . . . . . . ....
-
For the quadratic function (x) = a(x - h) 2 + k, in what quadrant is the vertex if the values of h and k are as follows? (a) h> 0, k>0 (c) h <0, k>0 (b) h> 0, k <0 (d) h <0, k <0 Consider the value...
-
The stress-strain diagram of a material can be approximated by the two line segments. If a bar having a diameter of \(80 \mathrm{~mm}\) and a length of \(1.5 \mathrm{~m}\) is made from this material,...
-
The Nebraska Institute of Science (NIS) pools all of its endowment funds so that it can obtain the benets of a large and diverse investment portfolio. The institute recently acquired a commercial...
-
Analyzing and Interpreting Pension Footnote-Funded and Reported Amounts Verizon Communications Inc. reports the following pension data in Note 11 to a recent 10-K report. At December 31 ($ millions)...
-
You are the IT director at Big Ten University. As part of a training program, you decide to draw a DM that includes some obvious mistakes to see whether your newly hired junior analysts can find...
-
Implement the following circuits only using NAND gates. Use the method of your choice (pushing bubbles, De Morgan's, etc.) a. f(A,B)=(A'+B') b. f(A,B)=(A'B') c. f(A,B,C)=(A+C)(B)+(A'B') d....
-
solve by LCM Method:+ DIT x-1 x-3
-
I have worked with you before and was very satisfied. Is it possible to get a literature review for a final thesis done on Adverse Effects of "Toxic Nurse Managers' on Nurses. I started it but...
-
Discuss and critically evaluate the ethical implications and impact of business objectives and sustainable leadership for stakeholders and how business leaders can engage effectively and responsibly...
-
If tane = 15 and cos=-, then what is sin e? Enter the answer as a fraction.
-
Outstanding stock of the Wildhorse Corporation included 42800 shares of $5 par common stock and 10700 shares of 5%, $10 par non-cumulative preferred stock. In 2024, the company's board of directors...
-
The five primary purposes of a budget are Select one: a. planning; allocating resources; facilitating communication and coordination; controlling profit and operations; and allocating overhead costs....
-
Assume that a trial balance is prepared with an account balance of $21,360 listed as $21,630 and an account balance of $1,500 listed as $15,000. Identify the transposition and the slide.
-
After successfully operating a partnership for several years, the partners have proposed to incorporate the business and admit another investor. The original partners will purchase at par an amount...
-
Blank Corporation acquired 100 percent of Faith Corporations common stock on December 31, 20X2, for $189,000. Data from the balance sheets of the two companies included the following amounts as of...
-
Plush Corporation purchased 100 percent of Common Corporations common stock on January 1, 20X3, and paid $450,000. The fair value of Commons identifiable net assets at that date was $430,000. By the...
-
Find the steady-state response of an underdamped single-degree-of-freedom system subjected to a ramp input \(F(t)=b t\) where \(b\) is the slope of the ramp.
-
For the torsional second-order system shown in Fig. 4.2 (c) with \(J=2 \mathrm{~kg}-\mathrm{m}^{2}, c_{t}=\) \(2 \mathrm{~N}-\mathrm{m}-\mathrm{s} / \mathrm{rad}\), and \(k_{t}=2...
-
For the translational system shown in Fig. 4.2 (a) with \(k=1\) and \(f(t)=\) unit step function, determine the values of \(m\) and \(c\) to achieve a \(40 \%\) overshoot and a settling time of \(5...
Study smarter with the SolutionInn App