Pie Corporation acquired 75 percent of Slice Company's ownership on January 1, 20X8, for $90,000. At...
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Pie Corporation acquired 75 percent of Slice Company's ownership on January 1, 20X8, for $90,000. At that date, the fair value of the noncontrolling interest was $30,000. The book value of Slice's net assets at acquisition was $86,000. The book values and fair values of Slice's assets and liabilities were equal, except for Slice's buildings and equipment, which were worth $17,200 more than book value. Accumulated depreciation on the buildings and equipment was $27,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Pie concluded at December 31, 20X8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $3,000. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. Trial balance data for Pie and Slice on December 31, 20X8, are as follows: Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Slice Company Cost of Goods Sold Wage Expense Depreciation Expense Interest Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Wages Payable Notes Payable Common Stock Retained Earnings Sales Pie Corporation Debit Credit $ 56,500 83,000 103,000 31,000 362,000 100,710 115,000 42,000 22,000 9,000 10,500 38,000 Slice Company Debit Credit $ 26,000 17,000 30,000 20,000 162,000 100,000 24,000 9,000 3,000 4,000 16,200 $ 141,000 35,000 $ 36,000 13,000 198,850 197,000 99,000 266,000 $ 411,200 12,000 8,000 83,200 60,000 26,000 186,000 $ 411,200 Income from Slice Company 22,860 $ 972,710 $ 972,710 A No Answer is complete but not entirely correct. Accounts Entry 1 Common stock Retained earnings Income from Slice Company NCI in Net Income of Slice Company Dividends declared Investment in Slice Company NCI in Net assets of Slice Company Depreciation expense B 2 Goodwill impairment loss Income from Slice Company NCI in Net Income of Slice Company C 3 Buildings and equipment Goodwill Accumulated depreciation Investment in Slice Company NCI in Net assets of Slice Company D 4 Accumulated depreciation Buildings and equipment Debit Credit 60,000 26,000 31,500 x 11,500 15,600 x 92,550 x 30,850 x 1,860 x 13,200 11,295 x 3,765 x 18,600 3,200 1,860 x 14,955 x 4,895 x 27,000 27,000 Pie Corporation acquired 75 percent of Slice Company's ownership on January 1, 20X8, for $90,000. At that date, the fair value of the noncontrolling interest was $30,000. The book value of Slice's net assets at acquisition was $86,000. The book values and fair values of Slice's assets and liabilities were equal, except for Slice's buildings and equipment, which were worth $17,200 more than book value. Accumulated depreciation on the buildings and equipment was $27,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Pie concluded at December 31, 20X8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $3,000. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. Trial balance data for Pie and Slice on December 31, 20X8, are as follows: Item Cash Accounts Receivable Inventory Land Buildings and Equipment Investment in Slice Company Cost of Goods Sold Wage Expense Depreciation Expense Interest Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Wages Payable Notes Payable Common Stock Retained Earnings Sales Pie Corporation Debit Credit $ 56,500 83,000 103,000 31,000 362,000 100,710 115,000 42,000 22,000 9,000 10,500 38,000 Slice Company Debit Credit $ 26,000 17,000 30,000 20,000 162,000 100,000 24,000 9,000 3,000 4,000 16,200 $ 141,000 35,000 $ 36,000 13,000 198,850 197,000 99,000 266,000 $ 411,200 12,000 8,000 83,200 60,000 26,000 186,000 $ 411,200 Income from Slice Company 22,860 $ 972,710 $ 972,710 A No Answer is complete but not entirely correct. Accounts Entry 1 Common stock Retained earnings Income from Slice Company NCI in Net Income of Slice Company Dividends declared Investment in Slice Company NCI in Net assets of Slice Company Depreciation expense B 2 Goodwill impairment loss Income from Slice Company NCI in Net Income of Slice Company C 3 Buildings and equipment Goodwill Accumulated depreciation Investment in Slice Company NCI in Net assets of Slice Company D 4 Accumulated depreciation Buildings and equipment Debit Credit 60,000 26,000 31,500 x 11,500 15,600 x 92,550 x 30,850 x 1,860 x 13,200 11,295 x 3,765 x 18,600 3,200 1,860 x 14,955 x 4,895 x 27,000 27,000
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Related Book For
Advanced Financial Accounting
ISBN: 9781265042615
13th International Edition
Authors: Theodore E. Christensen, David M. Cottrell, Cassy Budd
Posted Date:
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