On January 1, Year 1, Papa Inc. acquired 80% of the outstanding voting shares of Sonny Inc. for total consideration of $1,200,000. On this date, Sonny reported total assets of $1,800,000 and total liabilities of $800,000. All assets and liabilities had FVs equal to carrying values except for the following: . . Inventory-Carrying value of $150,000 but the fair value is $170,000; and Patent-Carrying value of $130,000 but the fair value is $150,000 The patent had a remaining useful life of 10 years as of the date of acquisition. On December 31, Year 3, Papa and Sonny reported $200,000 and $150,000, respectively, for patent on the separate- entity financial statements. What amount would be reported for patent on the consolidated financial statements as at December 31, Year 3? a. $368,000 O b. $364,000 O c. $336,000 O d. $350,000

On January 1, Year 1, Papa Inc. acquired 80% of the outstanding voting shares of Sonny Inc. for total consideration of $1,200,000. On this date, Sonny reported total assets of $1,800,000 and total liabilities of $800,000. All assets and liabilities had FVs equal to carrying values except for the following: . . Inventory-Carrying value of $150,000 but the fair value is $170,000; and Patent-Carrying value of $130,000 but the fair value is $150,000 The patent had a remaining useful life of 10 years as of the date of acquisition. On December 31, Year 3, Papa and Sonny reported $200,000 and $150,000, respectively, for patent on the separate- entity financial statements. What amount would be reported for patent on the consolidated financial statements as at December 31, Year 3? a. $368,000 O b. $364,000 O c. $336,000 O d. $350,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

See similar textbooks

Similar questions

On January 2, year 1, ABC Company purchased 75% of XYZ's outstanding common stock. On that date, the fair value of the 25% noncontrolling interest was $35,000. During year 1, XYZ had net income of $20,000. Selected balance sheet data at December 31, year 1, is as follows: ABC (Column 1), XYZ (Column 2) * During year 1, ABC and XYZ paid cash dividends of $25,000 and $5,000, respectively, to their shareholders. There were no other intercompany transactions. In its December 31, year 1 consolidated statement of retained earnings, what amount should ABC report as dividends paid?
On January 2, year 1, ABC Company purchased 75% of XYZ's outstanding common stock. On that date, the fair value of the 25% noncontrolling interest was $35,000. During year 1, XYZ had net income of $20,000. Selected balance sheet data at December 31, year 1, is as follows: ABC (Column 1), XYZ (Column 2) During year 1, ABC and XYZ paid cash dividends of $25,000 and $5,000, respectively, to their shareholders. There were no other intercompany transactions. a) In its December 31, year 1 consolidated statement of retained earnings, what amount should ABC report as dividends paid? b) In ABC's December 31, year 1, consolidated balance sheet, what amount should be reported as noncontrolling interest in net assets? c) In its December 31, year 1 consolidated balance sheet, what amount should ABC report as common stock?
On January 2, year 1, ABC Company purchased 75% of XYZ's outstanding common stock. On that date, the fair value of the 25% noncontrolling interest was $35,000. During year 1, XYZ had net income of $20,000. Selected balance sheet data at December 31, year 1, is as follows: ABC (Column 1), XYZ (Column 2) During year 1, ABC and XYZ paid cash dividends of $25,000 and $5,000, respectively, to their shareholders. There were no other intercompany transactions. In its December 31, year 1 consolidated statement of retained earnings. REQUIRED: 1. In ABC's December 31, year 1, consolidated balance sheet, what amount should be reported as noncontrolling interest in net assets?
On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $218,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $349,000. During 2021, Burks reported net income of $76,000 and declared and paid cash dividends of $25,000. Alamar sold inventory costing $25,000 to Burks during 2021 for $36,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1. Record the acquisition of a 36 percent interest in Burks. 1b. Record the 36 percent income earned by Alamar from this investment. 1c. Record the investee dividend declaration. 1d. Record the collection of dividend from investee.
On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shares with a market price of P45 per share. The book value of Luna Corp.’s identifiable net assets approximate its fair value, except for the following: • Merchandise inventory’s fair value is lower than the book balance by 150,000. • Equipment-A, with 2 years remaining useful life, costing P300,000 is understated by P50,000. • Land with a fair value of P500,000 is recognized in the books amounting to P350,000. The following events happened to Luna Corp. • Equipment-A was sold in June 30, 2023 for P320,000. • 60% of merchandise inventory were sold in 2022. • There is no movement as to the ordinary shares of Luna Corp during the year. The unadjusted trial balance as of December 31, 2022 were as follows: Lucas Company Luna Corp Cash 2,240,000 1,800,000 Trade Receivables 1,000,000 960,000 Merchandise Inventory…
On January 1, 2018, Alamar Corporation acquired a 42 percent interest in Burks, Inc., for $185,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $337,000. During 2018, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $29,000 to Burks during 2018 for $41,000. Burks used all of this merchandise in its operations during 2018. Prepare all of Alamar's 2018 journal entries to apply the equity method to this investment....... For this example what/how do you determine the Dividend Recievable amount?
On January 01, 2021, Batman Corp. acquired 75% of the outstanding stock of Superman Co. for P1,380,000 cash. The book value of Superman Co's net assets was P1,200,000. Batman Corp. determined that the inventory and plant assets (remaining life of 5 years) of Superman Co. were understated by P100,000 and P300,000, respectively. Superman Co's net income for the year ended December 31, 2021 was P500,000. During the year 2021, Batman Corp. received P240,000 cash dividends from Superman Co. The fair value of NCI was determined at P445,000. Loss on impairment of goodwill was P25,000. Net income of B Corp. under the cost method amounted to P1,000,000. B Corp. is using the fair value method in measuring NCI. How much is the Investment Balance on December 31, 2021 on the books of Batman Corp. under the equity method? a.1,395,000 b.1,375,000 c.1,615,000 d.1,380,000
Jimin, Inc. purchased 40% of Hope Inc.’s outstanding ordinary shares on January 2, 2021, for P270,000,000. Jimin obtained significant influence over Hope. The book value of Jimin's net assets at the purchase date totalled $450,000,000. Book values and fair values were the same for all financial statement items except for inventory and buildings, for which fair values exceeded book values by $12,500,000 and $112,500,000, All inventories on hand at the purchase date was sold during 2021. The buildings have average remaining useful lives of 15 years. Hope, Inc. reported net income of $110,000,000 for the year ended December 31, 2021, and paid cash dividends of $50,000,000. The fair value of Jimin, Inc.’s investment in associate was $300,000,000 at December 31, 2021. How much is the value of the Investment in Associates on December 31, 2021?
On January 1, 2024, Alamar Corporation acquired a 35 percent interest in Burks, Incorporated, for $235,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $347,000. During 2024, Burks reported net income of $79,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $22,000 to Burks during 2024 for $44,000. Burks used all of this merchandise in its operations during 2024. Required: Prepare all of Alamar's 2024 journal entries to apply the equity method to this investment. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 2 3 Note: Enter debits before credits. 4 Record the investee dividend declaration. Transaction с 5 General Journal Debit Credit
On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $198,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $353,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $27,000 to Burks during 2021 for $35,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment 2. Record the 36 percent income earned by Alamar from this investment.
On January 1, 2021, Alamar Corporation acquired a 36 percent interest in Burks, Inc., for $198,000. On that date, Burks’s balance sheet disclosed net assets with both a fair and book value of $353,000. During 2021, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $27,000 to Burks during 2021 for $35,000. Burks used all of this merchandise in its operations during 2021. Prepare all of Alamar’s 2021 journal entries to apply the equity method to this investment 1. Record the acquisition of a 36 percent interest in Burks
On January 1, 2024, Alamar Corporation acquired a 40 percent interest in Burks, Incorporated, for $210,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $360,000. During 2024, Burks reported net income of $80,000 and declared and paid cash dividends of $25,000. Alamar sold inventory costing $30,000 to Burks during 2024 for $40,000. Burks used all of this merchandise in its operations during 2024. Required: Prepare all of Alamar's 2024 journal entries to apply the equity method to this investment. Record the acquisition of a 40 percent interest in Burks. Record the accrual of 40 percent of the reported earnings of the investee. Record the investee dividend declaration Record the collection of dividend from investee. Record the income on intra-entity sale.