Question

On January 1, 2020, Portal Corporation acquired 90% of Squaredeal Company's voting stock for $62,000 in...

On January 1, 2020, Portal Corporation acquired 90% of Squaredeal Company's voting stock for $62,000 in cash and stock. The noncontrolling interest in Squaredeal had a fair value of $5,000. The entire excess of fair value over book value was attributable to goodwill, which is not impaired in 2020. It is now December 31, 2020, and Squaredeal's trial balance is as follows:

Squaredeal's trial balance, December 31, 2020

Dr (Cr)

Current assets

$ 3,000

Plant assets, net

97,000

Liabilities

(59,000)

Capital stock

(12,700)

Retained earnings, beginning

(25,300)

Dividends

1,000

Sales revenue

(280,000)

Cost of sales and operating expenses

276,000

Total

$ 0


Portal uses the complete equity method to report its investment in Squaredeal on its own books.

1. On the 2020 consolidation working paper, eliminating entry (E) credits the noncontrolling interest in Squaredeal by:

Select one:

A. $1,270

B. $2,530

C. $3,800

D. $3,840

2. On the 2020 consolidation working paper, eliminating entry (R) recognizes goodwill in the amount of:

Select one:

A. $33,000

B. $29,000

C. $27,800

D. $41,700

3. On the 2020 consolidation working paper, eliminating entry (N) recognizes noncontrolling interest in net income of:

Select one:

4. On the consolidated balance sheet at December 31, 2020, the noncontrolling interest is valued at

Select one:

A. $5,000

B. $3,800

C. $5,300

D. $5,400

A. $400

B. $300

C. $0

D. $325

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1) c = 3800

workings :

Calculation of Non controlling holders share in Squaredeal's

a) 10 % of Common Stock (12700) 1270

b) 10% of Retained earnings opening (25300) 2530

TOTAL Share 3800

2) Answer =c = Good will 27800

Workings :

Statement of cauculation of goodwill

Amont Invested in Squaredeal's for 90% take 62,000

- a) 90% share in coomon capiatl (12700*90%) 11430

-b) 90% Share in retained earnngs ( 25300*90%) 22770

Difference (62,000-22770) 27800

3) Asweer = A =400

Share of Retained earnigs 10%

Sale Revenue 280,000

Cost 2,76,000

Profit 4000

Share 10% 400

4) aswer = A

FAIR VALUE OF non Controling intrest = 5000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2017, Portland Company acquired all of Salem Company’s voting stock for $16,000,000 in...
On January 1, 2017, Portland Company acquired all of Salem Company’s voting stock for $16,000,000 in cash. Some of Salem’s assets and liabilities at the date of purchase had fair values that differed from reported values, as follows:    Book value Fair value Buildings and equipment, net (20 years, straight-line) $11,000,000 $ 3,000,000 Identifiable intangibles (5 years, straight-line) 0 10,000,000 Salem’s total shareholders’ equity at January 1, 2017, was $4,000,000. It is now December 31, 2020 (four years later). Salem’s...
Goodwill, Equity Method, Eliminating Entries, First Year On January 1, 2020, Playtel Inc. acquired 75 percent...
Goodwill, Equity Method, Eliminating Entries, First Year On January 1, 2020, Playtel Inc. acquired 75 percent of the stock of San Jose Cable for $200 million in cash. At the date of acquisition, the fair value of the noncontrolling interest was $50 million, and Playtel’s shareholders’ equity accounts were as follows (in thousands): Common stock, $1 par $5,000 Additional paid-in capital 25,000 Retained deficit (1,000) Treasury stock (800) Total $28,200 Both companies have a December 31 year-end. At the date...
2. On January 1, 20X8, Gregory Corporation acquired 90 percent of Nova Company's voting stock, at...
2. On January 1, 20X8, Gregory Corporation acquired 90 percent of Nova Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Nova at that date. Gregory uses the equity method in accounting for its ownership of Nova. On December 31, 20X8, the trial balances of the two companies are as follows: Gregory Corp Nova Company Dr Cr Dr Cr Current Assets 200000 120000 Depreciable Assets...
Peppard acquires 90% of the voting stock of Schultz on January 1, 2020 for $5,000. The...
Peppard acquires 90% of the voting stock of Schultz on January 1, 2020 for $5,000. The fair value of the noncontrolling interest is $550. Schultz’s equity is reported at $4,800 at the date of acquisition. Its net assets are reported at amounts approximating fair value, but it has previously unreported identifiable intangible assets (5-year life, straight-line), valued at $1,000. Peppard uses the complete equity method to account for its investment. Schultz reports net income of $300 for 2020. REQUIRED: What...
On January 1, 20X8, Gregory Corporation acquired 90 percent of Nova Company's voting stock, at underlying...
On January 1, 20X8, Gregory Corporation acquired 90 percent of Nova Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Nova at that date. Gregory uses the equity method in accounting for its ownership of Nova. On December 31, 20X8, the trial balances of the two companies are as follows: Gregory Corp Nova Company Dr Cr Dr Cr Current Assets 200000 120000 Depreciable Assets 300000...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed,...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,089,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,140,000 and Retained Earnings of $57,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $121,000. QuickPort attributed the $13,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following:...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed,...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,089,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,140,000 and Retained Earnings of $57,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $121,000. QuickPort attributed the $13,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following:...
Pie Corporation acquired 75 percent of Slice Company’s ownership on January 1, 20X8, for $96,000. At...
Pie Corporation acquired 75 percent of Slice Company’s ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of Slice’s net assets at acquisition was $100,000. The book values and fair values of Slice’s assets and liabilities were equal, except for Slice’s buildings and equipment, which were worth $20,000 more than book value. Accumulated depreciation on the buildings and equipment was $30,000 on the acquisition date. Buildings and...
On January 1, 2020, Harrison, Inc., acquired 90 percent of Starr Company in exchange for $1,125,000...
On January 1, 2020, Harrison, Inc., acquired 90 percent of Starr Company in exchange for $1,125,000 fair-value consideration. The total fair value of Starr Company was assessed at $1,200,000. Harrison computed annual excess fair-value amortization of $8,000 based on the difference between Starr’s total fair value and its underlying book value. The subsidiary reported net income of $70,000 in 2020 and $90,000 in 2021 with dividend declarations of $30,000 each year. Apart from its investment in Starr, Harrison had net...
Pratt Company acquired all of the voting stock of Swank Company on January 1, 2016 for...
Pratt Company acquired all of the voting stock of Swank Company on January 1, 2016 for $60,000. Swank Company’s book value at the date of acquisition totaled $8,000. Swank had previously unrecorded identifiable intangibles with a total fair value of $20,000, and plant assets were overvalued by $15,000. All of Swank’s other identifiable net assets had book values that approximated fair value at the date of acquisition. Goodwill arising from this acquisition equaled $47,000. The identifiable intangibles have an estimated...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT