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   
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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

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