Question

Company A acquired 140,000 shares in Company B for 400,000$ on 1 January 20x0 when company...

Company A acquired 140,000 shares in Company B for 400,000$ on 1 January 20x0 when company B retained earnings were 62,000$ and the fair valuation of its non-current assets $80,000 more than the book value. Based on fair value Company B should have written off additional depreciation of 6,000$ per year.

Company A $ Company B $
Assets 490,000 350,000
Investment in Company B 400,000
890,000 350,000
Shares of 1$ each 680,000 200,000
Retained earnings 210,000 150,000
890,000 350,000

Identify the amount that the retained earnings will be reported at the Consolidated statement of Financial positions as at 31 December 20x3?

A) 267,400$

B) 254,800$

C) 271,600$

D) none of these

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Company B retained earning before acquistion = $62,000

Company B retained earning Dec 31 20x3 = $150,000

Increase in retained earning = $150,000 - $62,000 = $88,000

Less Additional depreciation = $6000

Net Increase = $88,000 - $6000 = $82,000

Company A's share of net increase = $82,000 * 70% = $57,400

Company A's retained earning before adjustment of increase in earnings from investment = $210,000

Thus, Company A's retained earning after adjustment of increase in earnings from investment = $210,000 + $57400 = $267,400

Thus the answer would be

A) $267,400

Feel free to ask for any clarification, if required. Kindly provide feedback by thumbs up. It would be highly appreciated. Thank You.

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 1 January 20X0, Linda Ltd acquired 100 % of the share capital of Yoko Ltd...
On 1 January 20X0, Linda Ltd acquired 100 % of the share capital of Yoko Ltd for $900,000 cash. At that date, the equity section of Yoko Ltd’s balance sheet was as follows: $ Share capital 900,000 Retained profits 400,000 Asset revaluation reserve 300, 000 Assuming all assets and liabilities were recorded at their fair values what will be the effect of the acquisition on the financial statements? Select one: Goodwill will be increased by $700,000 in Linda Ltd. separate...
On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000...
On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for $260,000 cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (five-year remaining life) that was undervalued on its books by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded on Suarez’s financial records, were estimated to have a 20-year future life. As of December...
Corporate Accounting 16. On 1 January 2020, Big Ltd acquired all the issued shares (non cum....
Corporate Accounting 16. On 1 January 2020, Big Ltd acquired all the issued shares (non cum. div.) of small Ltd for $750 000. At that date, the equity of small Ltd was recorded at:                                                 Share capital                       $350,000                                                 Reserves                               150,000                                                 Retained earnings              100 000 On 1 January 2020, the records of small Ltd also showed that the carrying value of the land is $40,000 with a fair value of $50,000 . Further small Ltd had a dividend payable...
34) On January 1, 2017, Prince Company purchased an 80% interest in the common stock of...
34) On January 1, 2017, Prince Company purchased an 80% interest in the common stock of Sivet Company for $1,040,000, which was $60,000 greater than the book value of equity acquired. The difference between implied and book value relates to the subsidiary’s land. The following information is from the consolidated retained earnings section of the consolidated statements workpaper for the year ended December 31, 2017: SIVET CONSOLIDATED COMPANY BALANCES 1/01/17 retained earnings $300,000 $1,400,000 Net income 220,000 680,000 Dividends declared...
On January 1, 2014, Penelope Company acquired a 100% interest in Leah Company for $200,000 cash....
On January 1, 2014, Penelope Company acquired a 100% interest in Leah Company for $200,000 cash. On January 1, 2014, Leah Company had the following assets and liabilities: Book Value Fair Value Cash $10,000 $10,000 Accounts Receivable 30,000 35,000 Inventory 40,000 50,000 Plant Assets 60,000 80,000 Total Assets $140,000 $175,000 Liabilities $25,000 $25,000 Capital Stock 100,000 Retained Earnings 15,000 Total Liabilities & Stockholders' Equity $140,000 Penelope used push down accounting to account for the acquisition. The total amount of push-down...
On January 1, 2017, Gardner, Inc. acquired 100 percent of the common stock of Drake Company...
On January 1, 2017, Gardner, Inc. acquired 100 percent of the common stock of Drake Company for $760,000 in cash and other fair-value consideration. Gardner Company fair value was allocated among its net assets as follows: The December 31, 2018 trial balance for the parent and subsidiary follows: Fair value of consideration transferred for Drake Company $760,000 Book value of Drake Company Common stock an APIC $130,000 Retained Earnings $370,000 $500,000 Excess Fair value over book value to: Trademark (10-year...
On 1 July 2019, Adelaide Ltd acquired 75% of the issued shares of Canberra Ltd for...
On 1 July 2019, Adelaide Ltd acquired 75% of the issued shares of Canberra Ltd for $720,000. At this date, the equity of Canberra Ltd consisted of share capital of $400,000 and retained earnings of $210,000. All the identifiable assets and liabilities of Canberra Ltd were recorded at amounts equal to fair value except for the following. Carrying Amount Fair value Machine (cost $50,000)                      20,000          24,000 Plant (cost $400,000)        200,000       280,000 Inventories                      50,000          66,000...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company for $540,000. On this date, Shaw Company had common stock of $400,000 and retained earnings of $140,000. An examination of Shaw Company’s assets and liabilities revealed that their book value was equal to their fair value except for marketable securities and equipment: Book Value Fair Value Marketable securities $ 20,000 $ 45,000 Equipment (net) 120,000 140,000 Required: Prepare...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased...
EXERCISE 5-1 Allocation of Cost LO 1 LO 3 On January 1, 2018, Pam Company purchased an 85% interest in Shaw Company for $540,000. On this date, Shaw Company had common stock of $400,000 and retained earnings of $140,000. An examination of Shaw Company’s assets and liabilities revealed that their book value was equal to their fair value except for marketable securities and equipment: Book Value Fair Value Marketable securities $ 20,000 $ 45,000 Equipment (net) 120,000 140,000 Required: Prepare...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000. On that date, the fair value of C’s identifiable net assets was $600,000 and the book value of its shareholders’ equity was $500,000 Assume that fair value enterprise method will be used for valuation of subsidiary. What amount of non-controlling interest should be reported on the balance sheet on the date of acquisition? $0 $150,000 $180,000 $300,000 Assume that Identifiable net...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT