Question

On January 1, 2014, Pirate Company acquired an 80% interest in Sun Company for $425,000. On...

On January 1, 2014, Pirate Company acquired an 80% interest in Sun Company for $425,000. On that date, Sun reported stockholder’s equity of $400,000: $100,000 in common stock and $300,000 in retained earnings. In setting the acquisition price, Pirate appraised three accounts at values different from the balances reported within Sun’s financial records: Buildings (8-year remaining life): Undervalued by $32,500 Land: Undervalued by $50,000 Royalty agreement (20-year remaining life): Not previously recorded; Valued at $30,000 At December 31, 2018, the trial balances of these two companies are as follows in DEBIT / (CREDIT) format: Included in these figures is a $20,000 payable that Sun owes to the parent company. No goodwill impairments have occurred since the acquisition date. REQUIRED: a. Prepare the elimination entries that would be required for consolidation for 2018. b. Determine the consolidated totals of each item above for 2018. Pirate Company Sun Company Current Assets 605,000               280,000               Investment in Sun Company 425,000               ?                        Land 200,000               300,000               Buildings (net) 640,000               290,000               Equipment (net) 380,000               160,000               Royalty Agreement ?                        ?                        Goodwill ?                        ?                        Current Liabilities (910,000)             (300,000)             Common Stock (480,000)             (100,000)             Retained Earnings, 1/1/18 (704,000)             (480,000)             Dividends Declared 90,000                 20,000                 Noncontrolling Interest ?                        ?                        Revenues (780,000)             (360,000)             Dividend Income (16,000)                ?                        Expenses 550,000               190,000

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Particulars Private Sun Adjustment Elimination Consolidated
Equity and Liabilities
Shareholders Equity
Common Stock $4,80,000 $1,00,000 $0 -$1,00,000 $4,80,000
Retained earnings $8,60,000 $6,30,000 $1,12,500 -$4,78,500 $11,24,000
Non Controlling Interest $0 $0 $0 $1,68,500 $1,68,500
Current Liabilities $9,10,000 $3,00,000 -$20,000 $0 $11,90,000
Total $22,50,000 $10,30,000 $92,500 -$4,10,000 $29,62,500
Assets
Land $2,00,000 $3,00,000 $50,000 $0 $5,50,000
Building $6,40,000 $2,90,000 $32,500 $0 $9,62,500
Equipment $3,80,000 $1,60,000 $0 $0 $5,40,000
Royalty Agreement $0 $0 $30,000 $0 $30,000
Goodwill on colsolidation $0 $0 $0 $15,000 $15,000 W.N.1
Current Assets $6,05,000 $2,80,000 -$20,000 $0 $8,65,000
Investment in sun $4,25,000 $0 $0 -$4,25,000 $0
Total $22,50,000 $10,30,000 $92,500 -$4,10,000 $29,62,500
Profit and loss Private Sun
Revenue $7,80,000 $3,60,000
Dividend Income $16,000 $0
$7,96,000 $3,60,000
Expenses $5,50,000 $1,90,000
Net Income $2,46,000 $1,70,000
Opening Retianed earning $7,04,000 $4,80,000
$9,50,000 $6,50,000
Dividend Declared and paid $90,000 $20,000
Closing retained earning $8,60,000 $6,30,000
W.N.1
particulars $
Common shares $80,000
retained earnings $2,40,000
Building $26,000
Land $40,000
Royalty Agreement $24,000
$4,10,000
Investment made $4,25,000
Good will on colsolidation $15,000
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
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common...
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired. Demers earns income and pays dividends as follows: 2014 2015 2016...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $64,500 of the fair-value price was attributed to undervalued land while $72,000 was assigned to undervalued equipment having a 10-year remaining life. The $63,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid $856,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $214,000 both before and after Miller’s acquisition. On January 1, 2016, Taylor reported a book value of $752,000 (Common Stock = $376,000; Additional Paid-In Capital = $112,800; Retained Earnings = $263,200). Several of Taylor’s buildings...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid...
Miller Company acquired an 80 percent interest in Taylor Company on January 1, 2016. Miller paid $856,000 in cash to the owners of Taylor to acquire these shares. In addition, the remaining 20 percent of Taylor shares continued to trade at a total value of $214,000 both before and after Miller’s acquisition. On January 1, 2016, Taylor reported a book value of $752,000 (Common Stock = $376,000; Additional Paid-In Capital = $112,800; Retained Earnings = $263,200). Several of Taylor’s buildings...
Pop Company acquires 85% of Sonny Company for $637,500 on January, 1 2014. Sonny reported common...
Pop Company acquires 85% of Sonny Company for $637,500 on January, 1 2014. Sonny reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $50,000, equipment having a 6-year remaining life and the building having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Pop accounts for its investment in Sonny using the equity method. Based on...
Powell Company acquires 80% of Short Company for $500,000 on January 1, 2019. Short reported common...
Powell Company acquires 80% of Short Company for $500,000 on January 1, 2019. Short reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.Short earns income and pays dividends as follows: 2019 2020 Net Income...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $75,500 of the fair-value price was attributed to undervalued land while $52,000 was assigned to undervalued equipment having a 10-year remaining life. The $72,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant...
On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange...
On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $788,900 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $338,100 both before and after Truman’s acquisition. In reviewing its acquisition, Truman assigned a $129,500 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is...
2- Dubai Corporation acquired 100 percent of Sharjah Company's common stock on January 1, 2019. Balance...
2- Dubai Corporation acquired 100 percent of Sharjah Company's common stock on January 1, 2019. Balance sheet data for the two companies immediately following the acquisition follows: Item Dubai Corporation Sharjah Company Cash $ 30,000 $ 25,000 Accounts Receivable 80,000 40,000 Inventory 150,000 55,000 Land 65,000 40,000 Buildings and Equipment 260,000 160,000 Less: Accumulated Depreciation (120,000 ) (50,000 ) Investment in Spin Company Stock 150,000 Total Assets $ 615,000 $ 270,000 Accounts Payable $45,000 $33,000 Taxes Payable 20,000 8,000 Bonds...
On January 1, 2013, Starbucks acquired 100% of Dunkin. On this date: Starbucks acquired 100% of...
On January 1, 2013, Starbucks acquired 100% of Dunkin. On this date: Starbucks acquired 100% of Dunkin’s outstanding common stock for $842,000 in cash. Dunkin’s Buildings had a FV in excess of BV of $72,000 and remaining Useful Life was 12 years. Dunkin’s Equipment had a FV in excess of BV of $10,000 and remaining Useful Life was 10 years. Dunkin had an unrecorded Patent with a FMV $20,000 and remaining Useful Life was 20 years. Dunkin’s Stockholder’s Equity total...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT