Parent acquired Subsidiary on January
1, 2020 at a price $450,000 in excess of book value....
Parent acquired Subsidiary on January
1, 2020 at a price $450,000 in excess of book value. Of that
excess, $350,000 was allocated to an unrecorded patent with a
10-year life, with the remainder to goodwill. The parent uses the
equity method to account for its investment in its subsidiary.
In 2021, Subsidiary sold to Parent
land having a book value of $90,000 for a total price of
$244,000.
Financial statements of the two
companies for the year ended December 31,...
Consolidation several years subsequent to date of
acquisition—Equity method
Assume that a parent company acquired a...
Consolidation several years subsequent to date of
acquisition—Equity method
Assume that a parent company acquired a subsidiary on January 1,
2014. The purchase price was $665,000 in excess of the subsidiary’s
book value of Stockholders’ Equity on the acquisition date, and
that excess was assigned to the following [A] assets:
[A] Asset
Original
Amount
Original
Useful
Life
Property, plant and equipment (PPE), net
$140,000
16
years
Patent
245,000
7
years
License
105,000
10
years
Goodwill
175,000
Indefinite
$665,000
The [A]...
Parent acquired Subsidiary on January 1, 2016, at a price
$300,000 in excess of book value....
Parent acquired Subsidiary on January 1, 2016, at a price
$300,000 in excess of book value. Of that excess, $200,000 was
allocated to an unrecorded patent with a 10-year life, with the
remainder to goodwill. The parent uses the equity method to account
for its investment in its subsidiary.
In 2017, Subsidiary sold to Parent land having a book value of
$90,000 for a total price of $145,000.
Financial statements of the two companies for the year ended
December 31,...
Problem 3: Assume that a parent company acquired 80% of a
subsidiary on January 1, 2014....
Problem 3: Assume that a parent company acquired 80% of a
subsidiary on January 1, 2014. The purchase price was $175,000 in
excess of the subsidiary’s book value of Stockholders’ Equity on
the acquisition date, and that excess was assigned entirely to an
unrecorded Patent owned by the subsidiary. The assumed economic
useful life of the patent is 10 years. Assume that subsidiary sells
inventory to the parent. The parent, ultimately, sells the
inventory to customers outside of the consolidated...
On January 1, 20X1, Parent Company purchased 80% of the common
stock of Subsidiary Company for...
On January 1, 20X1, Parent Company purchased 80% of the common
stock of Subsidiary Company for $316,000. On this date, Subsidiary
had common stock, other paid-in capital, and retained earnings of
$40,000, $120,000, and $190,000, respectively. Net income and
dividends for 2 years for Subsidiary Company were as follows:
20X1 20X2
Net income $50,000 $90,000
Dividends 10,000 20,000
On January 1, 20X1, the only tangible assets of Subsidiary that
were undervalued were inventory and building. Inventory, for which
FIFO is...
Consolidation subsequent to date of acquisition—Equity
method with noncontrolling interest , AAP and gain on upstream...
Consolidation subsequent to date of acquisition—Equity
method with noncontrolling interest , AAP and gain on upstream
intercompany equipment sale
A parent company acquired its 75% interest in its subsidiary on
January 1, 2011. On the acquisition date, the total fair value of
the controlling interest and the noncontrolling interest was
$350,000 in excess of the book value of the subsidiary’s
Stockholders’ Equity. All of that excess was allocated to a Royalty
Agreement, which had a zero book value in the...
In January 1, 2014 James Company has acquired 85% of LuLu
Company for
$2,125,000
on the...
In January 1, 2014 James Company has acquired 85% of LuLu
Company for
$2,125,000
on the date of the acquisition the subsidiary had retained earnings
$650,000 and a capital of $1,100,000.
Separate balance sheet as of 1 January 2014 for James and its
Subsidiary.
Description
Parents
Subsidiary
Cash
60,000
35,000
Receivable
35,000
40,000
Land
1,550,000
550,000
Property
1,500,000
1,200,000
Investment in Subsidiary
2,125,000
-
Total asset
5,270,000
1,825,000
Account payable
50,000
60,000
Other liabilities
67,000
15,000
Capital stock
3,900,000
1,100,000...
Consolidation at the end of the first year subsequent to
date of acquisition—Cost method (purchase price...
Consolidation at the end of the first year subsequent to
date of acquisition—Cost method (purchase price equals book
value)
Assume that the parent company acquires its subsidiary on January
1, 2016, by exchanging 31,500 shares of its $1 par value Common
Stock, with a market value on the acquisition date of $40 per
share, for all of the outstanding voting shares of the acquiree.
You have been charged with preparing the consolidation of these two
companies at the end of...
In January 1, 2014 James Company has acquired 85% of LuLu
Company for
$2,125,000
on the...
In January 1, 2014 James Company has acquired 85% of LuLu
Company for
$2,125,000
on the date of the acquisition the subsidiary had retained earnings
$650,000 and a capital of $1,100,000.
Separate balance sheet as of 1 January 2014 for James and its
Subsidiary.
Description
Parents
Subsidiary
Cash
60,000
35,000
Receivable
35,000
40,000
Land
1,550,000
550,000
Property
1,500,000
1,200,000
Investment in Subsidiary
2,125,000
-
Total asset
5,270,000
1,825,000
Account payable
50,000
60,000
Other liabilities
67,000
15,000
Capital stock
3,900,000
1,100,000...
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...