Question

(20 pnts) Fargus Corporation owned 61% of the voting common stock of Sanatee, Inc. The parent's...

  1. (20 pnts) Fargus Corporation owned 61% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price.
    On January 1, 2010, Sanatee sold $1,800,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on April 1, 2012, for 95% of the face value. Both companies utilized the straight-line method of amortization.
    1. Prepare amortization tables for Fargus (4/1/2012 to 12/31/2013) and Sanatee (1/1/2010 to 12/31/2013)
    2. Determine whether this is gain/loss on retirement of bond on April 1 2012
    3. Determine the consolidated interest expense on Dec 31 2012
    4. If Fargus has net income $200,000 and Sanatee has net income $50,000 in 2012, how much is the consolidated net income?
  1. What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2012?
  1. What consolidation entry would be recorded in connection with these intra-entity bonds on December 31, 2013?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
Fargus Corporation owned 51% of the voting common stock of Sanatee, Inc. The parent's interest was...
Fargus Corporation owned 51% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price. On January 1, 2010, Sanatee sold $1,400,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on April 1, 2012, for 95% of...
Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...
Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,100,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8...
Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...
Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2011, Hamilton sold $1,200,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 7...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2014, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake’s 2015 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $300,000. Scenic reported net income of $110,000. Placid Lake declared $100,000 in dividends during this period;...
Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $590,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $7,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $490,000. Scenic reported net income of $300,000. Placid Lake declared $180,000 in dividends during this period;...
Louise Corp. owned all of the voting common stock of Thelma Co. On January 1, 2017,...
Louise Corp. owned all of the voting common stock of Thelma Co. On January 1, 2017, Thelma sold a parcel of land to Louise. The land had a book value of $32,000 and was sold to Louise for $45,000. What journal entry, if any, should be recorded on the consolidation work sheet for the consolidation the operations of Louise Corp and Thelma Corp as a result of this transaction? SHOW ALL WORK IN SUPPORT OF YOUR ANSWER Chaffee Co. owned...
1.Prater Inc. owned 85% of the voting common stock of Harkin Corp. During 2021, Prater made...
1.Prater Inc. owned 85% of the voting common stock of Harkin Corp. During 2021, Prater made several sales of inventory to Harkin. The total selling price was $215,000 and the cost was $105,000. At the end of the year, 40% of the goods were still in Harkin’s inventory. Harkin’s reported net income was $400,000. Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, what was the net income attributable to the noncontrolling interest...
On January 1, 2012, Smeder Company, an 80% owned subsidiary of Collins, Inc. transferred equipment with...
On January 1, 2012, Smeder Company, an 80% owned subsidiary of Collins, Inc. transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash. At the date of transfer, Smeder's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used. Smeder reported net income of $28,000 and $32,000 for 2012 and 2013, respectively. All net income effects of the intra-entity transfer are...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for...
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company’s outstanding voting stock for $392,000. Birch reported a $355,000 book value and the fair value of the noncontrolling interest was $98,000 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for $228,000 when Cedar had a $204,000 book value and the 20 percent noncontrolling interest was valued at $57,000. In each acquisition, the subsidiary’s excess acquisition-date fair over book value was assigned...
Trim Corporation acquired 100 percent of Round Corporation’s voting common stock on January 1, 20X2, for...
Trim Corporation acquired 100 percent of Round Corporation’s voting common stock on January 1, 20X2, for $405,000. At that date, the book values and fair values of Round’s assets and liabilities were equal. Round reported the following summarized balance sheet data: Assets $ 707,000 Accounts Payable $ 94,000 Bonds Payable 208,000 Common Stock 118,000 Retained Earnings 287,000 Total $ 707,000 Total $ 707,000 Round reported net income of $77,000 for 20X2 and paid dividends of $19,000. Required: a. Give the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT