Question

1)On January 1, 2017, Padme Corp. acquired 80% of the voting common stock of Stormtrooper Inc....

1)On January 1, 2017, Padme Corp. acquired 80% of the voting common stock of Stormtrooper Inc. During the year, Padme sold to Stormtrooper for $450,000 goods which cost $330,000. Stormtrooper still owned 15% of the goods at year-end. Stormtrooper's reported net income was $204,000, and Padme's net income was $806,000. Padme decided to use the equity method to account for this investment. What was the noncontrolling interest's share of consolidated net income?
A. $3,600.
B. $22,800.
C. $30,900.
D. $32,900.
E. $40,800.

2)During 2017, Poe Co. sold inventory to its wholly-owned subsidiary, Starwar Co. The inventory cost $30,000 and was sold to Starwar for $44,000. From the perspective of the combination, when is the $14,000 gain realized?

A. When the goods are sold to a third party by Starwar.
B. When Starwar pays Poe for the goods.
C. When Poe sold the goods to Starwar.
D. When the goods are used by Starwar.
E. No gain can be recognized since the transaction was between related parties.

3)Pepe, Incorporated acquired 60% of Sheev Company on January 1, 2016. On that date Sheev sold equipment to Pepe for $45,000. The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 10 years. Sheev reported net income of $300,000 and $325,000 for 2016 and 2017, respectively. Pepe uses the equity method to account for its investment in Sheev. What is the gain or loss on equipment reported by Sheev for 2016?
A. $54,000 gain.
B. $21,000 loss.
C. $21,000 gain.
D. $9,000 loss.
E. $9,000 gain.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer 1) A) $3600

Stormtooper having stock of $67500 (450000*15%), which is purchase from Padme Corp.

Unrealized Profit of Padme Corp. On stock of Stormtrooper is = 67500*(450000-330000)/450000

= $18000

Now, Non Controlling interest share of consolidated net Income = 18000*20% = $3600

Answer 2) A) When the goods are sold to third party by Strawar.

Poe. Company will recognize the profit only if Subsidiary company sell the goods to third party.

Answer 3) E) $9000 gain

Cost of equipment to Pepe Company = Cost- Depreciation

= 120000 - 66000 = $54000

Now, Gain on sale of equipment = 54000-45000

= $9000

Company Pepe will recognize gain of $9000.

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 January 1, 2017, Pond Co. acquired 40% of the outstanding voting common shares of Ramp...
On January 1, 2017, Pond Co. acquired 40% of the outstanding voting common shares of Ramp Co. for $700,000. On that date, Ramp reported assets and liabilities with book values of $2.2 million and $700,000, respectively. A building owned by Ramp had an appraised value of $300,000, although it had a book value of only $120,000. This building had a 12-year remaining life and no salvage value. It was being depreciated on the straight-line basis. Ramp generated net income of...
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)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017,...
1)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017, for $257,000. Annual amortization of $19,000 resulted from this acquisition. Presents reported net income of $70,000 in 2017 and $50,000 in 2018 and paid $22,000 in dividends each year. Santa reported net income of $40,000 in 2017 and $47,000 in 2018 and paid $10,000 in dividends each year. On the consolidated financial statements for 2017, a)what amount should have been shown for Equity in...
Hamza Inc. acquired all of the outstanding common stock of Ali Corp. on January 1, 2016,...
Hamza Inc. acquired all of the outstanding common stock of Ali Corp. on January 1, 2016, for $372,000. Equipment with a ten-year life was undervalued on Ali's financial records by $46,000. Hamza also owned an unrecorded customer list with an assessed fair value of $67,000 and an estimated remaining life of five years. (USE THIS TABLE TO ANSWER THE NEXT TWO Q’s) Ali Co. earned reported net income of $180,000 in 2016 and $216,000 in 2017.  Dividends of $70,000 were paid...
Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2020....
Renz Co. acquired 80% of the voting common stock of Sogers Corp. on January 1, 2020. During 2020, Sogers had revenues of $2,900,000 and expenses of $2,400,000. The amortization of fair value allocations totaled $60,000 in 2020. Not including its investment in Sogers, Renz Co. had its own revenues of $5,800,000 and expenses of $3,200,000 for the year 2020. The noncontrolling interest's share of the earnings of Sogers Corp. for 2020 is calculated to be
On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne...
On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $784,000 consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $196,000 and Rockne's assets and liabilities had a collective net fair value of $980,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $380,000 in 2018. Since being acquired, Rockne has regularly supplied inventory...
PAM Co. acquired all of the common stock of Sista Co. on January 1, 2017. As...
PAM Co. acquired all of the common stock of Sista Co. on January 1, 2017. As of that date, Sista had the following trial balance: Debit Credit Accounts payable $ 60,000 Accounts receivable $ 50,000 Additional paid-in capital 60,000 Buildings (net) (20-year life) 140,000 Cash and short-term investments 70,000 Common stock 300,000 Equipment (net) (8-year life) 240,000 Intangible assets (indefinite life) 110,000 Land 90,000 Long-term liabilities (mature 12/31/19) 180,000 Retained earnings, 1/1/17 120,000 Supplies 20,000 Totals $ 720,000 $ 720,000...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed,...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $972,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,020,000 and Retained Earnings of $51,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $108,000. QuickPort attributed the $9,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following:...
On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of Poe...
On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of Poe & Company. The purchase price was $320,000. Danner has significant influence over Poe. No amortization is required. During 2016, Poe reported income of $126,000 and paid dividends of $30,000. On January 2, 2017, Danner sold 4,000 shares for $51,500. Required: Compute the balance in Equity Investment at December 31, 2016. Prepare the journal entry to record the sale of the 4,000 shares. What was...
4. On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of...
4. On January 2, 2016, Danner Corp. purchased 32,000 shares (40%) of the common stock of Poe & Company. The purchase price was $320,000. Danner has significant influence over Poe. No amortization is required. During 2016, Poe reported income of $126,000 and paid dividends of $30,000. On January 2, 2017, Danner sold 4,000 shares for $51,500. Required: a. Compute the balance in Equity Investment at December 31, 2016. b. Prepare the journal entry to record the sale of the 4,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT