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.
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- Use the following data for Problems 10–15: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 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the consolidated total of noncontrolling interest appearing on the balance sheet?a. $85,500b. $83,100c. $87,000d. $70,500Use the following data for Problems 10–15: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 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the total of consolidated cost of goods sold?a. $140,000b. $152,000c. $132,000d. $145,000Use the following data for Problems 10–15: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 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the total of consolidated revenues?a. $500,000b. $460,000c. $420,000d. $400,000
- Use the following data for Problems 10–15: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 31, the financial statements appeared as follows:Included in the above statements, Jarel sold inventory costing $80,000 to Suarez for $100,000. Of these goods, Suarez still owns 60 percent on December 31.What is the consolidated total for equipment (net) at December 31?a. $735,000.b. $740,000.c. $760,000.d. $765,000.7. On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000. XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. As an independent case, assume that the goodwill is impaired by P5,000 by December 31, determine the net income/(net loss) attributable to the controlling interest. As of December 31, the financial statements appeared as follows:(Use the data below for Questions 7-17.) Company Pacquires 80% of Company S for $600,000 on 1/1/19. P did not pay a "control premium" for the acquisition. On that date, S reported common stock of $200,000 and retained earnings of $250,000. In addition, the fair value of S's buildings (14-year remaining life) was higher than their carrying value by $70,000. All other assets and liabilities have fair value equal to carrying value. P uses the partial equity method to record its investment in S. Below are some data taken from accounting records of the year 2020 (the second year). P's own operating income, 2020: $540,000 S's net income, 2020 $180,000 S's retained earnings at 1/1/20: $340,000 S's dividends declared, 2020: $120,000 Provide the following figures: 7. NCI in net assets (i.e., NCI's fair value) at the acquisition date: 8. Goodwill at the acquisition date: 9. Consolidated net income, 2020: 10. NCI in net income, 2020: 11. P's net income, 2020: 12. P's "Investment in S", 12/31/20:…
- On 1-1-2011, the company REGAL purchased 30% of the outstanding voting shares of company ARON for $600,000. The book value of ARON's net assets at the date of purchase was $1,800,000. REGAL was willing to pay more than the book value of the acquired shares solely because ARON's depreciable assets with a 10-year remaining life were undervalued. REGAL uses straight-line depreciation. During 2011, ARON reported net income of $150,000 and paid dividends of $60,000. The fair value of the investment in ARON as of 31-12-2011 was $590,000. Assume REGAL uses the fair value method (classified as fair value through profit or loss) to account for its investment in ARON. The income reported by REGAL during 2011 pertaining to the ARON investment was: (PLEASE PROVIDE EXPLAINTION) A) $10,000 B) $42,000 C) $63,000 D) $39,000 E) None of the above.3. On January 1, ABC Acquired 60 percent of the outstanding voting stock of XYZ for P301,500 cash consideration. The remaining 40 percent of XYZ had an acquisition date fair value of P138,500. On January 1, XYZ possessed equipment (5-year life) that was undervalued on its books P25,000. XYZ also had developed several secret formulas that ABC assessed at P50,000. Theses formulas, although not recorded on XYZ's financial records, were estimated to have a 20-year future life. ABC also determined that the inventory of XYZ is overvalued by P10,000. 80% of these inventories remain unsold by the end of the year. Determine the net income (net loss) attributable to the non-controlling interest. As of December 31, the financial statements appeared as follows:On 1-1-2011, the company REGAL purchased 30% of the outstanding voting shares of company ARON for $600,000. The book value of ARON's net assets at the date of purchase was $1,800,000. REGAL was willing to pay more than the book value of the acquired shares solely because ARON's depreciable assets with a 10-year remaining life were undervalued. REGAL uses straight-line depreciation. During 2011, ARON reported net income of $150,000 and paid dividends of $60,000. The fair value of the investment in ARON as of 31-12-2011 was $590,000. Assume there is no goodwill implicit in the investment in ARON at acquisition date. The net income reported by REGAL during 2011 pertaining to the ARON investment was: A) $18,000 B) $45,000 C) $63,000 D) $39,000 E) None of the above
- 1. On January 1, 2018, Koehn Company bought 25% outstanding ordinary shares of Cosby Company for P1 million. The book value of the net asset acquired was P3 million. The difference was attributable to the fair value of Cosby's machinery exceeding book value. The machinery has a remaining life of 10 years. 0n January 3, 2018, Koehn Company sold an equipment costing P600,000 to Cosby Company for P800,000. The equipment has a remaining life of five years. In 2018, Cosby Company reported net income of P1,000,000. Cash dividends of P100,000 were declared and paid by Cosby Company on December 31, 2018. How much is the carrying amount of the investment in associate on December 31, 2018?On 1-1-2011, the company REGAL purchased 30% of the outstanding voting shares of company ARON for $600,000. The book value of ARON's net assets at the date of purchase was $1,800,000. REGAL was willing to pay more than the book value of the acquired shares solely because ARON's depreciable assets with a 10-year remaining life were undervalued. REGAL uses straight-line depreciation. During 2011, ARON reported net income of $150,000 and paid dividends of $60,000. The fair value of the investment in ARON as of 31-12-2011 was $590,000. Assume there is no goodwill implicit in the investment in ARON at acquisition date. The net income reported by REGAL during 2011 pertaining to the ARON investment was: PLEASE PROVIDE EXPLANATION A) $18,000 B) $45,000 C) $63,000 D) $39,000 E) None of the aboveDirection: Analyze the case and give what is asked. On January 2, 20X1, Entity X purchases 75% of the common stock of Entity Y for P250,000. Entity Y has P200,000 and P50,000 common stock and retained earnings, respectively. On December 31, 20X1, Entity X sold equipment to Entity Y for P80,000. The equipment generally costs Entity X P120,000 when purchased four (4) years ago. Moreover, it is depreciated over its life of 10 years using the straight-line method with no residual value. The companies have the following data for years 20X1 and 20X2: Entity X Items 20X1 20X2 Dividends Paid Comprehensive Income from Own Operation Р38,000 147,000 Р60,000 159,000 Entity Y Items 20X1 20X2 Dividends Paid to X P22,500 50,000 P31,500 74,000 Comprehensive Income from Own Operation Required: 1. Prepare the necessary journal and elimination entries that should be made in 20X1 and 20X2 about the sale of equipment. Follow the steps in the handout. 2. Allocate the consolidated comprehensive income for…