bvs.1 Prophet Corporation acquired 75 percent of Seer Corporation's voting common stock on December 31, 20X4, for $390,000. At thedate of combination, Seer reported the following:AssetsCurrent AssetsLong-Term Assets (net)Total$ 220,000420,000LiabilitiesCurrent LiabilitiesLong-Term LiabilitiesCommon Stock$ 640,000Retained EarningsTotal$ 80,000200,000120,000240,000$ 640,000At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, whichhad a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fairvalue of the noncontrolling interest was determined to be $130,000 at that date.Required:Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare theconsolidation entry or entries needed to prepare a consolidated balance sheet at December 31, 20X4.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Part 2:Step 1: Recognize Prophet's Investment in Seer1. Record the initial investment in Seer by…

Answered: Prophet Corporation acquired 75 percent…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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Prophet Corporation acquired 75 percent of Seer Corporation's voting common stock on December 31, 20X4, for $390,000. At the date of combination, Seer reported the following: Assets Current Assets Long-Term Assets (net) Total 220,000 420,000 $ 640,000 Liabilities Current Liabilities Long-Term Liabilities Common Stock Retained Earnings Total $ 80,000 200,000 120,000 240,000 $ 640,000 At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, which had a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fair value of the noncontrolling interest was determined to be $130,000 at that date. Required: Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet at December 31, 20X4. Note: If no entry is required…
Prophet Corporation acquired 75 percent of Seer Corporation's voting common stock on December 31, 20X4, for $390,000. At the date of combination, Seer reported the following: Assets Current Assets Long-Term Assets (net) Total $ 220,000 420,000 640,000 Liabilities Current Liabilities Long-Term Liabilities Common Stock Retained Earnings Total $ 80,000 200,000 120,000 240,000 $ 640,000 At December 31, 20X4, the book values of Seer's net assets and liabilities approximated their fair values, except for buildings, which had a fair value of $80,000 more than book value, and inventories, which had a fair value of $36,000 more than book value. The fair value of the noncontrolling interest was determined to be $130,000 at that date. Required: Prophet Corporation wishes to prepare a consolidated balance sheet immediately following the business combination. Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet at December 31, 20X4.
Trim Corporation acquired 100 percent of Round Corporation's voting common stock on January 1, 20X2, for $414,000. 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 $ 713,000 Accounts Payable Bonds Payable $ 104,000 195,000 Common Stock 128,000 Total $ 713,000 Retained Earnings Total 286,000 $ 713,000 Round reported net income of $79,000 for 20X2 and paid dividends of $26,000. Required: a. Give the journal entries recorded by Trim Corporation during 20X2 on its books if Trim accounts for its investment in Round using the equity method. b. Give the consolidation entries needed at December 31, 20X2, to prepare consolidated financial statements. Complete this question by enter
Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2. Balance sheet datafor the two companies immediately following acquisition follow: 7. What amount of consolidated retained earnings will be reported? A.P 295,000 C. P 232,000B. P 268,000 D. P 205,0008. What amount of stockholders; equity will be reported?A. P 355,000 C. P 419,500B. P 397,000
M.T. Glass, Inc. purchased the following investments onJanuary 1, 2028:1. 21,000 shares (representing 42%) of AA Company stockfor $546,0002. 18,000 shares (representing 9%) of ZZ Company stockfor $306,000AA Company and ZZ Company reported the following informationfor the years 2028 and 2029:2028: AA Company ZZ CompanyNet income $140,000 $225,000Total dividends paid $ 78,000 $ 53,000Market value at Dec 31 $33 per share $22 per share2029: AA Company ZZ CompanyNet income $210,000 $280,000Total dividends paid $ 90,000 $125,000Market value at Dec 31 $35 per share $23 per shareCalculate the amount of dividend revenue shown in M.T. Glass,Inc.'s 2029 income statement for these two investments.
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $283,500. Steal reported the following net income and dividend payments: Year Net Income Dividends Paid 20X7 $ 48,000 $ 28,000 20X8 58,000 38,000 20X9 33,000 13,000 On January 1, 20X7, Steal had $256,000 of $10 par value common stock outstanding and retained earnings of $156,000, and the fair value of the noncontrolling interest was $189,000. Steal held land with a book value of $26,500 and a market value of $34,000 and equipment with a book value of $338,000 and a market value of $378,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: Compute the increase in the fair value of patents held by Steal. Prepare the…
On January 1, 2021 Pail corp acquired 80 percent of Sand Company's stock fo 640,000 cash. The fair value of the noncontrolling interest at that date was determined to be 160,000. For the year ended December 31 2021 Pail reported dividends of 46,000 on its general ledger. Sand reported devidends of 37000 on its general ledger. What amount of dividends would be reported on 12/31/21 consolidated statement of retained earnings?
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1, 20X7, for $277,500. Steal reported the following net income and dividend payments: Dividends Paid Year Net Income 20X7 $ 45,000 $ 25,000 20X8 55,000 35,000 10,000 20X9 30,000 On January 1, 20X7, Steal had $250,000 of $6 par value common stock outstanding and retained earnings of $150,000, and the fair value of the noncontrolling interest was $185,000. Steal held land with a book value of $23,500 and a market value of $31,000 and equipment with a book value of $335,000 and a market value of $375,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of 10 years. All depreciable assets held by Steal at the date of acquisition had a remaining economic life of eight years. Required: a. Compute the increase in the fair value of patents held by Steal. Increase in fair value
Adams' net assets at the purchase date totaled P900,000. Fair stock on January 2, 20x3 for P400,000. The carrying amount of 5. Sage, Inc. bought 40% of Adams Corp.'s outstanding common investment in associate on Dec. 31, 20x1? d. 40,000; 592,000; 2,092,000 (40,000); 632,000; 2,132,000 a. 40,000; 592,000; 2,029,000 b. 50,000; 750,000; 2,255,000 c. (40,000); 632,000; 2,132,00 d. 40,000; 592,000; 2,092,000 с. is a maxin * Sage, Inc. bought 40% of Adams Corp.'s outstanding common Stock on January 2, 20x3 for P400.000, The carrying amount of Adams' net assets at the purchase date totaled P900,000. Fair values and carrying amounts were the same for all items ended decla other 31, 20 except for plant and inventory, for which fair values exceeded their carrying amounts by P90,000 and P10,000, respectively, The plant has an eighteen-year life. The inventory was sold during 20x3. During 20x3, Adams reported net income of P120,000 and paid a P20,000 cash dividend. What amount should Sage report…
On January 1, 2021, Entity F acquired 25% of the shares of Pot, Inc. for P425,000. At this date all identifiable assets and liabilities of Pot, Inc. were recorded at amounts equal to fair value, and the equality of Pot consisted of the following: Share capital P1,000,000 General reserve P300,000 Asset revaluation surplus P200,000 Retained earnings P200,000 In 2021, Pot reported profit of P250,000. P50,000 of the asset revaluation surplus was realized in 2021. Pot paid P40,000 divedend and transferred P30,000 to general reserve. What is the carrying amount of the investment in Pot, Inc. as of December 31,2021? a. P465,000 b. P477,000 c. P482,500 d. P490,000
P Inc. purchased 81% of the voting shares of S Inc for $696,143 cash on January 1, year 2. P recorded Investment in S at cost. The Balance Sheet of P Inc. & S Inc. for year 5 showed the following balances P Inc. S Inc. Investment $696,143 $90,653 What is the amount for Investment on Consolidated Balance Sheet of P Inc. for year5?
Problem Company owns 90 percent of Solution Dairy's stock. The balance sheets of the two companies immediately after the Solution acquisition showed the following amounts: Assets Cash & Receivables. Inventory Land Buildings & Equipment (net) Investment in Solution Dairy Total Assets Liabilities & Stockholders' Equity Current Payables Long-Term Liabilities Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Problem Company $ 132,000 211,000 74,000 409,000 259,200 $ 1,085,200 Solution Dairy $ 88,000 108,000 54,000 228,000 $ 478,000 $ 77,000 254,200 382,000 372,000 $ 30,000 180,000 66,000 202,000 $ 1,085,200 $ 478,000 The fair value of the noncontrolling interest at the date of acquisition was determined to be $28,800. The full amount of the increase over book value is assigned to land held by Solution. At the date of acquisition, Solution owed Problem $9,000 plus $1,100 accrued interest. Solution had recorded the accrued interest, but Problem had not Required: Prepare…

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