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a.
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary
To Explain:
b.
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Explain: Journal entry that S recorded for the receipt of assets and accounts payable from P.
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Chapter 1 Solutions
Advanced Financial Accounting
- North Ltd acquired $100,000 of shares in South Ltd for trading purposes on 1 January 20X3. Transaction costs of $2,000 were incurred. The fair value of the shares at 31 December 20X3 was $120, 500. Choose the account names and calculate the amount that correctly account for this investment on 31 December 20X3 (amount for the credit entry is not required).arrow_forwardOn January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio Issued to the owners of Mason $329,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $32,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $17,000 in connection with stock Issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Presidio Company Mason Company $ 36,200 Items $ 81,900 Receivables 290,000 151,000 Inventory 378,000 178,000 Land 284,000 272,000 Buildings (net) 469,000 280,000 Equipment (net) 194,000 71,100 Accounts payable (179,000) (47,700) Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 (462,000) (329,000) (110,000) в 0 (120,000) (360,000) (585,900) (491,600) Note:…arrow_forwardDuring a fiscal year, the balance of a parent company's Investment in Subsidiary ledger account for a wholly owned subsidiary, for which the parent company uses the equity method of accounting, increases the amount of the sibsidiary's A. Adjusted net income. B. Dividends. C. Adjusted net income plus dividends. D. Undistributed earnings.arrow_forward
- The general ledger of Grumpy Corporation as of December 31, 2021, includes the following accounts: Соprights Deposits with advertising agency (will be used to promote goodwill) 27,000 Discount on bonds payable Excess of cost over fair value of identifiable net assets of Р30,000 70,000 acquired subsidiary Trademarks 90,000 90,000 In the preparation of Grumpy's balance sheet as of December 31, 2021, what should be reported as total intangible assets?arrow_forwardThe December 31, 20x8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: Assets Cash and Receivables Inventory Buildings and Equipment (net) Investment in Saloon Company Total Assets Liabilities and Equity Accounts Payable Common Stock Retained Earnings Total Liabilities and Equity PINT CORPORATION AND SALOON COMPANY Balance Sheets December 31, 20x8 view transaction list Consolidation Worksheet Entries A B < Pint acquired the shares of Saloon Company on January 1, 20X7. On December 31, 20X8, assume Pint sold Inventory to Saloon during 20X8 for $105,000 and Saloon sold Inventory to Pint for $309,000. Pint's balance sheet contains Inventory Items purchased from Saloon for $100,000. The Items cost Saloon $60,000 to produce. In addition, Saloon's Inventory contains goods it purchased from Pint for $27,000 that Pint had produced for $16,200. Assume Saloon reported net Income of $72,000 and dividends of $14,400.…arrow_forwardThe trial balances for Wallace Corporation and Au Inc. at December 31, Year 4, just before the transaction described below, were as follows: Current assets Land Other tangible assets Liabilities Common shares Retained earnings, 1/1/Year 4 Revenues Expenses Land Other tangible assets Liabilities On December 31, Year 4, Wallace purchased all of the outstanding shares of Au Inc. by issuing 39,000 common shares with a market value of $25 per share. The carrying amounts of Au Inc.'s assets and liabilities were equal to fair value except for the following: Fair Value $527,000 354,000 339,000 Walla $307,000 627,000 527,000 427,000 227,000 627,000 827,000 647,000 Required: What are the balances for the land, other tangible assets, goodwill, investment in common shares, liabilities, common shares, and revenues after the transaction noted above on: (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.) (a) Wallace's separate entity financial statements…arrow_forward
- Rim Ltd purchased assets of 8,00,000 from Ant Ltd. It issued equity shares of 100 each full paid up in satisfaction of their claim. Make Journal entries to record these transactions.arrow_forwardOn December 31, Year 1, P Company obtains control over the net assets of S Company by purchasing 100% of the ordinary shares of S Company. P Company paid for the purchase by issuing ordinary shares with a fair value of $44,000. In addition, P Company paid $1,000 for professional fees to facilitate the transaction. The following information has been assembled just prior to the acquisition date: Show Transcribed Text Goodwill Plant assets (net) Current assets Shareholders' equity Long-term debt Current liabilities Show Transcribed Text (i) the acquisition method (ii) the new-entity method Carrying Amount $ 80,000 50.000 $130,000 $ 75,000 25,000 30.000 3 $130,000 ü P Company 3 Fair Value $ 38,000 90,000 55,000 $ 183,000 $ 29,000 30,000 Carrying Amount $ 20.000 15,000 $35.000 $18,000 7,000 10,000 S Company $35,000 Fair Value $ 22,000 26,000 14.000 $ 62,000 $ 8,000 10,000 Required (a) Prepare a consolidated statement of financial position for P Company and calculate the debt-to-equity ratio…arrow_forwardSubject: Corporate Accounting Q) The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000 Required:(a) Pass the necessary journal entry to record the acquisition (2 marks)(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50arrow_forward
- Question 1 .Panther Corporation decided to establish Snake Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Snake issued 100,000 shares of $2 par value common stock. The following information is provided on the assets and liabilities transferred: Cash Accounts Receivable Patent Building & Equipment Land Accounts Payable Cost $50,000 80,000 70,000 200,000 60,000 20,000 Book Value $50,000 75,000 70,000 140,000 60,000 20,000 Required: a. Give the journal entry that Panther recorded for the transfer of assets and liabilities to Snake b. Give the journal entry that Snake recorded for the receipt of assets and liabilities from Pantherarrow_forward1. ABC Company has several subsidiaries that are included in its consolidated financial statements. In its December 31, year 1 trial balance. ABC had the following intercompany balances before eliminations: Determine intercompany receivables.arrow_forwardNorth Ltd acquired $100,000 of shares in South Ltd for trading purposes on 1 January 20X3. Transaction costs of $2,000 were incurred. The fair value of the shares at 31 December 20X3 was $120,500. Choose the account names and calculate the amount that correctly account for this investment on 31 December 20X3 (amount for the credit entry is not required). ENTER YOUR ANSWER IN "Amount" WHOLE NUMBERS WITH NO COMMAS OR DOLLAR SIGNS (EG $1,000,000 SHOULD BE SHOWN AS 1000000; -$1,000,000 SHOULD BE SHOWN AS -1000000). Dr Cr Financial asset Expense Cash Ple Gain in FV-OCI Financial liability Gain in FV-P&L ◆ Amount Amount not required of the question.arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
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