Exam 3: The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

On January 1, 20X6, Joseph Company acquired 80% of Salt Company's outstanding stock for cash. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Salt Company's net assets at the date of acquisition. Selected balance sheet data at December 31, 20X6 are as follows: -Based on the preceding information,what amount should be reported as noncontrolling interest in net assets in Joseph Company's December 31,20X6,consolidated balance sheet?

On January 1, 20X6, Joseph Company acquired 80% of Salt Company's outstanding stock for cash. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Salt Company's net assets at the date of acquisition. Selected balance sheet data at December 31, 20X6 are as follows: -Based on the preceding information,what amount will Joseph Company report as common stock outstanding in its consolidated balance sheet at December 31,20X6?

For which of the following reporting units is the preparation of combined financial statements most appropriate?

Zeta Corporation and its subsidiary reported consolidated net income of $320,000 for the year ended December 31,20X8.Zeta owns 80 percent of the common shares of its subsidiary,acquired at book value.Noncontrolling interest was assigned income of $30,000 in the consolidated income statement for 20X8.What is the amount of separate operating income reported by Zeta for the year?

In reading a set of consolidated financial statements you are surprised to see the term noncontrolling interest not reported under the Liability section of the Balance Sheet. Required: a.What is a non-controlling interest? b.Why must it be reported in the financial statements as an element of equity rather than a liability?

On January 1,20X8,Gregory Corporation acquired 90 percent of Nova Company's voting stock,at underlying book value.The fair value of the noncontrolling interest was equal to 10 percent of the book value of Nova at that date.Gregory uses the equity method in accounting for its ownership of Nova.On December 31,20X8,the trial balances of the two companies are as follows: Required: 1)Provide all consolidating entries required as of December 31,20X8,to prepare consolidated financial statements. 2)Prepare a three-part consolidation worksheet. Problem 48 (continued):

On January 3, 20X9, Jane Company acquired 75 percent of Miller Company's outstanding common stock for cash. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Miller Company's net assets at the date of acquisition. Selected balance sheet data at December 31, 20X9, are as follows: -Based on the preceding information,what amount will Jane Company report as common stock outstanding in its consolidated balance sheet at December 31,20X9?

On January 1, 20X8, Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date. Wilhelm uses the equity method in accounting for its ownership of Kaiser. On December 31, 20X9, the trial balances of the two companies are as follows: -Based on the preceding information,what amount would be reported as total stockholder's equity in the consolidated balance sheet at December 31,20X9?

Parent Company acquired 90% of Son Inc.on January 31,20X2 in exchange for cash.The book value of Son's individual assets and liabilities approximated their acquisition-date fair values.On the date of acquisition,Son reported the following: During the year Son Inc.reported $310,000 in net income and declared $15,000 in dividends.Parent Company reported $520,000 in net income and declared $25,000 in dividends.Parent accounts for their investment using the equity method. Required: 1)What journal entry will Parent make on the date of acquisition to record the investment in Son Inc.? 2)If Parent were to prepare a consolidated balance sheet on the acquisition date (January 31,20X2),what is the basic consolidation entry Parent would use in the consolidation worksheet? 3)What is Parent's balance in "Investment in Son Inc." prior to consolidation on December 31,20X2? 4)What is the basic consolidation entry Parent would use in the consolidation worksheet on December 31,20X2? Problem 47 (continued):

On January 3, 20X9, Redding Company acquired 80 percent of Frazer Corporation's common stock for $344,000 in cash. At the acquisition date, the book values and fair values of Frazer's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Frazer. The stockholders' equity accounts of the two companies at the acquisition date are: Noncontrolling interest was assigned income of $11,000 in Redding's consolidated income statement for 20X9. -Based on the preceding information,what is the total stockholders' equity in the consolidated balance sheet as of January 3,20X9?

Maple Corporation and its subsidiary reported consolidated net income of $380,000 for the year ended December 31,20X5.Maple owns 75% of the common shares of its subsidiary,acquired at book value.Noncontrolling interest was assigned income of $25,000 in the consolidated income statement for 20X5.What is the amount of separate operating income reported by Maple for the year?

On January 1, 20X8, Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at that date. Wilhelm uses the equity method in accounting for its ownership of Kaiser. On December 31, 20X9, the trial balances of the two companies are as follows: -Based on the preceding information,what amount would be reported as noncontrolling interest in the consolidated balance sheet at December 31,20X9?

On January 3, 20X9, Redding Company acquired 80 percent of Frazer Corporation's common stock for $344,000 in cash. At the acquisition date, the book values and fair values of Frazer's assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 20 percent of the total book value of Frazer. The stockholders' equity accounts of the two companies at the acquisition date are: Noncontrolling interest was assigned income of $11,000 in Redding's consolidated income statement for 20X9. -Based on the preceding information,what amount will be assigned to the noncontrolling interest on January 3,20X9,in the consolidated balance sheet?

On January 2, 20X2, Kentucky Company acquired 70% of Bluegrass Corporation's common stock for $420,000 cash. At the acquisition date, the book values and fair values of Bluegrass' assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 30% of the total book value of Bluegrass. The stockholders' equity accounts of the two companies at the acquisition date are as follows: Noncontrolling interest was assigned income of $15,000 in Kentucky's consolidated income statement for 20X2. -Based on the preceding information,what is the total stockholders' equity in the consolidated balance sheet as of January 2,20X2?

Cosby Corporation acquired 60 percent of Huxtable Corporation's voting common stock.Huxtable's buildings and equipment had a book value of $200,000 and a fair value of $250,000 at the time of the acquisition.What will be the amount at which Huxtable's buildings and equipment will be reported in consolidated statements on the acquisition date?

On January 1,20X8,Zeta Company acquired 85 percent of Theta Company's common stock for $100,000 cash.The fair value of the noncontrolling interest was determined to be 15 percent of the book value of Theta at that date.What portion of the retained earnings reported in the consolidated balance sheet prepared immediately after the business combination is assigned to the noncontrolling interest?

On January 1,20X5,Seaside Company acquires 90 percent ownership in Rainbow Corporation for $180,000.The fair value of the noncontrolling interest at that time is determined to be $20,000.Rainbow reports net assets with a book value of $160,000 and fair value of $175,000.Seaside Company reports net assets with a book value of $480,000 and a fair value of $525,000 at that time,excluding its investment in Rainbow.What will be the amount of goodwill that would be reported immediately after the combination?

Consolidated financial statements tend to be most useful for:

Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31,20X9.On the date of acquisition,Princeton held land with a book value of $150,000 and a fair value of $300,000; Sheffield held land with a book value of $100,000 and fair value of $500,000.Using the entity theory,at what amount would land be reported in a consolidated balance sheet prepared immediately after the combination?

Xing Corporation owns 80 percent of the voting common shares of Adams Corporation.Noncontrolling interest was assigned $24,000 of income in the 20X9 consolidated income statement.What amount of net income did Adams Corporation report for the year?