Exam 5: Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value

Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?

The following information applies to Questions 48-51: On January 1, 20X8, Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash. At that date, Animation reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Animation's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Animation reported Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years. -Based on the preceding information,what is the amount of consolidated comprehensive income reported for 20X9?

Top Corporation acquired 80 percent of Bottom Corporation's common stock on January 1,20X8,for $520,000.At that date,Bottom reported common stock outstanding of $250,000 and retained earnings of $375,000.Assume the fair value of the noncontrolling interest on January 1,20X8 was $130,000.The book values and fair values of Bottom's assets and liabilities were equal on the acquisition date,except for other intangible assets,which had a fair value $25,000 greater than book value and a 5-year remaining life.Top and Bottom reported the following data for 20X8 and 20X9: a.Compute consolidated comprehensive income for 20X8 and 20X9. b.Compute comprehensive income attributable to the controlling interest for 20X8 and 20X9. Problem 58 (continued):

The following information applies to Questions 14 - 20 On January 1, 20X6, Interstate Corporation acquired 70 percent of Catapult Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: At the date of the business combination, the book values of Catapult's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. -Based on the preceding information,what amount of consolidated retained earnings will be reported in the consolidated balance sheet prepared immediately after the business combination?

The following information applies to Questions 52-53 On January 1, 20X8, Colorado Corporation acquired 75 percent of Denver Company's voting common stock for $90,000 cash. At that date, the fair value of the noncontrolling interest was $30,000. Denvers's balance sheet at the date of acquisition contained the following balances: At the date of acquisition, the reported book values of Denver's assets and liabilities approximated fair value. Consolidating entries are being made to prepare a consolidated balance sheet immediately following the business combination. -Based on the preceding information,in the entry to eliminate the investment balance,

The following information applies to Questions 14 - 20 On January 1, 20X6, Interstate Corporation acquired 70 percent of Catapult Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: At the date of the business combination, the book values of Catapult's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. -Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?

Based on the preceding information,what amount of buildings and equipment (net)will be included in the consolidated balance sheet immediately following the acquisition?

The following information applies to Questions 14 - 20 On January 1, 20X6, Interstate Corporation acquired 70 percent of Catapult Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: At the date of the business combination, the book values of Catapult's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. -Based on the preceding information,what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?

The following information applies to Questions 21-26 On December 31, 20X8, X Company acquired controlling ownership of Y Company. A consolidated balance sheet was prepared immediately. Partial balance sheet data for the two companies and the consolidated entity at that date follow: During 20X8, X Company provided consulting services to Y Company and has not yet paid for them. There were no other receivables or payables between the companies at December 31, 20X8. -Rohan Corporation holds assets with a fair value of $150,000 and a book value of $125,000 and liabilities with a book value and fair value of $50,000.What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Helms Company pays $90,000 to acquire 75 percent ownership in Rohan and goodwill of $20,000 is reported?

The following information applies to Questions 48-51: On January 1, 20X8, Bristol Company acquired 80 percent of Animation Company's common stock for $280,000 cash. At that date, Animation reported common stock outstanding of $200,000 and retained earnings of $100,000, and the fair value of the noncontrolling interest was $70,000. The book values and fair values of Animation's assets and liabilities were equal, except for other intangible assets which had a fair value $50,000 greater than book value and an 8-year remaining life. Animation reported Bristol reported net income of $100,000 and paid dividends of $30,000 for both the years. -Based on the preceding information,what is the amount of consolidated comprehensive income reported for 20X8?

The following information applies to Questions 41-45 On January 1, 20X6, Polka Co. (Polka) and Strauss Co. (Strauss) had condensed balance sheets as follows: On January 2, 20X6, Polka borrowed $90,000 and used the proceeds to acquire 90% of the outstanding common shares of Strauss. This debt is payable in ten equal annual principal and accrued interest payments beginning December 30, 20X6. On the acquisition date, the fair value of Strauss was $100,000, and the excess cost of the investment over Strauss's carrying amount of acquired net assets should be allocated 60% to inventory and 40% to goodwill. -Stockholders' equity on the January 2,20X6,consolidated balance sheet should be:

The following information applies to Questions 14 - 20 On January 1, 20X6, Interstate Corporation acquired 70 percent of Catapult Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: At the date of the business combination, the book values of Catapult's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. -Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination?

The following information applies to Questions 29-31 On January 1, 20X6, Climber Corporation acquired 90 percent of Wisden Corporation for $180,000 cash. Wisden reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Wisden reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 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 five years. All depreciable assets held by Wisden at the date of acquisition had a remaining economic life of five years. Climber uses the equity method in accounting for its investment in Wisden. -Based on the preceding information,what balance would Climber report as its investment in Wisden at January 1,20X8?

Pink Inc.sells half of its 70% interest in Brown Co.on January 1,20X6.On that date,the fair value of Brown as a whole is $940,000 and the carrying amount of Pink's 70% share of Brown is $320,000.What,if any,is the gain on the sale of half of Pink's interest in Brown?

The following information applies to Questions 35-26 On December 31, 20X8, Melkor Corporation acquired 80 percent of Sydney Company's common stock for $160,000. At that date, the fair value of the noncontrolling interest was $40,000. Of the $75,000 differential, $10,000 related to the increased value of Sydney's inventory, $20,000 related to the increased value of its land, and $25,000 related to the increased value of its equipment that had a remaining life of 10 years from the date of combination. Sydney sold all inventory it held at the end of 20X8 during 20X9. The land to which the differential related was also sold during 20X9 for a large gain. At the date of combination, Sydney reported retained earnings of $75,000 and common stock outstanding of $50,000. In 20X9, Sydney reported net income of $60,000, but paid no dividends. Melkor accounts for its investment in Sydney using the equity method. -Based on the preceding information,what is the amount of write-off of differential associated with this acquisition recorded by Melkor during 20X9?

On December 31,20X8,Defoe Corporation acquired 80 percent of Crusoe Company's common stock for $104,000 cash.The fair value of the noncontrolling interest at that date was determined to be $26,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: On that date,the book values of Crusoe's assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and buildings and equipment,which had a fair value of $100,000.At December 31,20X8,Defoe reported accounts payable of $15,000 to Crusoe,which reported an equal amount in its accounts receivable. Required: 1)Provide the consolidating entries needed to prepare a consolidated balance sheet immediately following the business combination. 2)Prepare a consolidated balance sheet worksheet. Problem 55 (continued):

The following information applies to Questions 7-13 On January 1, 20X9, Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest at that date was determined to be $40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: At the date of the business combination, the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory, which had a fair value of $45,000, and land, which had a fair value of $60,000. -Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?

Based on the preceding information,what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?

The following information applies to Questions 39-40 On January 1, 20X8, Ramon Corporation acquired 75 percent of Tester Company's voting common stock for $300,000. At the time of the combination, Tester reported common stock outstanding of $200,000 and retained earnings of $150,000, and the fair value of the noncontrolling interest was $100,000. The book value of Tester's net assets approximated market value except for patents that had a market value of $50,000 more than their book value. The patents had a remaining economic life of ten years at the date of the business combination. Tester reported net income of $40,000 and paid dividends of $10,000 during 20X8. -Based on the preceding information,what balance will Ramon report as its investment in Tester at December 31,20X8,assuming Ramon uses the equity method in accounting for its investment?

The following information applies to Questions 32 - 34 On January 1, 20X2, Ephraim Corporation acquired 80 percent of Lilac Corporation for $200,000 cash. Lilac reported net income of $25,000 each year and dividends of $5,000 each year for 20X2, 20X3, and 20X4. On January 1, 20X2, Lilac reported common stock outstanding of $160,000 and retained earnings of $40,000, and the fair value of the noncontrolling interest was $50,000. It held land with a book value of $90,000 and a market value of $100,000, and equipment with a book value of $40,000 and a market value of $48,000 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 eight years. All depreciable assets held by Lilac at the date of acquisition had a remaining economic life of eight years. Ephraim uses the equity method in accounting for its investment in Lilac. -Based on the preceding information,what balance would Ephraim report as its investment in Lilac at January 1,20X4?