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

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances: A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders. -Based on the preceding information,what amount of land will be included in the consolidated balance sheet immediately following the acquisition?

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.Denver'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.Eliminating 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,

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?

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 will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances: A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders. -Based on the preceding information,what amount of buildings and equipment (net)will be included in the consolidated balance sheet immediately following the acquisition?

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 total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?

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?

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances: A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders. -Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?

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 the following data for 20X8 and 20X9: 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 comprehensive income attributable to the controlling interest for 20X9?

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 will be reported as noncontrolling interest in the consolidated balance sheet prepared immediately after the business combination?

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 been paid for them.There were no other receivables or payables between the companies at December 31,20X8. -Based on the information given,what balance in accounts receivable did Y Company report at December 31,20X8?

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?

Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000. The fair value of the noncontrolling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances: A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and $300,000 respectively. Goodwill is assigned proportionately to Bristle and the noncontrolling shareholders. -Based on the preceding information,what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?

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 the following data for 20X8 and 20X9: 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 comprehensive income attributable to the controlling interest for 20X8?

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 the following data for 20X8 and 20X9: 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?

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,the increase in the fair value of patents held by Wisden is:

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 the following data for 20X8 and 20X9: 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?

When a parent owns less than 100% of a subsidiary,the noncontrolling interest shareholders are allocated their ownership percentage of income or net assets in all of the following eliminating entries except for:

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?

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 been paid for them.There were no other receivables or payables between the companies at December 31,20X8. -Based on the information given,what was the fair value of Y Company as a whole at the date of acquisition?