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

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup 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,Pancake Company provided consulting services to Syrup Company and has not yet paid for them.There were no other receivables or payables between the companies at December 31,20X8. -Based on the information given,what amount will be reported as total controlling interest in the consolidated balance sheet?

On December 31,20X8,Pancake Company acquired controlling ownership of Syrup 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,Pancake Company provided consulting services to Syrup Company and has not yet 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 Syrup Company as a whole at the date of acquisition?

On January 1,20X8,Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.At that date,Stamp 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 Stamp'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.Stamp reported the following data for 20X8 and 20X9: Package 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 1,20X9,Pirate 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 liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?

On January 1,20X8,Parsley Corporation acquired 75 percent of Sage Company's voting common stock for $90,000 cash.At that date,the fair value of the noncontrolling interest was $30,000.Sage's balance sheet at the date of acquisition contained the following balances: At the date of acquisition,the reported book values of Sage'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,the amount of goodwill reported is:

On January 1,20X9,Pirate 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 1,20X2,Pint Corporation acquired 80 percent of Size Corporation for $200,000 cash.Size reported net income of $25,000 each year and dividends of $5,000 each year for 20X2,20X3,and 20X4.On January 1,20X2,Size 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 Size at the date of acquisition had a remaining economic life of eight years.Pint uses the equity method in accounting for its investment in Size. -Based on the preceding information,what balance would Pint report as its investment in Size at January 1,20X4?

Postage Corporation acquired 75 percent of Stamp 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.Stamp's balance sheet immediately before the combination reflected the following balances: A careful review of the fair value of Stamp'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 Postage and the noncontrolling shareholders. -Based on the preceding information,what amount of Stamp's inventory will be included in the consolidated balance sheet immediately following the acquisition?

On January 1,20X9,Pirate 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 assets will be reported in the consolidated balance sheet prepared immediately after the business combination?

Postage Corporation acquired 75 percent of Stamp 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.Stamp's balance sheet immediately before the combination reflected the following balances: A careful review of the fair value of Stamp'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 Postage and the noncontrolling shareholders. -Based on the preceding information,what amount of Stamp's land will be included in the consolidated balance sheet immediately following the acquisition?

Poppy Corporation acquired 80 percent of Seed Corporation's common stock on January 1,20X8,for $520,000.At that date,Seed 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 Seed'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.Poppy and Seed 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.

On January 1,20X8,Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.At that date,Stamp 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 Stamp'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.Stamp reported the following data for 20X8 and 20X9: Package 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?

On January 1,20X9,Pirate 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 consolidated retained earnings will be reported immediately after the business combination?

Which of the following stockholders' equity accounts are eliminated during the consolidation process?

On January 1,20X2,Pint Corporation acquired 80 percent of Size Corporation for $200,000 cash.Size reported net income of $25,000 each year and dividends of $5,000 each year for 20X2,20X3,and 20X4.On January 1,20X2,Size 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 Size at the date of acquisition had a remaining economic life of eight years.Pint uses the equity method in accounting for its investment in Size. -Based on the preceding information,what balance would Pint report as its investment in Size at January 1,20X5?

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice 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 Spice'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?

On January 1,20X8,Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.At that date,Stamp 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 Stamp'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.Stamp reported the following data for 20X8 and 20X9: Package 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?

Postage Corporation acquired 75 percent of Stamp 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.Stamp's balance sheet immediately before the combination reflected the following balances: A careful review of the fair value of Stamp'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 Postage and the noncontrolling shareholders. -Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet immediately following the acquisition?

On December 31,20X8,Peak Corporation acquired 80 percent of Summit 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 Summit'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.Summit 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,Summit reported retained earnings of $75,000 and common stock outstanding of $50,000.In 20X9,Summit reported net income of $60,000,but paid no dividends.Peak accounts for its investment in Summit using the equity method. -Based on the preceding information,the amount of goodwill reported in the consolidated financial statements prepared immediately after the combination is:

On January 1,20X6,Pumpkin Corporation acquired 70 percent of Spice 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 Spice'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 total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?