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

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 will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?

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 assets 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 20X8?

Scissor 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 Paper Company pays $90,000 to acquire 75 percent ownership in Scissor and goodwill of $20,000 is reported?

On January 1,20X6,Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash.Side reported net income of $30,000 and dividends of $10,000 for 20X6,20X7,and 20X8.On January 1,20X6,Side 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 Side at the date of acquisition had a remaining economic life of five years.Plus uses the equity method in accounting for its investment in Side. -Based on the preceding information,what balance would Plus report as its investment in Side at January 1,20X8?

On December 31,20X5,Paris Corporation acquired 60 percent of Sanlo Company's common stock for $180,000.At that date,the fair value of the noncontrolling interest was $120,000.Of the $45,000 differential,$5,000 related to the increased value of Sanlo's inventory,$15,000 related to the increased value of its land,and $10,000 related to the increased value of its equipment that had a remaining life of five years from the date of combination.Sanlo sold all inventory it held at the end of 20X5 during 20X6.The land to which the differential related was also sold during 20X6 for a large gain.In 20X6,Sanlo reported net income of $40,000 but paid no dividends.Paris accounts for its investment in Sanlo using the equity method. -Based on the preceding information,what amount of differential would Paris amortize during 20X6 in its equity method journal entries?

On December 31,20X5,Paris Corporation acquired 60 percent of Sanlo Company's common stock for $180,000.At that date,the fair value of the noncontrolling interest was $120,000.Of the $45,000 differential,$5,000 related to the increased value of Sanlo's inventory,$15,000 related to the increased value of its land,and $10,000 related to the increased value of its equipment that had a remaining life of five years from the date of combination.Sanlo sold all inventory it held at the end of 20X5 during 20X6.The land to which the differential related was also sold during 20X6 for a large gain.In 20X6,Sanlo reported net income of $40,000 but paid no dividends.Paris accounts for its investment in Sanlo 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 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 percentage of Syrup Company's shares were acquired by Pancake Company?

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 consolidated retained earnings will be reported in the consolidated balance sheet prepared immediately after the business combination?