Tanner Company, a subsidiary acquired for cash, owned equipment with a fair value higher than the book value as of the date of combination. A consolidated balance sheet prepared immediately after the acquisition would include this difference in:
Read DetailsOn 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, in the entry to eliminate the investment balance,
Read DetailsPeach Corporation owns 85% of Lemon Corporation. Peach Corporation purchased inventory from Lemon Corporation for $120,000 on September 20, 20X1. Peach resold 80 percent of the inventory to unaffiliated companies prior to December 31, 20X1, for $140,000. What amount of sales will be reported in the 20X1 Consolidated Income Statement?
Read DetailsOn 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, the increase in the fair value of patents held by Side is:
Read DetailsOn January 1, 20X8, Polo Corporation acquired 75 percent of Stallion Company’s voting common stock for $300,000. At the time of the combination, Stallion 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 Stallion’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. Stallion reported net income of $40,000 and paid dividends of $10,000 during 20X8. Based on the preceding information, which of the following is a consolidating entry needed to prepare a full set of consolidated financial statements at December 31, 20X8:
Read DetailsOn 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, what is the amount of write-off of differential associated with this acquisition recorded by Peak during 20X9?
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