ave & ExitSubmitCheck my work7SkippedMcGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective ofHogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retainedearnings of $80,000. An analysis of Hogan's net assets revealed the following:eBookMcGrawBuildings (10-year life).Equipment (4-year life)Book Value$ 10,000Fair Value14,0005,000$ 8,00018,00012,000LandAny excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2022, what adjustment is necessary for Hogan's Buildings account?Multiple Choice$1,620 increase

Book Value vs. Fair Value: The consolidation process considers the fair value of the subsidiary's…

Answered: ave & Exit Submit Check my work 7…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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LGM Motors acquired 80% of NS Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition. Consolidated Balances Amount Total Assets 15,670,000 Total Liabilities 4,575,000 Total Shareholder’s Equity ? The book value of the net assets of NS Services Center is P4,500,000. The assets of NS Service Center are fairly valued except for the following: Patent on the product that is deemed worthless, P50,000. Goodwill of P150,000. Unrecognized identifiable R&D of P75,000. The fair value of the non-controlling interest is 705,000 and the book value of LGM’s equity balance is P9,500,000. On December 31, 2022 the following information were provided by NS Services Center: Net income of 400,000 was Patents remaining useful life is 4 Pre-existing goodwill presented above was impaired with a current value of 120,000. Dividends were declared…
On August 31, 2020, Southampton Co. acquired all of the common stock of Brighton Company, which became a division of Southampton Co. Brighton Company reported the followir statement of financial position at the time of the acquisition: Brighton Company Statement of Financial Position Assets Equity and Liabilities Share capital- Plant assets (ne t) $1,350,000 $1,150,000 ordinary 235,000 Retained earnings Inventory Receivables 1,070,000 587.000 800,000 Accounts payable Cash 422.000 Total assets $2.807.000 Total equity and liabilities $2.807.000 An appraisal indicated that the fair value of the inventory was $372,000 and the fair value of the plant assets was $1,550,000. The agreed purchase price was $3,600,000, and this amount was paid in cash to the previous owners of Brighton Company. Required: a. Prepare the entry to record the purchase of Brighton Company. b. Assume that the carrying amount of Brighton Company division's net assets, including goodwill is $2.550,000. The recoverable…
On July 31, 2020, Swifty Company paid $3,540,000 to acquire all of the common shares of Blue Spruce Incorporated, which became a division of Swifty. Blue Spruce reported the following statement of financial position at the time of the acquisition Blue Spruce Inc. Statement of Financial Position As at July 31, 2020 Current assets $944,000 Current liabilities $708.000 Non-current assets 3.186.000 Long-term liabilities 590.000 Shareholders'equity 2832.000 Total liabilities and Total assets $4.130.000 shareholders equity $4.130.000 Itwas determined at the date of the purchase that the fair value of the identifiable net assets of Blue Spruce was $3.245,000. Over the next six months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foresecable future. At December 31, 2020, Blue Spruce reports the following statement of financial position information: Current assets 531.000 Non-current assets…
LGM Motors acquired 80% of NS Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition. Consolidated Balances Total Assets Total Liabilities Amount 15,670,000 4,575,000 Total Shareholder's Equity The book value of the net assets of NS Services Center is P4,500,000. The assets of NS Service Center are fairly valued except for the following: • Patent on the product that is deemed worthless, P50,000. • Goodwill of P150,000. • Unrecognized identifiable R&D of P75,000. The fair value of the non-controlling interest is 705,000 and the book value of LGM's equity balance is P9,500,.000. On December 31, 2022 the following information were provided by NS Services Center: • Net income of 400,000 was recognized. • Patents remaining useful life is 4 years. • Pre-existing goodwill presented above was impaired with a current value of 120,000. • Dividends were declared amounting to…
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2015, Sea-Breeze had the following assets and liabilities:The companies’ financial statements for the year ending December 31, 2018, follow:Answer the following questions:a. How can the accountant determine that the parent has applied the initial value method?b. What is the annual excess amortization initially recognized in connection with this acquisition?c. If the parent had applied the equity method, what investment income would the parent have recorded in 2018?d. What amount should the parent report as retained earnings in its January 1, 2018, consolidated balance sheet?e. What is consolidated net income for 2018 and what amounts are attributable to the controlling and noncontrolling interests?f. Within consolidated statements at January 1,…
Audi Motors acquired 80% of BMW Service Center outstanding shares on January 1, 2022 by paying cash. The consolidated statement of financial position showed the following balances at the date of acquisition. Consolidated Balances Amount Total Assets 15,670,000 Total Liabilities 4,575,000 Total Shareholder’s Equity ? The book value of the net assets of BMW Services Center is P4,500,000. The assets of BMW Service Center are fairly valued except for the following: Patent on the product that is deemed worthless, P50,000. Goodwill of P150,000. Unrecognized identifiable R&D of P75,000. The fair value of the non-controlling interest is 705,000 and the book value of Audi’s equity balance is P9,500,000. On December 31, 2022 the following information were provided by BMW Services Center: Net income of 400,000 was recognized. Patents remaining useful life is 4 years. Pre-existing goodwill presented above was impaired with a current value of 120,000.…
Anthem Co. acquired 60% of the outstanding shares of Bethel Co. onJanuary 2, 2021. Anthem Co. acquired it at book value which is the sameas its fair value at the date of acquisition. Income Statement of AnthemCo. and Bethel Co. for 2022 are as follows:Anthem Co.Net Sales P875,000Cost of Sales 525,000Gross Profit 350,000Operating Expenses 105,000Operating Income 245,000Dividend Income 56,000Net Income P301,000Bethel Co. made sales to Anthem Co. of P112,000 in 2021 andP168,000 in 2022.Anthem Co. reported inventory on December 31, 2021 amounting toP70,000 of which 20% comes from Bethel Co. and inventory onDecember 31, 2022 amounting to P84,000 of which 30% comes fromBethel Co.Anthem Co. made sales to Bethel Co. of P273,000 in 2021 andP338,000 in 2022.Bethel reported inventory coming from Anthem Co. as of December31, 2021 and December 31, 2022 in the amount of P54,600 andP152,100, respectively.Anthem Co. uses 30% mark-up on cost and Bethel Co. uses 25%mark-up on cost for their selling…
Peer, Inc. acquires 75 percent of Sea-breeze Corporation for P600,000 cash on January 1, 2016. The remaining percent of the Sea-breeze shares traded near a total value of 200,000 both before and after the acquisition date. NCI is measured on a full basis .On January 1, 2016, Sea-breeze had the following assets and liabilities: Book Value Fair Value Current Assets P 250,000 P 250,000 Land 100,000 100,000 Building (net) – 5-year-year life 400,000 350,000 Equipment (net) – 8-year life 300,000 400,000 Patent (10-year life) -0- 50,000 Accounts Payable (200,000) (200,000) Bonds Payable – 5-years (150,000) (175,000) Net P 700,000 P 775,000 Common Stock P 650,000 Retained Earnings P 50,000 The companies’ financial statements for the year ending December 31, 2016 using cost method are as follows: Peer Sea-Breeze Revenue P (800,000) P (250,000) Operating expenses…
On August 1, ABC Corporation acquired 80 percent of XYZ Corporation for P560,000. XYZ Corporation had the following book and market values at acquisition date. In good accounting form, please. Thank you! <33
ABC Corporation acquired 70 percent of XYZ Corporation on August 1 for P420,000. On that date, XYZ Corporation had the following book values and market values. What is the amount of purchase differential recognized on the acquisition date consolidated balance sheet with respect to plant assets. *In good accounting form, please. Thank you!
On January 1, 2024, Flower Company purchased 100% of the common stock of Cornell Company for $380,000 cash. Fair values differed from book values as follows: Fair value Inventory $45,000 Land 50,000 Buildings 200,000 Bonds Payable 95,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Parent Sub. Account Titles Company Company Assets: Inventory 150,000 30,000 Cash 639,000 165,000 Investment in Sub. Company 380,000 Land 20,000 30,000 Buildings, net 250,000 180,000 Goodwill 40,000 Liabilities and Equity: Current Liabilities 191,000 65,000 Bonds Payable 500,000 100,000 Common Stock 100,000 50,000 Other Paid-in Capital 150,000 70,000 Retained Earnings 538,000 120,000 Which of the following is not one of the eliminations and adjustments included on the consolidation worksheet…
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2018. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2018, Sea-Breeze had the following assets and liabilities: Book Value Fair Value Current assets $ 150,000 $ 150,000 Land 200,000 200,000 Buildings (net) (6-year remaining life) 300,000 360,000 Equipment (net) (4-year remaining life) 300,000 280,000 Patent (10-year remaining life) 0 100,000 Liabilities (400,000 ) (400,000 ) The companies’ financial statements for the year ending December 31, 2021, follow: Nascent Sea-Breeze Revenues $ (600,000 ) $ (300,000 ) Operating expenses 410,000 210,000 Investment income (42,000 ) 0 Net income $ (232,000 ) $ (90,000 ) Retained earnings, 1/1/21 $ (700,000 ) $ (300,000 ) Net income…

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