P company bought 60% of common stock of S company on January 1, 20x4. On January 1 20x5, there was an intercompany gain of sale of equipment of P63,000. The equipment has an estimated remaining life of 6 years with no salvage value. Net income from own operations of P and S were as follows:
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P company bought 60% of common stock of S company on January 1, 20x4. On January 1 20x5, there was an intercompany gain of sale of equipment of P63,000. The equipment has an estimated remaining life of 6 years with no salvage value. Net income from own operations of P and S were as follows:
Company 20x5 20x6
P Company 280,000 210,000
S Company 70,000 105,000
Assuming upstream sale determine NCI share in net income of S in year 20x6
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- P company bought 60% of common stock of S company on January 1, 20x4. On January 1 20x5, there was an intercompany gain of sale of equipment of P63,000. The equipment has an estimated remaining life of 6 years with no salvage value. Net income from own operations of P and S were as follows:Company 20x5 20x6P Company 280,000 210,000S Company 70,000 105,000Assuming upstream sale determine NCI share in net income of S in year 20x6 (without .00)Beef Company acquired 70% of Broccoli on January 1. On that date, the fair value of equipment with 3-year remaining life was P90,000 more than the book value. During the year Broccoli reported net income of 210,000. The non-controlling interest in net income for the year was P63,000. P33,000 P54,000 P72,000On January 1, 20x1, C Corp. acquired 80% of the outstanding ordinary shares of S Inc. On January 5, 20x1, C sold machinery costing P600,000 to S Inc. for P550,000. The machinery has an original estimated useful life of 6 years and has a remaining useful life of five years on the date of sale. 1. What is the consolidated amount of machinery on December 31, 20x1? ans. 500,000 2. What is the consolidated amount of accumulated depreciation on December 31, 20x1? ans. 200,000 3. What is the amount of intercompany profit (loss) that must be deferred at December 31, 20x1? ans. 40,000 Please show me the solution to understand how they were able to derive those answers.
- Spartan Inc. acquired 15% (90,000 shs) of the outstanding common stock of Buckeye Inc. on January 1, 20B for $2,160,000 (price was $84,000 over net book value - all related to Spartan’s share of undervalued equipment with a remaining life of 12 years; depreciation is st-line). Buckeye reported net income of $1,460,000 and declared and paid $902,000 of cash dividends during 20B. Fair value of the Buckeye shares was $26/share at year end. Required: (a) Prepare the journal entries for Spartan Inc. for 20B (include the acquisition entry), assuming that Spartan cannot exercise significant influence over Buckeye. The securities are correctly accounted for using the fair value method (trading portfolio). (b) Assume now that Spartan acquires an additional 10% of Buckeye for $1,440,000 (total share is now 25%) and can exercise significant influence over Buckeye (equity method is required). The total purchase price of the 25% share ($3,600,000) was $140,000 over the book value of Buckeye’s…P Markets Co. purchased 60% of S Ltd’s ordinary share capital on 1 January 20X4 for $540,000. The retained earnings of S Ltd at that date were $90,000. S Ltd’s share capital has remained unchanged since the acquisition. The additional information relates to the year ended 31 December 20X6. P Markets S $000 $000 Non-current assets Property plant and equipment 600 200Investments 540 Current assets Inventory 230 80 Trade receivables Bank 140 42 Bank 40…Keswick Co acquired 80% of the share capital of Derwent Co on 1 June 20X5. The summarised draft statements of profit or loss for Keswick Co and Derwent Co for the year ended 31 May 20X6 are shown below: Keswick Co Derwent Co $000 8,400 (4,600) 3,800 (1,500) (700) $000 3,200 (1,700) 1,500 Revenue Cost of sales Gross profit Distribution costs (510) Administrative costs (450) Profit before tax 1,600 (600) 540 Тах (140) Profit of the year 1,000 400 During the year Keswick Co sold goods costing $1,000,000 to Derwent Co for $1,500,000. At 31 May 20X6, 30% of these goods remained in Derwent Co's inventory. Task 1 Use the information above to complete the following financial statement: Revenue Less: Cost of sales Gross profit Less: Distribution costs Administrative costs Profit before tax Less: Tax Profit for the year Attributable to: Equity owners of Keswick Co Non-controlling interest
- On January 1, 20X1, XYZ, Inc. purchased 70% of Set Corporation for $469,000. On that date the book value of the net assets of Set totaled $500,000. Based on the appraisal done at the time of the purchase, all assets and liabilities had book values equal to their fair values except as follows: Book Value Fair Value Inventory $100,000 $120,000 Land 75,000 85,000 Equipment (useful life 4 years) 125,000 165,000 The remaining excess of cost over book value was allocated to a patent with a 10-year useful life. During 20X1 XYZ reported net income of $200,000 and Set had net income of $100,000. What income from subsidiary did Promo include in its net income if Promo uses the simple equity method? a. $70,000 b. $42,000 c. $38,000 d. $110,000People Co. acquired 80% of Steeple Co.'s common stock for $10,000,000 in cash on Jan. 2, 20x1. At that date, Steeple's 56,000,000 of net assets were fairly stated, except for an unrecorded intangible asset, favorable leases, with a $1,000,000 value (useful life of 10 years, straight-line amortization). The estimated fair value of the noncontrolling interests at the acquisition date was $2,000,000. People Co. accounts for its investment in Steeple Co. using the equity method. There are no intra-entity transactions and both firms are in the U.S.A It is now December 31, 20x3. Steeple reported net income of $250,000 for the current year, and declared and paid $40,000 in dividends. There were no impairments of Steeple's assets in 20x1, 20x2 or but goodwill is impaired by $100,000 in 20x3. Show consolidating entry R (relates to recognizing revalued assets and liabilities) that would be needed to present consolidated financial statements for 20x3.Richard Company purchased 20% of Cliff Company for P3,000,000 during the current year. This investment did not give Richard Company the ability to exercise significant influence over Cliff Company. During the year, Cliff Company reported net income of P3,500,000 and paid cash dividends of P4,000,000. What is the carrying amount of the investment in Cliff Company ot the end of the current year? o a.2.200,000 O b.2,900,000 O .3,000,000 o d. 3,700,000
- Z Company swapped 4,000 shares of ordinary share capital ,P100 par value with Int'l Inc.' equipment. The equipment costs International P1,000,000 when purchased five years ago, and currently has a fair value of P560,000. The equipment has a recorded accumulated depreciation of P550,000 in the books of International. How much is the amount to record for the equipment?Pirate Corporation purchased 100 percent ownership of Ship Company on January 1, 20X5, for $271,000. On that date, the book value of Ship’s reported net assets was $209,000. The excess over book value paid is attributable to depreciable assets with a remaining useful life of 10 years. Net income and dividend payments of Ship in the following periods were as shown below: Year Net Income Dividends 20X5 $ 25,000 $ 16,000 20X6 45,000 26,000 20X7 25,000 42,000 Required: Prepare journal entries on Pirate Corporation’s books relating to its investment in Ship Company for each of the three years, assuming it accounts for the investment using the equity method.Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2. Balance sheet data for the two companies immediately following acquisition follow: Item Power Silk Cash P44,000 P30,000Accounts Receivable 110,000 45,000Inventory 130,000 70,000Land 80,000 25,000Buildings and equipment 500,000 400,000Less: Accumulated depreciation (223,000) (165,000)Investment in Silk Corporation stock 150,500Total Assets P 791,500 P 405,000 Accounts payable…