Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 3, Problem 29P
a.
To determine
Prepare a consolidation worksheet for these two companies as of December 31, 2018.
b.
To determine
Find the account balances which would the parent’s individual financial statements show for the Equity in Subsidiary Earnings, Retained Earnings, and Investment in Company A’s accounts.
c.
To determine
Explain the manner in which the consolidation entries differ on a December 31, 2018, worksheet.
d.
To determine
Explain the manner in which the December 31, 2018, reported consolidated balances differ.
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Parent company theory.
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1.
Parent company theory
2.
Economic unit theory
1.
2.
Assuming the economic unit theory:
$
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Jeter Corporation purchases 80% of the outstanding stock of Super Company for $275,000 on July 1, 2015. Super Company has the following stockholders’ equity on July 1, 2015:Common stock ($5 par). . . . . . . . . . . . . . . . . . . . . . . . . $150,000Retained earnings, July 1, 2015 . . . . . . . . . . . . . . . . . . 50,000Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000The fair values of Super’s assets and liabilities agree with the book values, except for the equipment and the building. The equipment is undervalued by $10,000 and is thought to have a 5-year life; the building is undervalued by $50,000 and is thought to have a 20-year life. The remaining excess of cost over book value is attributable to goodwill. Jeter Corporation uses the simple equity method to record its investments. Since the purchase date, both firms have operated separately, and no intercompany transactions have occurred. Super Company closes its books on the date of…
Chapter 3 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
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