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 35P
a.
To determine
Explain how Company A derived the $66,000 balance in the Subsidiary Earnings account.
b.
To determine
Prepare a worksheet to consolidate the financial information for these two companies.
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On January 1, 2016, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona Inc. for $662,000 cash. At January 1, 2016, Sedona’s net assets had a total carrying amount of $463,400. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $96,000. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has declared a $20,500 dividend. Sedona recorded net income of $99,500 in 2016 and $110,300 in 2017.
Selected account balances from the two companies’ individual records were as follows:
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Phoenix
Sedona
2018 Revenues
$
544,000
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$
381,000
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2018 Expenses
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387,000
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Â
280,000
Â
2018 Income from Sedona
Â
63,350
Â
Â
Â
Â
Retained earnings 12/31/18
Â
270,350
Â
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224,500
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On its December 31, 2018, consolidated…
Allen Company acquired 100 percent of Bradford Company’s voting stock on January 1, 2014, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $14 per share). As of that date, Bradford had stockholders’ equity totaling $105,000. Land shown on Bradford’s accounting records was undervalued by $10,000. Equipment (with a five-year remaining life) was undervalued by $5,000. A secret formula developed by Bradford was appraised at $20,000 with an estimated life of 20 years.
Following are the separate financial statements for the two companies for the year ending December 31, 2018. There were no intra-entity payables on that date. Credit balances are indicated by parentheses.
a. Explain how Allen derived the $66,000 balance in the Subsidiary Earnings account.
b. Prepare a worksheet to consolidate the financial information for these two companies
Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2017, by Issuing 10,000 shares of its $10 par
value common stock (having a fair value of $17.50 per share). As of that date, Bradford had stockholders' equity totaling $112,150. Land
shown on Bradford's accounting records was undervalued by $19.700. Equipment (with a five-year remaining life) was undervalued by
$6,750. A secret formula developed by Bradford was appraised at $36,400 with an estimated life of 20 years.
The following are the separate financial statements for the two companies for the year ending December 31, 2021. There were no
Intra-entity payables on that date. Credit balances are indicated by parentheses.
Allen
Company
Revenues
$ (521,000)
Bradford
Company
$ (303,750)
115,500
54,000
e
Cost of goods sold
Depreciation expense
Subsidiary earnings
172,000
189,000
(131,080)
(291,080)
Net income
$
$ (134,250)
Retained earnings, 1/1/21
Net income (above)
$ (762,000)
(291,080)
175,500
$…
Chapter 3 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10Q
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Paar Corporation bought 100 percent of Kimmel,...Ch. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - If no legal, regulatory, contractual, competitive,...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - What is Phoenixs consolidated retained earnings...Ch. 3 - On its December 31, 2018, consolidated balance...Ch. 3 - Prob. 13PCh. 3 - Herbert, Inc., acquired all of Rambis Companys...Ch. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Following are selected account balances from...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - On January 1, 2017, Pinnacle Corporation exchanged...Ch. 3 - Following are selected accounts for Mergaronite...Ch. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39APCh. 3 - Prob. 40APCh. 3 - Prob. 1DYSCh. 3 - FASB ASC AND IASB RESEARCH CASE A vice president...Ch. 3 - Prob. 4DYSCh. 3 - Prob. 5DYS
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