Description of this paper

Stroud Corporation is an 80%-owned subsidiary of Pennie

Description

solution


Question

Question;Stroud Corporation is an 80%-owned subsidiary of Pennie, Inc., acquired by Pennie several years ago. On January 1, 20X2, Pennie sold land with a book value of $60,000 to Stroud for $90,000. Stroud resold the land to an unrelated party for $100,000 on September 26, 20X3. The land will beincluded in the December 31, 20X2 consolidated balance sheet of Pennie, Inc. and Subsidiary at _______.Sun Company is a 100%-owned subsidiary of Peter Company. On January 1,20X1, Sun Company has $500,000 of 8% face rate bonds outstanding, withan unamortized discount of $5,000 which is being amortized over a 5 yearremaining life to maturity. On that date, Peter Company purchased thebonds for $497,000. The adjustment to the consolidated income of the twocompanies needed in the consolidation process for 20X2 (the followingyear) is __________. Powell Company owns an 80% interest in Sauter, Inc. On January 1, 20X1,Sauter issued $400,000 of 10-year, 12% bonds at a premium of $25,000. OnDecember 31, 20X5, 5 years after original issuance, Powell purchased allof the outstanding bonds for $390,000. Both firms use the straight-linemethod of amortization.Bond interest expense included in the 20X5 subsidiary incomedistribution schedule is __________. Assume investments in the stock of firms not included in the consolidated group result in the nonconsolidated firm reporting incomeof $200,000 and the firm paid dividends of $50,000. If the consolidatedfirm paid $10,000 more than book value for its 40% interest and regardsthe excess as attributable to goodwill, the operating activities,prepared using the indirect method, would reflect a net increase as aresult of this investment of __________.Puddle Corporation acquired 90% of Suds Company's common stock onJanuary 1, 20X1 for $32,000 cash when Sud's stockholders' equityconsisted of:Common Stock $20,000Retained Earnings $ 4,000A determination and distribution schedule was prepared for thedifference between the price paid by Puddles and the underlying equityacquired in Suds with the excess of cost over book value being allocatedas:Inventory (undervalued) $ 400Building & Equipment (undervalued) 2,000Patent 8,000Allocated excess cost over book value $10,400=======The inventory was sold during 20X1, and the building and equipment arebeing depreciated for 5 years using the straight-line method. The Patentis expected to have a 10-year useful life.The separate December 31, 20X1 financial statements for Puddle and Sudsis attached. Complete the worksheet and provide supporting calculations as needed and an explanation of the elimination and adjustment entries.Supernova Company had the following summarized balance sheet on December31, 20X1:AssetsAccounts receivable.................................... $ 200,000Inventory.............................................. 450,000Property and plant (net)............................... 600,000Goodwill............................................... 150,000Total................................................ $1,400,000==========Liabilities and EquityNotes payable.......................................... $ 600,000Common stock, $5 par................................... 300,000Paid-in capital in excess of par....................... 400,000Retained earnings...................................... 100,000Total................................................ $1,400,000==========The fair value of the inventory and property and plant is $600,000 and$850,000, respectively.Assume that Redstar Corporation purchases 100% of thecommon stock of Supernova Company for $1,800,000.What value will be assigned to the following accounts of the Supernova Company when preparing a consolidated balance sheet on December 31, 20X1?1) Inventory ___________2.) Property and Plant ___________3.) Goodwill ___________4) Noncontrolling Interestb.) Prepare a supporting determination and distribution of excessschedule

 

Paper#38506 | Written in 18-Jul-2015

Price : $27
SiteLock