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Question;35.;On January 1, 20X1, Parent Company acquired 100% of;the common stock of Subsidiary Company for $750,000. On this date Subsidiary;had total owners' equity of $540,000.;Any excess of cost over book value is attributable to land;undervalued $10,000, and to goodwill.;During 20X1 and 20X2, Parent has appropriately accounted for its;investment in Subsidiary using the simple equity method.;On January;1, 20X2, Parent held merchandise acquired from Subsidiary for $10,000. During 20X2;Subsidiary sold merchandise to Parent for $100,000, of which $20,000 is held by;Parent on December 31, 20X2. Subsidiary's usual gross profit on affiliated;sales is 40%.;On December 31, 20X2, Parent still owes Subsidiary $20,000 for;merchandise acquired in December.;On January;1, 20X2, Parent sold to Subsidiary some equipment with a cost of $50,000 and a;book value of $20,000. The sales price was $40,000. Subsidiary is depreciating;the equipment over a five-year life, assuming no salvage value and using the;straight-line method.;Required;Complete the Figure 4-3 worksheet for consolidated financial;statements for the year ended December 31, 20X2.;7.;On January 1, 20X1, Parent Company acquired 80% of;the common stock of Subsidiary Company for $560,000. On this date Subsidiary;had total owners' equity of $540,000, including retained earnings of $240,000.;During 20X1, Subsidiary had net income of $60,000 and paid no dividends.;Any excess of cost over book value is attributable to land;undervalued $10,000, and to goodwill.;During 20X1 and 20X2, Parent has appropriately accounted for its;investment in Subsidiary using the cost method.;On January;1, 20X2, Parent held merchandise acquired from Subsidiary for $10,000. During;20X2, Subsidiary sold merchandise to Parent for $100,000, of which $20,000 is;held by Parent on December 31, 20X2. Subsidiary's usual gross profit on;affiliated sales is 40%.;On December 31, 20X2, Parent still owes Subsidiary $20,000 for;merchandise acquired in December.;On January;1, 20X2, Parent sold to Subsidiary some equipment with a cost of $50,000 and a;book value of $20,000. The sales price was $40,000. Subsidiary is depreciating;the equipment over a five-year life, assuming no salvage value and using the;straight-line method.;Required;Complete the Figure 4-4 worksheet for consolidated financial;statements for the year ended December 31, 20X2.;4-16;Chapter 4;8.;On January 1, 20X1, Powers Company acquired 80% of;the common stock of Sculley Company for $195,000. On this date Sculley had;total owners' equity of $200,000 (common stock, other paid-in capital and;retained earnings of $10,000, $90,000 and $100,000 respectively).;Any excess;of cost over book value is attributable to inventory (worth $6,250 more than;cost), to equipment (worth $12,500 more than book value), and to patents. FIFO;is used for inventories. The equipment has;a;remaining life of five years and straight-line;depreciation is used. The excess to patents is to be amortized over 20 years.;The Powers company concept (pro rata fair value approach) is to be used in any;write up of assets.;Powers 7% Bonds Payable are due in 20X8 and Sculley 12% Bonds;are due in 20X5.;On July 1, 20X2 Sculley borrowed $100,000 from Powers with a 10%;1-Year Note.;During 20X1 and 20X2, Powers has appropriately accounted for its;investment in Sculley using the cost method.;On January;1, 20X2, Powers held merchandise acquired from Sculley for $10,000. During 20X2;Sculley sold merchandise to Powers for $50,000, $20,000 of which is still held;by Powers on December 31, 20X2. Sculley's usual gross profit on affiliated;sales is 50%.;On December;31, 20X1, Powers sold equipment to Sculley at a gain of $10,000. During 20X2;the equipment was used by Sculley. Depreciation is being computed using the;straight-line method, a five-year life, and no salvage value.;Required;a. Using the;information above or on the Figure 4-5 worksheet, prepare a determination and;distribution of excess schedule.;b. Complete;the Figure 4-5 worksheet for consolidated financial statements for the year;ended December 31, 20X2.;4-18;Chapter 4;Chapter 4;9.;On January 1, 20X1, Powers Company acquired 80% of;the common stock of Sculley Company for $195,000. On this date Sculley had;total owners' equity of $200,000 (common stock, other paid-in capital, and;retained earnings of $10,000, $90,000, and $100,000 respectively).;Any excess;of cost over book value is attributable to inventory (worth $6,250 more than;cost), to equipment (worth $12,500 more than book value), and to patents. FIFO;is used for inventories. The equipment has;a;remaining life of five years and straight-line;depreciation is used. The excess to the patents is to be amortized over 20;years. The Powers company concept (pro rata fair value approach) is to be used;in any write up of assets.;During 20X1 and 20X2, Powers has appropriately accounted for its;investment in Sculley using the simple equity method.;Powers 7% Bonds Payable are due in 20X8 and Sculley 12% Bonds;are due in 20X5.;On July 1, 20X2 Sculley borrowed $100,000 from Powers with a 10%;1-Year Note.;On January;1, 20X2, Powers held merchandise acquired from Sculley for $10,000. During;20X2, Sculley sold merchandise to Powers for $50,000, $20,000 of which is still;held by Powers on December 31, 20X2. Sculley's usual gross profit on affiliated;sales is 50%.;On December;31, 20X1, Powers sold equipment to Sculley at a gain of $10,000. During 20X2;the equipment was used by Sculley. Depreciation is being computed using the;straight-line method, a five-year life, and no salvage value.;Required;a. Using the;information above or on the Figure 4-6 worksheet, prepare a determination and;distribution of excess schedule.;b. Complete;the Figure 4-6 worksheet for consolidated financial statements for the year;ended December 31, 20X2.;4-21;4-23;Chapter 4;10.;On January 1, 20X1, Powers Company acquired 80% of;the common stock of Sculley Company for $195,000. On this date Sculley had;total owners' equity of $200,000 (common stock, other paid-in capital, and;retained earning of $10,000, $90,000, and $100,000 respectively).;Any excess;of cost over book value is attributable to inventory (worth $6,250 more than;cost), to equipment (worth $12,500 more than book value), and to the patents.;FIFO is used for inventories. The equipment has a remaining life of five years;and straight-line depreciation is used. The excess attributable to the patents;is to be amortized over 20 years. The Powers company concept (pro rata fair;value approach) is to be used in any write up of assets.;During 20X1 and 20X2, Powers has appropriately accounted for its;investment in Sculley using the sophisticated equity method.;On January;1, 20X2, Powers held merchandise acquired from Sculley for $10,000. During;20X2, Sculley sold merchandise to Powers for $50,000, $20,000 of which is still;held by Powers on December 31, 20X2. Sculley's usual gross profit on affiliated;sales is 50%.;On December;31, 20X1, Powers sold equipment to Sculley at a gain of $10,000. During 20X2;the equipment was used by Sculley. Depreciation is being computed using the;straight-line method, a five-year life, and no salvage value.;Required;a. Using the;information above or on the Figure 4-7 worksheet, prepare a determination and;distribution of excess schedule.;b. Complete;the Figure 4-7 worksheet for consolidated financial statements for the year;ended December 31, 20X2.;4-24;Chapter 4;4-26;Chapter 4

 

Paper#44363 | Written in 18-Jul-2015

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