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Question;7.;On January 1, 20X8, Parent Company purchased 90% of;the common stock of Subsidiary Company for \$350,000. On this date, Subsidiary;had common stock, other paid in capital, and retained earnings of \$20,000, \$;130,000, and \$200,000 respectively.;Any;excess of cost over book value is due to goodwill.;In both 20X8 and 20X9, Parent has accounted for the Investment;in Subsidiary using the cost method.;On January;1, 20X8, Subsidiary sold \$100,000 par value of 6%, ten-year bonds for \$97,000.;The bonds pay interest semi-annually on January 1 and July 1 of each year.;On January 1, 20X9, Parent repurchased all of Subsidiary's bonds;for \$96,400. The bonds are still held on December 31, 20X9.;Both companies have correctly recorded all entries relative to;bonds and interest, using straight-line amortization for premium or discount.;5-17;Chapter;5;Required;Complete the Figure 5-6 worksheet for consolidated financial;statements for the year ended of December 31, 20X9. Round all computations to;the nearest dollar.;5-18;Chapter 5;8.;On January 1, 20X8, Parent Company purchased 90% of;the common stock of Subsidiary Company for \$350,000. On this date, Subsidiary;had common stock, other paid in capital, and retained earnings of \$20,000, \$;130,000, and \$200,000, respectively.;Any;excess of cost over book value is due to goodwill.;In both 20X8 and 20X9, Parent has accounted for the Investment;in Subsidiary using the simple equity method.;On January;1, 20X8, Subsidiary sold \$100,000 par value of 6%, ten-year bonds for \$97,000.;The bonds pay interest semi-annually on January 1 and July 1 of each year.;On January 1, 20X9, Parent repurchased all of Subsidiary's bonds;for \$96,400. The bonds are still held on December 31, 20X9.;Both companies have correctly recorded all entries relative to;bonds and interest, using straight-line amortization for premium or discount.;Required;Complete the Figure 5-7 worksheet for consolidated financial;statements for the year ended of December 31, 20X9. Round all computations to;the nearest dollar.;9.;On January 1, 20X8, Parent Company purchased 90% of;the common stock of Subsidiary Company for \$355,000. On this date, Subsidiary;had common stock, other paid in capital, and retained earnings of \$20,000;\$130,000, and \$200,000 respectively.;Any;excess of cost over book value is due to goodwill.;In both 20X8 and 20X9, Parent has accounted for the Investment;in Subsidiary using the simple equity method.;On July 1;20X8, Subsidiary sold \$100,000 par value of 9%, ten-year bonds for \$106,755;which resulted in an effective interest rate of 8%. The bonds pay interest;semi-annually on January 1 and July 1 of each year. Subsidiary uses the;effective-interest method of amortizing the premium.;An amortization table for 20X8 and 20X9 is;presented below;Carrying;Carrying;Effective;Interest;Nominal;Premium;Value on;Value;Interest;Expense;Interest;Write-off;7-1-X8;\$106,755;4%;\$4,270;\$4,500;- \$230;1-1-X9;-;230;4%;4,261;4,500;-;239;-;106,525;7-1-X9;239;4%;4,251;4,500;-;249;-;106,286;249;12-31-X9 \$106,037;========;On July 1;20X9, Parent repurchased all of Par's bonds for \$94,153, which resulted in an;effective interest rate of 10%. The bonds are still held at year end.;Both;companies have correctly recorded all entries relative to bonds and interest.;Required;Complete the Figure 5-8 worksheet for consolidated financial;statements for the year ended of December 31, 20X9. Round all computations to;the nearest dollar.;5-20;5-21;Chapter 5;10.;On January 1, 20X7 Parent Company acquired 90% of;the common stock of Subsidiary Company for \$365,000. On this date, Subsidiary;had common stock, other paid in capital, and retained earnings of \$50,000;\$100,000, and \$200,000 respectively.;In both 20X7 and 20X8, Parent has accounted for the Investment;in Subsidiary using the simple equity method.;On January;1, 20X8, Parent purchased equipment for \$204,120 and immediately leased the;equipment to Subsidiary on a 4-year lease. The minimum lease payments of;\$60,000 are to be made annually on January 1, beginning immediately, for a;total of 4 payments. The implicit interest rate is 12%. The lease provides for;an automatic transfer of title at the end of 4 years. The estimated useful life;of the equipment is 6 years. The lease has been capitalized by both companies.;A lease amortization schedule, applicable to either company, is;presented below;Carrying;Carrying;Interest;Interest;Payment;Principal;Value on;Value;Rate;Reduction;1-1-X8;\$204,120;1-1-X8;- 60,000;12%;\$17,294;\$60,000;\$42,706;144,120;1-1-X9;- 42,706;12%;12,170;60,000;47,830;101,414;1-1-Y0;- 47,830;12%;6,416*;60,000;53,584;53,584;1-1-Y1;- 53,584;*Adjusted for rounding error.;\$;0;========;Required;Complete;the Figure 5-9 worksheet for consolidated financial statements for the year;ended December 31, 20X8. Round all computations to the nearest dollar.;5-22;Chapter 5;5-23;Chapter 5;11.;On January 1, 20X7, Parent Company acquired 90% of;the common stock of Subsidiary Company for \$365,000. On this date, Subsidiary;had common stock, other paid in capital, and retained earnings of \$50,000;\$100,000, and \$200,000 respectively.;In 20X7, 20X8, and 20X9, Parent has accounted for the Investment;in Subsidiary using the simple equity method.;On January;1, 20X8, Parent purchased equipment for \$204,120 and immediately leased the;equipment to Subsidiary on a 4-year lease. The minimum lease payments of;\$60,000 are to be made annually on January 1, beginning immediately, for a;total of 4 payments. The implicit interest rate is 12%. The lease provides for;an automatic transfer of title at the end of 4 years. The estimated useful life;of the equipment is 6 years. The lease has been capitalized by both companies.;A lease amortization schedule, applicable to either company, is;presented below;Carrying;Carrying;Interest;Interest;Payment;Principal;Value on;Value;Rate;Reduction;1-1-X8;\$204,120;1-1-X8;- 60,000;12%;\$17,294;\$60,000;\$42,706;144,120;1-1-X9;- 42,706;12%;12,170;60,000;47,830;101,414;1-1-Y0;- 47,830;12%;6,416*;60,000;53,584;53,584;1-1-Y1;- 53,584;*Adjusted for;rounding error;\$;0;========;Required;Complete;the Figure 5-10 worksheet for consolidated financial statements for the year ended;December 31, 20X9. Round all computations to the nearest dollar.;5-24;Chapter 5

Paper#44369 | Written in 18-Jul-2015

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