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Question;13.;On January 1, 20X1, Parent Company purchased 90% of;the common stock of Sub-A Company for $90,000. On this date, Sub-A had common;stock, other paid-in capital, and retained earnings of $10,000, $20,000, and;$60,000 respectively.;On January;1, 20X2, Sub-A Company purchased 80% of the common stock of Sub-B Company for;$68,000. On this date, Sub-B Company had common stock, other paid-in capital;and retained earnings of $5,000, $30,000, and $40,000 respectively.;Any excess of cost over book value on either purchase is due to;a patent, to be amortized over ten years.;Both Parent and Sub-A have accounted for their investments using;the cost method.;On December;31, 20X1, Parent sold used equipment to Sub-A Company. The equipment had a cost;of $45,000 and accumulated depreciation of $20,000. The sale price was $30,000.;During 20X2 and 20X3, Sub-A used the equipment, depreciating it over five years;using the straight-line method.;During 20X2, Sub-B sold merchandise to Sub-A for $20,000, of;which one-fourth is still held by Sub-B on December 31, 20X2. Sub-B's usual;gross profit is 40%. During 20X3, Sub-B sold more goods to Sub-A for $30,000;of which $10,000 is still on hand on December 31, 20X3.;Required;Complete the Figure 8-10 worksheet for consolidated financial;statements for 20X3.;8-29;Chapter;8;19.;On January 1, 20X1, Sub-A Company purchased 80% of;the common stock of Sub-B Company for $56,000, a price equal to book value. On;this date, Sub-B Company had common stock, other paid-in capital, and retained;earnings of $5,000, $30,000, and $35,000 respectively.;On January 1, 20X2, Parent Company purchased 90% of the common;stock of Sub-A Company for $108,000. On this date, Sub-A had common stock;other paid-in capital, and retained earnings of $10,000, $20,000, and $80,000;respectively. Any excess of cost over book value is due to a patent, to be;amortized over 10 years.;Both Parent and Sub-A have accounted for their investments using;the simple equity method.;During 20X2, Sub-B sold merchandise to Sub-A for $20,000, of;which one-fourth is still held by Sub-B on December 31, 20X2. Sub-B's usual;gross profit is 40%. During 20X3, Sub-B sold more goods to Sub-A for $30,000;of which $10,000 is still on hand on December 31, 20X3.;Required;Complete the Figure 8-11 worksheet for consolidated financial;statements for 20X3.;8-31;8-32;Chapter 8;15.;On January 1, 20X1, Parent Company purchased 85% of;the common stock, 8,500 shares, of Subsidiary Company for $317,500. On this;date, Subsidiary had common stock, other paid-in capital, and retained earnings;of $50,000, $100,000, and $200,000 respectively.;On January;1, 20X2, Subsidiary purchased, from its remaining shareholders, 1,000 shares of;its common stock, 10% of the stock outstanding on that date. The price paid was;$44,000.;Any;excess of cost over book value is due to goodwill.;In both 20X1 and 20X2, Parent has accounted for the Investment;in Subsidiary using the simple equity method.;During the last quarter of 20X2, Subsidiary sold merchandise to;Parent for $40,000, $10,000 of which is still held by Parent on December 31;20X2. Subsidiary's usual gross profit on intercompany sales is 40%.;Required;Complete;the Figure 8-12 worksheet for consolidated financial statements for the year;ended December 31, 20X2. Consolidation procedures should treat the purchase of;the treasury stock as an additional interest purchased by the parent.;16.;On January 1, 20X1, Parent Company purchased 85% of;the common stock of Subsidiary Company for $317,500. On this date, Subsidiary;had common stock, other paid-in capital, and retained earnings of $50,000;$100,000, and $200,000 respectively.;Any;excess of cost over book value is due to goodwill.;In both 20X1 and 20X2, Parent has accounted for the Investment;in Subsidiary using the simple equity method.;On January;1, 20X2, Subsidiary purchased from outside investors 800 shares of the common;stock of Parent Company, 8% of Parent's outstanding stock, for $60,000. It is;expected that the shares may be resold at a later date. Subsidiary uses the;cost method in accounting for the investment.;During the last quarter of 20X2, Subsidiary sold merchandise to;Parent for $40,000, $10,000 of which is still held by Parent on December 31;20X2. Subsidiary's usual gross profit on intercompany sales is 40%.;Required;Complete the Figure 8-13 worksheet for consolidated financial statements;for the year ended December 31, 20X2. Use the treasury stock method for the;Investment in Parent Company.;8-34;Chapter 8

 

Paper#44385 | Written in 18-Jul-2015

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