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Question;11. The Paris;Company purchased a 70% interest in Seine, Inc. for $278,000 on July 1, 20X1;when Seine had the following balance sheet;Assets;$;50,000;Accounts;receivable....................................;Inventory..............................................;110,000;Land...................................................;80,000;Building and;Equipment.................................;160,000;Total................................................;$400,000;========;Liabilities;and Equity;$160,000;Current;liabilities....................................;Common stock, $5;par...................................;50,000;Paid-in capital in excess of;par.......................;150,000;Retained earnings - 7/1................................;100,000;Total................................................;$400,000;========;The inventory is understated by $50,000 and is sold in the third;quarter of 20X1. The land has a fair value of $100,000. The equipment has a;fair value of $130,000 and a remaining life of 3 years. Any remaining excess is;attributed to a patent with a 10-year life.;The;following net incomes (earned evenly throughout the year) and dividends paid;(on 12/1 each year) are reported by Seine:.................................;Net income;20X1;20X2;$150,000;$100,000;Dividends paid.............................;10,000;10,000;Required;a. Prepare a;determination and distribution of excess schedule as of July 1, 20X1.;b. Prepare the;20X1 and 20X2 entries made by Paris to record the net income and dividends paid;information on its books under the sophisticated equity method.;c. Prepare the;20X1 and 20X2 entries made by Paris to record the net income and dividends paid;information on its books under the cost method.;3-28;Chapter 3;12.;The Paris Company purchased an 70% interest in;Seine, Inc. for $300,000 on July 1, 20X1, when Seine had the following balance;sheet;Assets;$;50,000;Accounts;receivable....................................;Inventory..............................................;110,000;Land...................................................;80,000;Building and;Equipment.................................;160,000;Total................................................;$400,000;========;Liabilities;and Equity;$160,000;Current liabilities....................................;Common stock, $5;par...................................;50,000;Paid-in capital in excess of;par.......................;150,000;Retained earnings -;7/1................................;100,000;Total................................................;$400,000;========;Assume that;all assets and liabilities have fair values equal to their book values. Any;excess cost is attributed to patent with a 10-year life.;The;following net incomes (earned evenly throughout the year) and dividends paid;(on 12/1 each year) are reported by Seine:.................................;Net income;20X1;20X2;$60,000;$80,000;Dividends paid.............................;10,000;10,000;Required;a. Prepare the;20X1 & 20X2 entries made by Paris to record the net income and dividends;paid information on its books under the simple equity method.;b. Prepare the;20X1 & 20X2 entries made by Paris to record the net income and dividends;paid information on its books under the cost method.;13. The Paris;Company purchased a 70% interest in Seine, Inc. for $300,000 on July 1, 20X1;when Seine had the following balance sheet;Assets;$;50,000;Accounts;receivable....................................;Inventory..............................................;110,000;Land...................................................;80,000;Building and;Equipment.................................;160,000;Total................................................;$400,000;========;Liabilities;and Equity;$160,000;Current;liabilities....................................;Common stock, $5;par...................................;50,000;Paid-in capital in excess of;par.......................;150,000;Retained earnings -;7/1................................;100,000;Total................................................;$400,000;========;Assume that;all assets and liabilities have fair values equal to their book values. Any;excess cost is attributed to patent with a 10-year life.;The;following net incomes (earned evenly throughout the year) and dividends paid;(on 12/1 each year) are reported by Seine:.................................;Net income;20X1;20X2;$60,000;$80,000;Dividends paid.............................;10,000;10,000;Required;a. Prepare a;determination and distribution of excess schedule as of July 1, 20X1.;b. Prepare the;20X1 and 20X2 entries made by Paris to record the net income and dividends paid;information on its books under the sophisticated equity method.;3-31;Chapter 3;14.;Pablo Company purchased an 80% interest in Sand;Company on July 1, 20X1, for $260,000. On July 1, 20X1, Sand Company had the;following information available;Common stock outstanding;($10;par).....................;$100,000;Retained;earnings, January 1, 20X1.....................;120,000;Net;income, January 1-June 30, 20X1....................;10,000;Dividends;paid, June 30, 20X1..........................;2,000;Equipment;is undervalued by $30,000 and has a 6-year remaining life. Any remaining excess;is attributable to patent with a 20-year life.;Required;a. Prepare a determination and;distribution of excess schedule.;b.;Complete the Figure 3-8 partial worksheet for the;year ended December 31, 20X1. Subsidiary books were not closed on the purchase;date. Provide keyed explanations for all worksheet entries and key each;amortization of excess separately. Include income distribution schedules.;3-32;Chapter 3;3-33;Chapter 3;15. Puddle;Corporation acquired 90% of Suds Company's common stock on January 1, 20X1 for;$32,000 cash when Sud's stockholders' equity;consisted of;Common Stock;$20,000 Retained Earnings $ 4,000;A;determination and distribution schedule was prepared for the difference between;the price paid by Puddles and the underlying equity acquired in Suds with the;excess of cost over book value being allocated as;Inventory;(undervalued);$;400;Building;Equipment (undervalued);2,000;Patent;8,000;Allocated;excess cost over book value;$10,400;=======;The;inventory was sold during 20X1, and the building and equipment are being;depreciated for 5 years using the straight-line method. The Patent is expected;to have a 10-year useful life.;Required;The;separate December 31, 20X1 financial statements for Puddle and Suds is provided;in Figure 3-7. Complete the worksheet and provide supporting calculations as;needed and an explanation of the elimination and adjustment entries.

 

Paper#44459 | Written in 18-Jul-2015

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