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intermediate accounting questions




Question;Problem 4-4Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2010, for$400,000. Trial balances at the end of 2010 for the companies were:Place ShawCash $ 80,350 $ 87,000Accounts and Notes Receivable 200,000 210,000Inventory, 1/1 70,000 50,000Investment in Shaw, Inc. 400,000 ?0?Plant Assets 300,000 200,000Dividends Declared 35,000 22,000Purchases 240,000 150,000Selling Expenses 28,000 20,000Other Expenses 15,000 13,000$1,368,350 $752,000Accounts and Notes Payable $ 99,110 $ 38,000Other Liabilities 45,000 15,000Common Stock, $10 par 150,000 100,000Other Contributed Captital 279,000 149,000Retained Earnings, 1/1 225,000 170,000Sales 550,000 280,000Dividend Income 20,240 ?0?$1,368,350 $752,000Inventory balances on December 31, 2010, were $25,000 for Place and $15,000 for Shaw, Inc.Shaw?s accounts and notes payable contain a $15,000 note payable to Place.Required:Prepare a workpaper for the preparation of consolidated financial statements on December31, 2010. The difference between book value of equity acquired and the value implied by thepurchase price relates to subsidiary land, which is included in plant assets.Problem 4-10Poco company purchased 80% of Solo Company?s stock on January 1, 2010, for $250,000. On December 31, 2010 the Companies prepared the following trial balances:PocoSoloCash$161,500 $125,000$125,000Inventory210,000195,000Investment Solo Company402,000- 0 -Land75,000150,000Cost of goods Sold410,000125,000Other expense100,00080,000Dividends declared30,00015,000Total$1,388,500$690,000Account payable$154,50035,000Common Stock200,000150,000Other contributed capital60,00035,000Retained Earnings,1/150,00060,000Sales760,000410,000Equity in Subsidiary Income164,000- 0 -$1,388,500$690,000Prepared a consolidated statements work paper on December 31, 2010. Any difference between bookvalue and the value implied by purchase price relates to goodwill.Problem 5-8Workpaper Entries and Gain on Sale of LandPadilla Company purchased 80% of the common stock of Sanoma Company in the open marketon January 1, 2010, paying $31,000 more than the book value of the interest acquired. The differencebetween book value and the value implied by the purchase price is attributable to land.Required:A. What workpaper entry is required each year until the land is disposed of?B. Assume that the land is sold on 1/1/13 and that Sanoma Company recognizes a $50,000gain on its books. What amount of gain will be reflected in consolidated income on the2013 consolidated income statement?C. In all years subsequent to the disposal of the land, what workpaper entry will be necessary?Show entry for all three methods (cost, partial equity, and complete equity).


Paper#50371 | Written in 18-Jul-2015

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