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Great Corporation acquired a 90% interest in SOS Corporation at its $810,000 book
value on December 31, 2013. A summary of the stockholders' equity for SOS at the
end of 2013 and 2014 is as follows:
12/31/13 12/31/14
Capital stock, $10 par $600,000 $600,000
Additional paid-in capital 30,000 30,000
Retained Earnings 270,000 420,000
Total stockholders' equity $900,000 $1,050,000
On January 1, 2015, SOS sold 10,000 new shares of its $10 par value common stock for
$45 per share. If SOS sold the additional shares to the general public,
Great's Investment in SOS account after the sale would be ________.
Jawaban :
SOS stock holders equity prior to the stock issuance $ 1,050,000
Plus: Capital received from new stock issued 450,000
New stockholders equity $ 1,500,000
Greats ownership [54,000/(60,000 + 10,000)] 77.14%
Greats adjusted investment in SOS $ 1,157,100
3. Pahm Corporation owns 80% of the outstanding voting common stock of Abussi
Corporation, which was purchased for $60,000 over Abussi's book value. The
excess purchase price was attributable to goodwill. Abussi Corporation owns 60% of
the outstanding common stock of Badock Corporation, which was purchased at
book value. The separate net incomes of Pahm, Abussi, and Badock (excluding
investment income) for the year are $200,000, $240,000, and $260,000,
respectively. There were no fair value/book value differences in the assets and
liabilities of Pahm, Abussi and Badock.
The amount of income for the current year assigned to the noncontrolling
shareholders of Badock Corporation is ……………………………
Jawaban:
40% x 260,000 = 104,000
4. Pasfield Corporation acquired a 90% interest in Santini Corporation for $90,000
cash on January 1, 2014. The following information is available for Santini at that
time.
Under the entity theory, a consolidated balance sheet prepared immediately after
the business combination will show goodwill of.........................................
Jawaban:
Goodwill = Implied Fair Value – Fair Value of Net Assets
= ($ 90,000/90%) - $ 75,000
= $ 25,000
Petrolia Seadigo
Buildings $500,000 $230,000
Accumulated Depr. - Buildings 180,000 79,000
The consolidated amounts for Buildings and Accumulated Depreciation - Buildings that
appeared, respectively, on the balance sheet at December 31, 2014,
were……………………….
Jawaban:
Gain = 30,000
Adjustment entry :
PETROLIA COMPANY
BALANCE SHEET
7. Parnaby has 25,000 common stock shares outstanding and its 100%-owned
subsidiary Sandal has 5,000 common stock shares outstanding. Parnaby and
Sandal do not have any potentially dilutive securities outstanding. The separate net
incomes for Parnaby and Sandal are $150,000 and $75,000, respectively. Diluted
EPS for the consolidated company is ……………….
Jawaban:
$ 15,000 gain/3years
9. Pfadt Inc. had $600,000 par of 8% bonds payable outstanding on January 1, 2013
due January 1, 2017 with an unamortized discount of $12,000. Senat is a 90%-
owned subsidiary of Pfadt. On January 2, 2013, Senat Corporation purchased
$150,000 par value of Pfadt's outstanding bonds for $152,000. The bonds have
interest payment dates of January 1 and July 1. Straight-line amortization is used.
With respect to the bond purchase, the consolidated income statement of Pfadt
Corporation and Subsidiary for 2013 showed a gain or loss of…………………….
Jawaban:
= 150,000 – 3,000
= $ 147,000
= 147,000 – 152,000
= (5,000) constructive loss on bond retirement
10. Pabari Corporation owns an 80% interest in Alders Corporation and Alders owns a
60% interest in Babao Corporation. Both interests were acquired at a cost equal to
book value equal to fair value. During 2013, Alders sells land to Babao at a profit of
$12,000. Babao still holds the land at December 31, 2013. Net income (loss) of the
three companies (excluding investment income) for 2013 are:
Pabari Corporation $180,000
Alders Corporation 72,000
Babao Corporation (30,000)
Controlling interest share of consolidated net income and noncontrolling interest share,
respectively, for 2013 are ……………………………….
Jawaban:
11. Paris Corporation purchased 80% of the outstanding voting common stock of
Sanders Corporation on January 1, 2014, at a cost of $400,000. The stockholders'
equity of Sanders Corporation on this date consisted of $200,000 of Capital Stock
and $100,000 of Retained Earnings. Book values were equal to fair values except
for land and inventory. The book value of Sanders' land was $10,000, and fair value
was $22,000. The book value of Sanders' inventory was $30,000, and fair value was
$25,000.
Under the parent company theory, what amount of goodwill was reported on the
consolidated balance sheet at December 31, 2014?
Purchase price 400,000
Less: BV acquired (80% x 300,000) (240,000)
Excess 160,000
Less: excess to land (12,000 x 80%) (9,600)
Add: excess to inventory (5,000 x 80%) 4000
Remainder allocated to goodwill 154,400
12. Prussia Corporation owns 80% of the voting stock of Stad Corporation. On January
1, 2013, Prussia paid $391,000 cash for $400,000 par of Stad's 10% $1,000,000 par
value outstanding bonds, due on April 1, 2018. Stad's bonds had a book value of
$1,045,000 on January 1, 2013. Straight-line amortization is used. The gain or loss
on the constructive retirement of $400,000 of Stad bonds on January 1, 2013 was
reported in the 2013 consolidated income statement in the amount of…………….
Jawaban:
27,000