Cole Company has the following 2014 financial data:
Cole Company should add segments if
A) the sum of its segments’ external revenue does not exceed $600,000.
B) the sum of its segments’ external revenue does not exceed $825,000.
C) the sum of its segments’ revenue including intersegment revenue does not exceed
$600,000.
D) the sum of its segments’ revenue including intersegment revenue does not exceed
$825,000.
Perth Corporation acquired a 100% interest in Sansone Company for $1,600,000 when
Sansone had no liabilities. The book values and fair values of Sansone’s assets were:
Immediately following the acquisition, equipment will be included on the consolidated
balance sheet at
A) $150,000.
B) $200,000.
C) $210,000.
D) $280,000.
On June 30, 2013, Stampol Company ceased operations and all of their assets and
liabilities were purchased by Postoli Incorporated. Postoli paid $40,000 in cash to the
owner of Stampol, and signed a five-year note payable to the owners of Stampol in the
amount of $200,000. Their closing balance sheets as of June 30, 2013 are shown below.
In the purchase agreement, both parties noted that Inventory was undervalued on the
books by $10,000, and Pistoli would also take possession of a customer list with a fair
value of $18,000. Pistoli paid all legal costs of the acquisition, which amounted to
$7,000.
Required:
1. Prepare the journal entry Postoli would record at the date of acquisition.
2. Prepare the journal entry Stampol would record at the date of acquisition.
Polaris Incorporated purchased 80% of The Solar Company on January 2, 2014, when
Solar’s book value was $800,000. Polaris paid $700,000 for their acquisition, and the
fair value of noncontrolling interest was $175,000. At the date of acquisition, the fair
value and book value of Solar’s identifiable assets and liabilities were equal. At the end
of the year, the separate companies reported the following balances:
Requirement 1: Calculate consolidated balances for each of the accounts as of
December 31, 2014.
Requirement 2: Assuming that Solar has paid no dividends during the year, what is the
ending balance of the noncontrolling interest in the subsidiary?
A summary balance sheet for the Uma, Van, and Walter partnership on December 31,
2014 is shown below. Partners Uma, Van, and Walter allocate profit and loss in their
respective ratios of 4:5:7. The partnership agreed to pay Walter $227,500 for his
partnership interest upon his retirement from the partnership on January 1, 2015. Any
payments exceeding Walter’s capital balance are treated as a bonus from partners Uma
and Van.
Required:
Prepare the journal entry to reflect Walter’s retirement.
Greta, Harriet, and Ivy have a retail partnership business selling personal computers.
The partners are allowed an interest allocation of 6% on their average capital. Capital
account balances on the first day of each month are used in determining weighted
average capital, regardless of additional partner investment or withdrawal transactions
during any given month. Withdrawals of capital that are debited to the capital account
are used in the average calculation. Partner capital activity for the year was:
Required:
Calculate weighted average capital for each partner, and determine the amount of
interest that each partner will be allocated. Round all calculations to the nearest whole
dollar.
Phim Inc., a U.S. company, owns 100% of Sera Corporation, a New Zealand company.
Sera’s equipment was acquired on the following dates (amounts are stated in New
Zealand dollars as NZ$):
Jan. 01, 2014 Purchased equipment for NZ$40,000
Jul. 01, 2014 Purchased equipment for NZ$80,000
Jan. 01, 2015 Purchased equipment for NZ$50,000
Jul. 01, 2015 Sold equipment purchased on Jan. 01, 2014 for NZ$35,000
Exchange rates for the New Zealand dollar on various dates are:
Sera’s equipment has an estimated 5-year life with no salvage value and is depreciated
using the straight-line method. Sera’s functional currency and reporting currency are the
New Zealand dollar.
Required:
1. Determine the value of Sera’s equipment account on December 31, 2015 in U.S.
dollars.
2. Determine Sera’s depreciation expense for 2015 in U.S. dollars.
3. Determine the gain or loss from the sale of equipment on July 1, 2015 in U.S. dollars.
