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82. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
How much does Pell record as income from Demers for the year ended December
31, 2011?
83. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
How much does Pell record as income from Demers for the year ended December
31, 2012?
84. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
Compute the non-controlling interest in the net income of Demers at December
31, 2010.
85. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
Compute the non-controlling interest in the net income of Demers at December
31, 2011.
86. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
Compute the non-controlling interest in the net income of Demers at December
31, 2012.
87. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
Compute the non-controlling interest in Demers at December 31, 2010.
88. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
Compute the non-controlling interest in Demers at December 31, 2011.
89. Pell Company acquires 80% of Demers Company for $500,000 on January 1,
2010. Demers reported common stock of $300,000 and retained earnings of
$210,000 on that date. Equipment was undervalued by $30,000 and buildings
were undervalued by $40,000, each having a 10-year remaining life. Any excess
consideration transferred over fair value was attributed to goodwill with an
indefinite life.
Demers earns income and pays dividends as follows:
Assume the partial equity method is applied.
Compute the non-controlling interest in Demers at December 31, 2012.
90. Parsons Company acquired 90% of Roxy Company several years ago and
recorded goodwill of $200,000 at that date. During 2013 an analysis of the fair
value of Roxy's assets determined an impairment of goodwill in the amount of
$50,000.
At what amount would consolidated goodwill be reported for 2013?
91. Parsons Company acquired 90% of Roxy Company several years ago and
recorded goodwill of $200,000 at that date. During 2013 an analysis of the fair
value of Roxy's assets determined an impairment of goodwill in the amount of
$50,000.
What journal entry would be made by Parsons regarding the impairment of
goodwill?
92. In comparing U.S. GAAP and international financial reporting standards
(IFRS) with regard to a basis for measurement of a non-controlling interest,
93. Where should a non-controlling interest appear on a consolidated balance
sheet?
94. What is preacquisition income?
95. Beta Corp. owns less than one hundred percent of the voting common
stock of Shedds Co. Under what conditions will Beta be required to prepare
consolidated financial statements?
96. Where may a non-controlling interest be presented in a consolidated
balance sheet?
97. How would you determine the amount of goodwill to be recognized at date
of acquisition when there is a non-controlling interest present?
98. How is a non-controlling interest in the net income of an entity reported in
the income statement?
99. One company buys a controlling interest in another company on April 1.
How should the preacquisition subsidiary revenues and expenses be handled in
the consolidated balances for the year of acquisition?
100. Prevatt, Inc. owns 80% of Franklin Company. During the current year, a
portion of the investment in Franklin is sold. Prior to recording the sale, Prevatt
adjusts the carrying value of its investment. What is the purpose of the
adjustment?
101. How does a parent company account for the sale of a portion of an
investment in a subsidiary?
102. Alonzo Co. acquired 60% of Beazley Corp. by paying $240,000 cash. There
is no active trading market for Beazley Corp. At the time of the acquisition, the
book value of Beazley's net assets was $300,000.
Required:
What amount should have been assigned to the non-controlling interest
immediately after the combination?
