Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The
fair value of Float's net assets was $1,850,000, and the book value was $1,500,000.
The non-controlling interest shares of Float Corp. are not actively traded.
A. Compute the amount of goodwill that will be recognized as of the
acquisition date.
B. Compute the amount of goodwill that will be attributed to Perch at
acquisition date?
C. Compute the amount of goodwill that will be attributed to non-controlling
interest at acquisition date?
D. Calculate the dollar amount of non-controlling interst that should appear in a
consolidated balance sheet at acquisition date.
E. Calculate the dollar amount of Float Corp's net assets to be represented in a
consolidted balance sheet at the date of acquisition.
F. Calculate the amount of fair value over book value differences attributed to
Perch at acquisition date.
On January 1, 2013, Nichols Company acquired 80% of Smith Company's common stock and
40% of its non-voting, cumulative preferred stock. The consideration transferred by Nichols was
$1,200,000 for the common and $124,000 for the preferred. Any excess acquisition-date fair
value over book value is considered goodwill. The capital structure of Smith immediately prior
to the acquisition is:
A. Compute the non-controlling interest in Smith at date of acquisition.
B. Prepare the consolidation entry S at date of acquisition referring to Smith.
C. If Smith’s net income is $100,000 in the year following the acquisition, what
is the non-controlling interest balance at the end of the year?
Popper Co. acquired 80% of the common stock of Cocker Co. on January 1, 2011,
when Cocker had the following stockholders' equity accounts.
A. On January 1, 2014, Cocker issued 10,000 additional shares of common
stock for $35 per share. Popper acquired 8,000 of these shares. How would
this transaction affect the additional paid-in capital of the parent company?
Calculate the amount of increase or decrease.
B. On January 1, 2014, Cocker issued 10,000 additional shares of common
stock for $21 per share. Popper did not acquire any of this newly issued
stock. How would this transaction affect the additional paid-in capital of the
parent company? Show your calculations.
C. On January 1, 2014, Cocker reacquired 8,000 of the outstanding shares of its
own common stock for $34 per share. None of these shares belonged to
Popper. How would this transaction have affected the additional paid-in
capital of the parent company? Show your calculations.
Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory
to Posito at a 25% profit on selling price. The following data is available
pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2012.
2012 2013 2014
Purchases by
Posito $8,000 $12,000 $15,000
Ending
inventory on
Posito’s
books
1,200 4,000 3,000
Assume the equity method is used. The following data is available pertaining to
Gargiulo’s income and dividends.
2012 2013 2014
Gargiulo’s
net income
$70,00
0 $85,000 $94,000
Dividends
paid by
Gargiulo
10,000 10,000 15,000
HINT: Consider the impact of intra-entity inventory transfers and inventory balances to net income.
a
.Compute the equity in earnings of Gargiulo reported on Posito's books for 2012.
Compute the equity in earnings of Gargiulo reported on Posito's books for 2013.
Compute the equity in earnings of Gargiulo reported on Posito's books for 2014.
Compute the non-controlling interest in Gargiulo's net income for 2012.
Compute the non-controlling interest in Gargiulo's net income for 2013.
Compute the non-controlling interest in Gargiulo's net income for 2014.
For consolidation purposes, what amount would be debited to January 1 retained
earnings for the 2012 consolidation worksheet entry with regard to the unrealized
gross profit of the 2012 intra-entity transfer of merchandise?
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