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MBA, Ph.D in Management
Harvard university
Feb-1997 - Aug-2003
Professor
Strayer University
Jan-2007 - Present
Complete the assignment posted for questions A & B. See the helpful tip below the question:
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Phillips Company purchased a 90% interest in Standards Corporation for $2,340,000 on January 1, 2016. Standards Corporation had $1,650,000 of common stock and $1,050,000 of retained earnings on that date.
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The following values were determined for Standards Corporation on the date of purchase:
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                                             Book Value             Fair Value
                        Inventory                    $240,000                 $300,000
                        Land                          2,400,000                2,700,000
                        Equipment                 1,620,000                1,800,000
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Required:
A. Prepare a computation and allocation schedule for the difference between the implied and book value in the consolidated statements work paper.
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B. Prepare the January 1, 2016, work paper entries to eliminate the investment account and allocate the difference between implied and book value.
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26) Pine Company, a computer manufacturer, owns 90% of the outstanding stock of Slider Company.  On January 1, 2017, Pine sold computers to Slider for $500,000.  The computers, which are inventory to Pine, had a cost to Pine of $350,000.  Slider Company estimated that the computers had a useful life of six years from the date of purchase.
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Slider Company reported net income of $310,000, and Pine Company reported net income of $870,000 from its independent operations (including sales to affiliates) for the year ended December 31, 2017.
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Required:
2018: Prepare in general journal form the work paper entries necessary because of the intercompany sales in the consolidated statements workpaper for both 2017 and 2018.
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2017: Calculate controlling interest in consolidated net income for 2017.
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