On January 1, 20X1, Parent Company purchased 80% of the common stock of
Subsidiary Company for 316,000. On this date, Subsidiary had ordinary shares, share premium, and retained earnings of 40,000,120,000, and 190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows: 20X1 20X2 Net income.............................. 50,000 90,000 Dividends................................10,000 20,000 On January 1, 20X1, the only tangible assets of Subsidiary which were undervalued were inventory and building. Inventory, for which FIFO is used, was worth 5,000 more than cost. The inventory was sold in 20X1. Building, which was worth 15,000 more than book value, has a remaining life of 8 years, and straight-line depreciation is used. Required: 1. Using equity method provide for all journal entries for 20x1 and 20x2 2. Using equity method provide for all journal entries for 20x1 and 20x2 (assuming NCI is measured on the basis of its proportionate interest in the acquirees identifiable net assets)
1. On January 1, 20X1, Parent Company purchased 80% of the common stock of
Subsidiary Company for 316,000. On this date, Subsidiary had ordinary shares, share premium, and retained earnings of 40,000,120,000, and 190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows: 20X1 20X2 Net income.............................. 50,000 90,000 Dividends................................10,000 20,000 On January 1, 20X1, the only tangible assets of Subsidiary which were undervalued were inventory and building. Inventory, for which FIFO is used, was worth 5,000 more than cost. The inventory was sold in 20X1. Building, which was worth 15,000 more than book value, has a remaining life of 8 years, and straight-line depreciation is used. Required: 5. Using equity method provide for all journal entries for 20x1 and 20x2 6. Using equity method provide for all journal entries for 20x1 and 20x2 (assuming NCI is measured on the basis of its proportionate interest in the acquirees identifiable net assets)
1. On January 1, 20X1, Parent Company purchased 80% of the common stock of
Subsidiary Company for 316,000. On this date, Subsidiary had ordinary shares, share premium, and retained earnings of 40,000,120,000, and 190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows: 20X1 20X2 Net income.............................. 50,000 90,000 Dividends................................10,000 20,000 On January 1, 20X1, the only tangible assets of Subsidiary which were undervalued were inventory and building. Inventory, for which FIFO is used, was worth 5,000 more than cost. The inventory was sold in 20X1. Building, which was worth 15,000 more than book value, has a remaining life of 8 years, and straight-line depreciation is used. Required: 3. Using equity method provide for all journal entries for 20x1 and 20x2 4. Using equity method provide for all journal entries for 20x1 and 20x2 (assuming NCI is measured on the basis of its proportionate interest in the acquirees identifiable net assets)
1. On January 1, 20X1, Parent Company purchased 80% of the common stock of
Subsidiary Company for 316,000. On this date, Subsidiary had ordinary shares, share premium, and retained earnings of 40,000,120,000, and 190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows: 20X1 20X2 Net income.............................. 50,000 90,000 Dividends................................10,000 20,000 On January 1, 20X1, the only tangible assets of Subsidiary which were undervalued were inventory and building. Inventory, for which FIFO is used, was worth 5,000 more than cost. The inventory was sold in 20X1. Building, which was worth 15,000 more than book value, has a remaining life of 8 years, and straight-line depreciation is used. Required: 1. Using equity method provide for all journal entries for 20x1 and 20x2 2. Using equity method provide for all journal entries for 20x1 and 20x2 (assuming NCI is measured on the basis of its proportionate interest in the acquirees identifiable net assets)