Based on the information provided below, prepare appropriate consolidation journal entries forpossible account adjustment or elimination.Reference appropriate accounting standards to explain the approach which needs to be taken for theadjusting journals.Parent paid $110 000 on 30 June for all the shares of Subsidiary, whose equity at that date is sharecapital $72 000 and retained profits $28 000. However, the assets of Subsidiary are not all recordedat their fair value. Assume that all companies adopt the revaluation model under AASB 116. Thediscrepancies are:Carrying Amount$Fair ValueInvestments26 00054 000Accounts receivable14 0008 000PPE26 00012 000Inventory70 00076 000FranchiseNil10 000

Goodwill: Goodwill is an intangible asset. It is defined as the excess of cost of an acquired…

Answered: Based on the information provided…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Prepare consolidation worksheet entries for December 31, 2021 -Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method. Prepare entry D to eliminate intra-entity dividend transfers. Prepare entry E to recognize current year amortization expense.
On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio Issued to the owners of Mason $329,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $32,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $17,000 in connection with stock Issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Presidio Company Mason Company $ 36,200 Items $ 81,900 Receivables 290,000 151,000 Inventory 378,000 178,000 Land 284,000 272,000 Buildings (net) 469,000 280,000 Equipment (net) 194,000 71,100 Accounts payable (179,000) (47,700) Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 (462,000) (329,000) (110,000) в 0 (120,000) (360,000) (585,900) (491,600) Note:…
In Bell Group's consolidation worksheet, the opening balance of retained earnings under 'group' column shows a balance of 70000. If there is a debit entry of 16000 in the NCI column, the opening balance of retained earnings under 'parent' column could be: A. 86000 B. 54000 C. 70000 D. 16000 Please show entries or details to explain.
On 1 January 2000, K Ltd acquired 60% of the shares in V ltd for $400,000. Consideration took the form of cash $300,000, and shares with a fair value of $200,000 At that date the owner's equity of V ltd comprised Shares capital $300,000 Retained earnings $200,000 $100,000 Revaluation surplus Total $600,000 On 1 January 2000, the fair values of all assets and liabilities of V Ltd were recorded in fair value with the exception of inventory which had a fair value $50,000 greater than book value. The inventory was all sold before 30 June 2000. • Both companies use the periodic method to account for inventory. ● The company income tax rate is 30%. K Ltd has a financial year end of 30 June. ● The fair value of the non-controlling interest is estimated to be $260,000. K Ltd uses the 100% goodwill method to measure NCI.
On January 1, 20X5, Potter Corporation started using a wholly owned subsidiary to deliver all its sales overnight to its customers. During 20X5, Potter recorded delivery service expense of $76,000 and made payments of $58,000 to the subsidiary. Required: Prepare the worksheet consolidation entries related to the intercompany services needed on December 31, 20X5, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries < A B Record the entry to reverse the delivery service expense.
The following book and fair values were available for Westmont Company as of March 1. Inventory Land Buildings Customer relationships Accounts payable Common stock Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Arturo pays cash of $4,456,250 to acquire Westmont. No stock is issued and Arturo pays $49,800 for legal fees to complete the transaction. View transaction list Prepare Arturo's journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet 1 Book Value Fair Value $ 644,750 $ 609,000 779,250 1,086,750 1,770,000 2,138,250 842,250 0 (102,000) (102,000) (2,000,000) (500,000) 2 (424,500) (457,000) 289,500 Note: Enter debits before credits. Transaction Record the acquisition of Westmont Company. General Journal Debit Credit >
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (b) On 20 December 20x1, a 70%-owned Subsidiary sold a piece of inventory Y which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date.
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a) On 20 December 20x1, a 90%-owned Subsidiary sold a piece of inventory which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date. (b) On 20 December 20x1, a Parent paid management fee of $200,000 to its 90%-owned Subsidiary. The Subsidiary recognised…
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (c)On 20 December 20x1, a 70%owned Subsidiary sold a piece of inventory Z which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $190,000 on this date.
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. a)On 20 December 20x1, a 60%-owned Subsidiary paid rental of $200,000 to its Parent.The Parent recognised the rental as income whilst the Subsidiary company recognised the rental paid as an expense. The space area rented by the Subsidiary from the Parent comprises 2% of the building for which the Parent rented out to other external parties. In the separate financial statements of the Parent, the…
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Scenario (b) On 20 December 20x1, a 60%-owned Subsidiary paid rental of $200,000 to its Parent.The Parent recognised the rental as income whilst the Subsidiary recognised the rental paid as an expense. The space area rented by the Subsidiary from the Parent comprises 98% of the building for which the Parent occupies the remaining 2% thereof. In the separate financial statements of the Parent, the…
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a) On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent recognised the interest paid as an expense.

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