1. A requires 100% of B on 1/1/2009. B will be operated as a separate subsidiary. A will use the equity method to account for its investment in B. In 2013, A has net income of 400,000 and pays dividends of 100,000. B has net income of 200,000 and pays dividends of 75,000. At acquisition date, A has a building with a BV of 3,000,000 and fv of 4,000,000. At that date, B has a building with a bv of 800,000 and fv of 900,000. Both building have a useful life of 5 years. (straight line method) At 12/31/2013, A has BV building of 5000,000. B has BV building of 2000,000.
a. prepares consolidation worksheet D to reflect necessary adjustment for dividend
b. how much are consolidated dividends of 2013
c. prepares worksheet entry A at 12/31/2013 (no goodwill)
2. A acquires 100% of B on 1/1/2010 by issuing 10,000 shares with par value $1 and fv $70. In addition, A agrees to pay an additional $100,000 if B earns $50,000 net income in 4 years. B will be operated as a separate subsidiary of A. At acquisition date, there is 80% probability of this occurring.
On 1/1/2010, A had net asset with bv of 400,000 and fv of 500,000. At that date, B had net assets with bv of 200,000 and fv of 150000.
At 12/31/2012, A has net assets with bv of 600,000 and fv of 800,000. At that date, B has net assets with bv of 300,000 and fv of 400,000. Assume that all differences b/t book value and fair value relate to land.
a. how much is goodwill at 1/1/2010
b. how much is goodwill at 12/31/2012 (assume no impairment)
3. Wang acquires 100% of chen on 1/1/2010 and will operate chen as a separate sub. In the first year of operation, chen has net income of 70,000 and pays dividends of 50,000. And that there is 3000 of excess annual amortization associated with chen'sequipment.
a. assume wang uses equity method to account for its investment. What entries will wangrecod on its books on 12/31/2010, for chen's income, dividends and excess amortization.
b. Same as A, what consodidate worksheet entries will wangrecord for chen's income, dividends and excess amortization.
c. Assume wang uses the partial equity method to account for its investment, what entires will wangrecod on its books on 12/31/2010 for chen's income, dividends and excess amortization.
d. Same as C, what consolidate worksheet entries will wang record for chen's income, dividends and excess amortization.
e. Assume wang uses the cost method to account for its investment, what entrie will wangrecod on its book on 12/31/2010 for chen's income, dividends and excess amortization
f. Same as e, what consolidate worksheet entries will wang record for chen's income, dividends and excess amortization.
4. Shoe owns 100% of foot in an acquisition completed 3 years ago, it is now 12/31/2012. Foot has borrowed 500,000 from shoe, without interest.
a. prepare the necessary consolidation worksheet entry on 12/31/2012
b. assume instead that shoe had borrowed 500,000 from foot. Prepare the necessary consolidation worksheet entry on 12/31/2012
c. in both part a and b, how much will show up on the individual books of shoe and foot as to loans receivable and payable. Answer by identifying whose books, the name of the account and the amount.
5. Haskins acquires 100% of sells on 1/1/2011. Haskins uses the equity methods. It is now 12/31/2014, the following are the stockholder's equity accounts of sells on various dates.
| |
1/1/11 |
1/1/14 |
12/31/14 |
|
Common stock
|
120,000
|
140,000
|
160,000
|
|
Addition paid in capital
|
2,000,000
|
2,300,000
|
2,500,000
|
|
R/E
|
100,000
|
130,000
|
150,000
|
A. Prepare consolidate worksheet S, at 12/31/14
B. Assume total stockholder's equity of Haskin at 12/31/15 is 6000,000. How much is consolidatestockholders' equity
C. How would this answer differ if Haskin were using the partial equity methods and it there was 10,000 of excess amortization.