Candy Corporation Paid $240,000 on April 1,2013 for All of the Common
Candy Corporation paid $240,000 on April 1,2013 for all of the common stock of Bun Corporation in a business acquisition.On January 1,2013,Bun's stockholders' equity was equal to $195,000.Bun's first quarter 2013 net income was $10,000 and first quarter 2013 dividends were $5,000.In 2013,preacquisition sales were $32,500 and preacquisition cost of sales was $22,500.(There were no other preacquisition expenses in 2013 . )Dividends are paid quarterly on March 31,June 30,September 30 and December 31.Any excess cost over book value acquired is allocated to goodwill.
1.Candy sold equipment with a 5-year remaining useful life to Bun on July 1,2013 for a gain of $10,000.Salvage value of the equipment is zero and both companies use the straight-line depreciation method.
2.Bun's accounts payable balance at December 31 includes $5,000 due to Candy from the sale of equipment.
3.Candy accounts for its investment in Bun using the equity method.
Complete the working papers to consolidate the financial statements of Candy and Bun Corporations for the year ending December 31,2013.
Olson Corporation paid $62,000 to acquire 100% of Towing Corporation's outstanding voting common stock at book value on May 1,2013.The stockholders' equity of Towing on January 1,2013 consisted of $40,000 Capital Stock and $20,000 Retained Earnings.Towing's total dividends for 2013 were $6,000,paid equally on April 1 and October 1.Towing's net income was earned uniformly throughout 2013.In 2013,preacquisition sales were $10,000 and preacquisition expenses were cost of sales for $5,000.(There were no other preacquisition expenses in 2013 . )
During 2013,Olson made sales of $10,000 to Towing at a gross profit of $3,000.One-half of this merchandise was inventoried by Towing at year-end,and one-half of the 2011 intercompany sales were unpaid at year-end 2013.
Olson sold equipment with a ten-year remaining useful life to Towing at a $2,000 gain on December 31,2013.The straight-line depreciation method is used by both companies.The equipment has no salvage value.
Financial statements of Olson and Towing Corporations for 2013 appear in the first two columns of the partially completed consolidation working papers.
Complete the consolidating working papers for Olson Corporation and Subsidiary for the year ending December 31,2013.
Justice Corporation paid $40,000 cash for an 80% interest in the voting common stock of Grace Corporation on July 1,2014,when Grace's stockholders' equity consisted of $30,000 of $10 par common stock and $15,000 retained earnings.The excess cost over the book value of the investment was assigned $2,000 to undervalued inventory items that were sold in 2014,with the remaining excess being assigned to goodwill.During the last half of 2014,Grace reported $4,000 net income and declared dividends of $2,000,and Justice reported income from Grace of $1,200.
There were no intercompany sales during the last half of 2014,but during 2015 Justice sold inventory items that cost $8,000 to Grace for $12,000.Half of these inventory items were included in Grace Corporation's Inventory at December 31,2015,with $1,000 unpaid by Grace at December 31,2015.
On January 5,2015,Justice sold a plant asset with a book value of $2,500 and a remaining useful life of 5 years to Grace for $4,000.Grace Corporation owned the plant asset at year-end.The plant asset has no salvage value and both companies use the straight-line depreciation method.
Justice Corporation uses the equity method to account for its investment in Grace,and the changes in Justice's Investment in Grace account from acquisition until year-end 2015 are as follows:
Complete the working papers for the year ending December 31,2015 that are given below.
On September 1,2013,Beck Corporation acquired an 80% interest in Johnsen Corporation for $700,000.Johnsen's stockholders' equity at January 1,2013 consisted of $200,000 of Common Stock and $600,000 of Retained Earnings.The book values of its assets and liabilities were equal to their respective fair values on this date.All excess purchase cost was attributed to goodwill.
During 2013,Johnsen uniformly earned $78,000 and paid dividends of $9,000 on each of four dates: February 1,June 1,August 1,and December 1.
Required: Compute the following:
1.Implied goodwill associated with Johnsen Corporation based on Beck's purchase price on September 1,2013.
2.Beck's income from Johnsen for 2013.
3.Preacquisition income for Beck Corporation and Subsidiary for 2013.
4.Noncontrolling interest share for 2013.
5.What is the balance in Beck's Investment in Johnsen account at December 31,2013?