Do not give image format Required:(a) Prepare the journal entries recorded by Ahmed for its investments in Gander during Year 6. (If no entry is required for atransaction/event, select "No journal entry required" in the first account field.)View transaction list View journal entry worksheetShow Transcribed TextNoABRecord the purchase of Gander shares.Record the dividends on preferred shares from Gander.CRecord the equity-method income.Record the dividends from Gander.DTransaction1234Required:(a) Prepare the journal entries recorded by Ahmed for its investments in Gander during Year 6. (If no entry is reqitransaction/event, select "No journal entry required" in the first account field.)CashDividend incomeCashShow Transcribed Text3Investment in Gander preferred sharesNet incomeInvestment in Gander common sharesNet incomeDividend incomeAnswer is not complete.General JournalXNon-controlling interest's share of net incomeNon-controlling interest on the balance sheetXXxX✔X✔XDebit35000 x$ 280000Debit160,0006,400160,000105,0006.400105,00027,000✔CreditCredit160,0006,400160,000 X105,000105.0006,40027,000✔(b) Calculate non-controlling interest's share of net income and non-controlling interest on the balance sheet for the Year 6consolidated financial statements. (Omit $ sign in your response.)Ⓒ Ahmed Corporation purchased 75 percent of Gander Company's common shares and 40 percent of its preferred shares onJanuary 1, Year 6, for $540,000 and $160,000, respectively. At the time of purchase, the fair value of Gander's common andpreferred shares was equal to their carrying value. Gander's balance sheet contained the following balances:Preferred Shares ($10 par value)Common SharesRetained EarningsTotal Shareholders' Equity$400,000300,000420,000$ 1,120,000For the year ended December 31, Year 6, Gander reported net income of $140,000 and paid dividends of $52,000 (whichincludes the preferred dividend). The preferred shares are cumulative and pay an annual dividend of 4 percent. There were nodividends in arrears at the date of acquisition. Ahmed uses the cost method to account for its interest in the preferred shares ofGander and the equity method to account for its interest in the common shares of Gander.

Consolidation is the process of combining the financial statements of related companies, to show the…

Answered: Required: (a) Prepare the journal…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

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On January 1, 20X7, Phillips Corporation acquired 35 percent of the outstanding shares of Shell Corporation for $100,000 cash. Shell Company reported net income of $175,000 and paid dividends of $25,000 for both 20X7 and 20X8. The fair value of shares held by Phillips was $310,000 and $325,000 on December 31, 20X7 and 20X8 respectively.Based on the preceding information, what amount will be reported by Phillips as its basis in the Shell investment for 20X7, if it used the equity method of accounting? Group of answer choices $122,500 $161,250 $100,000 $152,500
When it purchased Sutton, Inc. on January 1, 20X1, Pavin Corporation issued 500,000 shares of its $5 par voting common stock. On that date the fair value of those shares totaled $4,200,000. Related to the acquisition, Pavin had payments to the attorneys and accountants of $200,000, and stock issuance fees of $100,000. Immediately prior to the purchase, the equity sections of the two firms appeared as follows: Pavin Sutton Common stock $ 4,000,000 $ 700,000 Paid-in capital in excess of par 7,500,000 900,000 Retained earnings 5,500,000 500,000 Total $17,000,000 $2,100,000 Immediately after the purchase, the consolidated balance sheet should report retained earnings of: a. $6,000,000 b. $5,800,000 c. $5,500,000 d. $5,300,000
Spartan Corporation redeemed 25 percent of its shares for $1,800 on July 1 of this year, in a transaction that qualified as an exchange under IRC §302(a). Spartan’s accumulated E&P at the beginning of the year was $1,800. Its current E&P is $16,300. Spartan made dividend distributions of $2,700 on June 1 and $6,000 on August 31. Determine the beginning balance in Spartan’s accumulated E&P at the beginning of the next year. See Revenue Rules 74-338 and 74-339 for help in making this calculation. (Round your intermediate calculations to the nearest whole dollar amount.)
Spartan Corporation redeemed 25 percent of its shares for $2.700 on July 1 of this year, in a transaction that qualified as an exchange under IRC $302(a). Spartan's accumulated E&P at the beginning of the year was $2,700. Its current E&P is $19,900. Spartan made dividend distributions of $2,400 on June 1 and $6,600 on August 31. Determine the beginning balance in Spartan's accumulated E&P at the beginning of the next year. See Revenue Rules 74-338 and 74-339 for help in making this calculation. (Round your intermediate calculations to the nearest whole dollar amount.) Accumulated E&P at the beginning of the next year
Spartan Corporation redeemed 25 percent of its shares for $4,500 on July 1 of this year, in a transaction that qualified as an exchange under $302(a). Spartan reported accumulated E&P at the beginning of the year of $4,500 and current E&P at year end was $12,300. Spartan made dividend distributions of $3,600 on June 1 and $6,600 on August 31. Determine the beginning balance in Spartan's accumulated E&P at the beginning of the next year. See Revenue Rule 74-338 and Revenue Rule 74 - 339 for help in making this calculation.
Wooden Reed Inc. (WRI) issued 30,000 voting common shares to acquire all of the assets and liabilities of Creative Instrument Ltd. (CIL). On the acquisition date, WRI's shares were trading at $21.83 per share. After the transaction, CIL owned 20% of WRI's outstanding shares. Below are the statements of financial position of both companies immediately before the transaction, along with the fair values of CIL's assets and liabilities: WRI CIL Cash Accounts receivable Inventory Property, plant, equipment (net) Current liabilities Long-term debt Common shares Retained earnings $754,900 ■ $919,900 $265,000 O $100,000 S carrying value 75,000 CA 180,000 220,000 880,000 $ 1,355,000 $ 75,000 235,000 100,000 945,000 $ 1,355,000 If the consolidated statement of financial position was created immediately after the acquisition, the consolidated 2. common share account will be: A TTİNEN carrying value $ 35,000 TRT- 67,500 10 125,000 S climi 1 temagam de - SAM A TRILOŽ B 350,000 $ 577,500 $ 25,000…
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YSL Corporation acquired 80% of the outstanding ordinary shares of GBX Company on June 1, 2022 for P586,250. GBX Company’s shareholder’s equity components at the end of this year were as follows: Ordinary shares, P100 par, P250,000; Share premium, P112,500 and Retained earnings, P222,500.Non-controlling interest (NCI) is measured at fair value. All the assets of GBX were fairly valued, except for inventories, which is overstated by P11,000 and equipment, which is understated by P15,000. Remaining useful life of equipment is 4 years. Both companies use straight line method for depreciation and amortization.Shareholder’s equity of YSL on January 1, 2022 is composed of Ordinary shares, P750,000; Share premium, P175,000 and Retained earnings, P525,000.Fair value of NCI on the date of acquisition is P117,500. Goodwill, if any, should be written down by P14,225 at year end. Net income for the first year of parent and subsidiary are P75,000 and P42,500 (from date of acquisition),…
On January 1, 20x1, ABC Corporation purchased all of XYZ Corporation's common stock for $1,200,000. On that date, the fair values of XYZ's assets and liabilities equaled their carrying amounts of $1,320,000 and $320,000, respectively. During year 1, XYZ paid cash dividends of $20,000. Selected information from the separate balance sheets and income statements of ABC and XYZ as of December 31, year 1, and for the year then ended follows: ABC Corporation (Column 1), XYZ Corporation (Column 2) REQUIRED: In ABC's December 31, year 1 consolidated balance sheet, what amount should be reported as total retained earnings?
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YSL Corporation acquired 80% of the outstanding ordinary shares of GBX Company on June 1, 2022 for P586,250. GBX Company's shareholder's equity components at the end of this year were as follows: Ordinary shares, P100 par, 250,000; Share premium, P112,500 and Retained. earnings, P222,500. Non-controlling interest (NCl) is measured at fair value. All the assets of GBX were fairly valued, except for inventories, which is overstated by P11,000 and equipment, which is understated by 15,000, Remaining useful life of equipment is 4 years. Both companies use straight line method for depreciation and amortization. Shareholder's equity of YSL on January 1, 2022 is composed of Ordinary shares, P750,000; Share premium, P175,000 and Retained earnings, P525,000 Fair value of NCI on the date of acquisition is P117,500. Goodwill, if any, should be written down by P14,225 at year end. Net income for the first year of parent and subsidiary are P75,000 and P42,500 (from date of acquisition),…
On January 1, 20X2, Parent Inc. issued 32,000 shares of its P10 par value common stock for all the outstanding shares of Son Company. The fair value of Parent Inc.'s stock is P25 per share. Parent Inc. pays P50,000 in registering the stocks. Given below are the statements of financial position (SFP) of the companies before the acquisition: Parent Inc. Statement of Financial Position January 1, 20X2 Assets Liabilities and Equity P210,000 420,000 400,000 500,000 505,000 P2,035,000 Cash P200,000 Accounts Payable 185,000 Bonds Payable 190,000 Common Stock, P10 par value 300,000 Additional Paid-In Capital (APIC) 740,000 Retained Earnings 420,000 Total Liabilities and Equity P2,035,000 Accounts Receivable Inventory Land Building, net of depreciation Equipment, net of depreciation Total Assets Son Company Statement of Financial Position January 1, 20X2 Book Value Fair Value P55,000 150,000 130,000 500,000 300,000 P1,135,000 Accounts Receivable Inventory Land P55,000 130,000 85,000 320,000…

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