Thomas Inc. had the following stockholders' equity accounts as of January 1, 2013:
Prefered stock-- $90 par non voting nonparticipating;
9% cumulative dividned $2,700,000
Common Stock -- $25 Par $5,600,000
Retained Earnings $14,000,000
Kuried Co. acquired all of the voting common stock of Thomas on January 1, 2013, for $20,656,000. The preferred stock remained in the hands of outside parties and had a fair value of $3,060,000. A database valued at $656,000 was recognized and amortized over five years.
During 2013, Thomas reported earning $630,000 in net income and paid $504,000 in total cash dividends. Kuried used the equity method to account for this investment.
Requirements:
What is the amount of goodwill resulting from this acquisition?
What was the non-controlling interest's share of consolidated net income for the year 2013?
What is the controlling interest share of Thomasâ net income for the year ended December 31, 2013?
What was Kuriedâs balance in the Investment in Thomas Inc. account as of December 31, 2013?
Prepare all consolidation entries for 2013.
Thomas Inc. had the following stockholders' equity accounts as of January 1, 2013:
Prefered stock-- $90 par non voting nonparticipating;
9% cumulative dividned $2,700,000
Common Stock -- $25 Par $5,600,000
Retained Earnings $14,000,000
Kuried Co. acquired all of the voting common stock of Thomas on January 1, 2013, for $20,656,000. The preferred stock remained in the hands of outside parties and had a fair value of $3,060,000. A database valued at $656,000 was recognized and amortized over five years.
During 2013, Thomas reported earning $630,000 in net income and paid $504,000 in total cash dividends. Kuried used the equity method to account for this investment.
Requirements:
What is the amount of goodwill resulting from this acquisition?
What was the non-controlling interest's share of consolidated net income for the year 2013?
What is the controlling interest share of Thomasâ net income for the year ended December 31, 2013?
What was Kuriedâs balance in the Investment in Thomas Inc. account as of December 31, 2013?
Prepare all consolidation entries for 2013.
Related questions
Review of pre-consolidation equity method (controlling investment in affiliate, fair value differs from book value)
Assume an investee has the following financial statement information for the three years ending December 31, 2013:
| (At December 31) | 2011 | 2012 | 2013 |
|---|---|---|---|
| Current assets | $310,500 | $416,550 | $428,205 |
| Tangible fixed assets | 844,500 | 861,450 | 992,595 |
| Intangible assets | 75,000 | 67,500 | 60,000 |
| Total assets | $1,230,000 | $1,345,500 | $1,480,800 |
| Current liabilities | $150,000 | $165,000 | $181,500 |
| Noncurrent liabilities | 330,000 | 363,000 | 399,300 |
| Common stock | 150,000 | 150,000 | 150,000 |
| Additional paid-in capital | 150,000 | 150,000 | 150,000 |
| Retained earnings | 450,000 | 517,500 | 600,000 |
| Total liabilities and equity | $1,230,000 | $1,345,500 | $1,480,800 |
| (For they year ended December 31) | 2011 | 2012 | 2013 |
|---|---|---|---|
| Revenues | $1,275,000 | $1,380,000 | $1,455,000 |
| Expenses | 1,162,500 | 1,260,000 | 1,314,000 |
| Net income | $112,500 | $120,000 | $141,000 |
| Dividends | $37,500 | $52,500 | $58,500 |
Assume that on January 1, 2011, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values. In addition, the acquisition resulted in no goodwill or bargain purchase gain recognized in the consolidated financial statements of the investor company. Assuming that the investor company uses the equity method to account for its investment in the investee, what is the balance in the "investment in investee" account in the investor company's preconsolidation balance sheet on December 31, 2013?
A. $900,000
B. $750,000
C. $675,000
D. $1,480,800
Assume that on January 1, 2011, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values. In addition, the acquisition resulted in no goodwill or bargain purchase gain recognized in the consolidated financial statements of the investor company. Assuming that the investor company uses the equity method to account for its investment in the investee, what is the balance in the "income from investee" account in the investor company's preconsolidation income statement for the year ended December 31, 2013?
A. $58,500
B. $141,000
C. $112,500
D. $82,500
On January 1, 2012, John Doeby Enterprises acquired a 55%interest in BMI, Inc. (BMI). Doeby paid for the transaction with $3million cash and 500,000 shares of Doeby common stock (par value$1.00 per share). At the time of the acquisition, Doebyâs and BMI'sbook values were:
| Doeby | BMI | |
| Common Stock | 2,400,000 | 6,000,000 |
| Additional Paid-In Capital in Excess of Par | 12,050,000 | 10,870,000 |
| Retained Earnings | 2,500,000 | 100,000 |
On January 1, 2012 Doeby common stock had a market value of$14.90 per share and there was no control premium in thistransaction. Any consideration transferred over book value isassigned to goodwill. BMI had the following balances on January 1,2012
| Book Value | Fair Value | |
| Land | 1,700,000 | 2,550,000 |
| Buildings, Net (7-year remaining life) | 2,700,000 | 3,400,000 |
| Equipment, Net (5-year remaining life) | 3,700,000 | 3,300,000 |
For internal reporting purposes, Doeby employs the equity methodto account for this investment. REQUIRED:
(1) In good form, prepare a schedule showing the determinationof goodwill, and the amortization and allocation amounts, relatedto Doebyâs January 1, 2012 transaction.
(2) Assuming that BMIâs pre-consolidation balances showsubsidiary net income of $625,000 and dividends declared and paidof $130,000, in good form, prepare the consolidation eliminationentries needed at December 31, 2012.
(3) Assume that on January 1, 2013, Doeby pays $2,000,000 toacquire another 10% of BMIâs outstanding voting stock, in goodform, prepare the entry Doeby will record to reflect thisadditional acquisition.
(4) In good form, prepare a schedule showing the computation ofthe noncontrolling interest in BMI immediately after DoebyâsJanuary 1, 2013 acquisition.
