On January 1, 2016,Aspen Company acquired 80 percent of Birch Companyâs voting stockfor $288,000. Birch reported a $300,000 book value, and the fairvalue of the noncontrolling interest was $72,000 on that date.Then, on January 1, 2017, Birch acquired 80 percent of CedarCompany for $104,000 when Cedar had a $100,000 book value and the20 percent noncontrolling interest was valued at $26,000. In eachacquisition, the subsidiaryâs excess acquisition-date fair overbook value was assigned to a trade name with a 30-year remaininglife.
These companies report the following financial information.Investment income figures are not included.
2016
2017
2018
Sales:
Aspen Company
$415,000
$545,000
$688,000
Birch Company
200,000
280,000
400,000
Cedar Company
Not available
160,000
210,000
Expenses:
Aspen Company
$310,000
$420,000
$510,000
Birch Company
160,000
220,000
335,000
Cedar Company
Not available
150,000
180,000
Dividends declared:
Aspen Company
$ ?20,000
$?40,000
$?50,000
Birch Company
10,000
20,000
20,000
Cedar Company
Not available
2,000
10,000
Assume that each ofthe following questions is independent:
If allcompanies use the equity method for internal reporting purposes,what is the December 31, 2017, balance in Aspenâs Investment inBirch Company account?
What is theconsolidated net income for this business combination for2018?
What is thenet income attributable to the noncontrolling interest in2018?
Assume thatBirch made intra-entity inventory transfers to Aspen that haveresulted in the following intra-entity gross profits in inventoryat the end of each year:
Date
Amount
12/31/16
?$10,000
12/31/17
?16,000
12/31/18
?25,000
What is theaccrual-based net income of Birch in 2017 and 2018,respectively?
On January 1, 2016,Aspen Company acquired 80 percent of Birch Companyâs voting stockfor $288,000. Birch reported a $300,000 book value, and the fairvalue of the noncontrolling interest was $72,000 on that date.Then, on January 1, 2017, Birch acquired 80 percent of CedarCompany for $104,000 when Cedar had a $100,000 book value and the20 percent noncontrolling interest was valued at $26,000. In eachacquisition, the subsidiaryâs excess acquisition-date fair overbook value was assigned to a trade name with a 30-year remaininglife.
These companies report the following financial information.Investment income figures are not included.
2016 | 2017 | 2018 | |
Sales: | |||
Aspen Company | $415,000 | $545,000 | $688,000 |
Birch Company | 200,000 | 280,000 | 400,000 |
Cedar Company | Not available | 160,000 | 210,000 |
Expenses: | |||
Aspen Company | $310,000 | $420,000 | $510,000 |
Birch Company | 160,000 | 220,000 | 335,000 |
Cedar Company | Not available | 150,000 | 180,000 |
Dividends declared: | |||
Aspen Company | $ ?20,000 | $?40,000 | $?50,000 |
Birch Company | 10,000 | 20,000 | 20,000 |
Cedar Company | Not available | 2,000 | 10,000 |
Assume that each ofthe following questions is independent:
If allcompanies use the equity method for internal reporting purposes,what is the December 31, 2017, balance in Aspenâs Investment inBirch Company account?
What is theconsolidated net income for this business combination for2018?
What is thenet income attributable to the noncontrolling interest in2018?
Assume thatBirch made intra-entity inventory transfers to Aspen that haveresulted in the following intra-entity gross profits in inventoryat the end of each year:
Date | Amount |
12/31/16 | ?$10,000 |
12/31/17 | ?16,000 |
12/31/18 | ?25,000 |
What is theaccrual-based net income of Birch in 2017 and 2018,respectively?
Related questions
On January 1, 2012, Aspen Company acquired 80 percent of BirchCompanyâs outstanding voting stock for $386,000. Birch reported a$347,500 book value and the fair value of the noncontrollinginterest was $96,500 on that date. Also, on January 1, 2013, Birchacquired 80 percent of Cedar Company for $160,000 when Cedar had a$173,000 book value and the 20 percent noncontrolling interest wasvalued at $40,000. In each acquisition, the subsidiaryâs excessacquisition-date fair over book value was assigned to a trade namewith a 30-year life.
These companies report the following financial information.Investment income figures are not included.
| 2012 | 2013 | 2014 | ||||
| Sales: | ||||||
| Aspen Company | $ 462,500 | $ | 625,000 | $ | 900,000 | |
| Birch Company | 227,250 | 390,750 | 594,400 | |||
| Cedar Company | Not available | 212,600 | 222,200 | |||
| Expenses: | ||||||
| Aspen Company | $ 375,000 | $ | 530,000 | $ | 547,500 | |
| Birch Company | 164,000 | 309,000 | 505,000 | |||
| Cedar Company | Not available | 194,000 | 183,000 | |||
| Dividends declared: | ||||||
| Aspen Company | $ 18,000 | $ | 30,000 | $ | 40,000 | |
| Birch Company | 8,000 | 20,000 | 20,000 | |||
| Cedar Company | Not available | 4,000 | 12,000 | |||
Assume that each of the following questions is independent: |
| a. | If all companiesuse the equity method for internal reporting purposes, what is theDecember 31, 2013, balance in Aspen's Investment in Birch Companyaccount? |
Investment in Birch____________
| b. | What is theconsolidated net income for this business combination for2014? |
| Consolidated net income_____________ |
| c. | What is the netincome attributable to the noncontrolling interest in 2014? |
Noncontrolling interests share of the consolidated netincome__________
| d. | Assume thatBirch made intra-entity inventory transfers to Aspen that haveresulted in the following unrealized gross profits at the end ofeach year: |
| Date | Amount |
| 12/31/12 | $18,400 |
| 12/31/13 | 21,300 |
| 12/31/14 | 33,400 |
What is the realized income of Birch in 2013 and 2014,respectively? |
Realized income 2013 2014
_______ ________
On January 1, 2012, Aspen Company acquired 80 percent of BirchCompanyâs outstanding voting stock for $364,000. Birch reported a$320,000 book value and the fair value of the noncontrollinginterest was $91,000 on that date. Also, on January 1, 2013, Birchacquired 80 percent of Cedar Company for $108,000 when Cedar had a$108,000 book value and the 20 percent noncontrolling interest wasvalued at $27,000. In each acquisition, the subsidiaryâs excessacquisition-date fair over book value was assigned to a trade namewith a 30-year life.
These companies report the following financial information.Investment income figures are not included.
| 2012 | 2013 | 2014 | ||||
| Sales: | ||||||
| Aspen Company | $ 485,000 | $ | 767,500 | $ | 892,500 | |
| Birch Company | 211,500 | 386,000 | 622,300 | |||
| Cedar Company | Not available | 263,700 | 240,000 | |||
| Expenses: | ||||||
| Aspen Company | $ 332,500 | $ | 525,000 | $ | 635,000 | |
| Birch Company | 167,000 | 315,000 | 550,000 | |||
| Cedar Company | Not available | 244,000 | 210,000 | |||
| Dividends declared: | ||||||
| Aspen Company | $ 10,000 | $ | 45,000 | $ | 55,000 | |
| Birch Company | 8,000 | 18,000 | 18,000 | |||
| Cedar Company | Not available | 2,000 | 6,000 | |||
Assume that each of the following questions is independent:
a. If all companies use the equity method forinternal reporting purposes, what is the December 31, 2013, balancein Aspen's Investment in Birch Company account?
b. What is the consolidated net income for thisbusiness combination for 2014?
c. What is the net income attributable to thenoncontrolling interest in 2014?
d. Assume that Birch made intra-entityinventory transfers to Aspen that have resulted in the followingunrealized gross profits at the end of each year:
| Date | Amount |
| 12/31/12 | $13,500 |
| 12/31/13 | 16,200 |
| 12/31/14 | 30,400 |
What is the realized income of Birch in 2013 and 2014,respectively?
