Week 5 Individual Assignment upload

Week 5 Individual Assignment upload - Chapter 5 E5-13...

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Chapter 5 E5-13 Consolidation after one Year of Ownership Required A. Eliminating entries, Jan 1, 20X2 E1 Common Stock $120,000 Retained Earnings Jan 1 80,000 Differential 30,000 Investment in Lowe Stock 190,000 Noncontrolling Interest 40,000 Eliminate investment balance Computation of Differtial Purchase Price 190,000 Underlying book value ($200,000 * .80 = 160,000) -160,000 Differential 30,000 E2 Building and Equip 25,600 Goodwill 4,400 Differential 30,000 Computation of Differtial 32,000 x .80 =25,600 30,000 - 25,600 = 4,400 B. Eliminating entries, december 31,20X2 E1 Income from Subsidiary 28,800 Investment in Lowe Corporation Stock 28,800 Elimainate income from subsidiary Computation of income from subidiary Reported net income from Lowe $40,000 Stock acquired x .80 Income before amortized differential 32,000 Amortization differential: Building and Equip (25,600/8 = 3,200) 3,200 Income from Subsidiary for 20X2 28,000 E2 Income to Noncontrolling interest 8,000 noncontroling interest 8,000 E3 Common stock - Lowe's 120,000 Retained Earnings, Jan 1 80,000 Differential 30,000 Investment in Lowe Stock 190,000 Noncontrolling Interest 40,000 Eliminate beginning investment balance E4 Buildings and Equip 25,600 Goodwill 4,400 Differential 30,000 Assigned to beginning differential E5 Depreciation Expense 3,200 Accumulated Depreciation 3,200 Amortized Differential Pioneer Corporation purchased 80 percent of Loew Corporation's stock on Januar 1, 20X2, At that date Lowe reported retained earnings of $80,000 and had $120,000 of stock outstanding. The fair value of its buildings was $32,000, more than the book value. Pioneer paid $190,000 to acquire the Lowe shares. At that date, the noncontrolling interest had a fair value of $47,500. The remaining economic life for all Lowe's depreciable assets was eight years on that date of combination. The amount of the differential assigned to goodwill is not impaired.
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Week 5 Individual Assignment upload - Chapter 5 E5-13...

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