Chapter 4-13 - ...........................................

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CHAPTER 4 CONSOLIDATED FINANCIAL STATEMENTS AND OUTSIDE OWNERSHIP Answers to Problems 26. (20 Minutes) (Consolidated figures with both mid-year acquisition and a noncontrolling interest) a. The consolidated income statement only includes revenues of $35,000 (December 2006 revenues) and expenses of $22,000 (December 2006 expenses) generated by Wade after the acquisition. b. Because consolidated financial statements are prepared for the new owner Brookwood, the noncontrolling interest shows a beginning balance of $21,000 (10% × $210,000 acquisition date book value). For the month of December the noncontrolling interest will increase for its share of the income ($1,500) and decrease for its share of the dividend ($500) for a total of $22,000 at December 31. c. Revenues . ............................................................. 385,000 Common stock—Wade .
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Unformatted text preview: ........................................ 10,000 Retained earnings—Wade (Jan. 1). ....................... 90,000 ............................................................... Expenses 220,000 ....................................................... Dividends paid 55,000 ............................................... Investment in Wade 189,000 ......................................... Noncontrolling interest 21,000 .............................. (beginning balance at Dec. 1) Because Wade did not close its books on the date of acquisition, the retained earnings elimination is accomplished through its components as of December 1, i.e., beginning balance, net income (revenues and expenses), and dividends paid. Note also that these elements comprise the December 1 value assigned to the noncontrolling interest....
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This note was uploaded on 02/08/2012 for the course ACCOUNTING 559 taught by Professor Keating during the Spring '07 term at DeVry Addison.

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Chapter 4-13 - ...........................................

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