Exam 9: Indirect and Mutual Holdings

Use the following information to answer the question(s)below. Pace Corporation owns 70% of Abaza Corporation and 60% of Babon Corporation.Abaza Corporation owns 20% of Babon Corporation.Pace's investment in Abaza was consummated in one transaction at a purchase price $20,000 in excess of the book value.Pace's purchase of Babon was made in one transaction at a price $30,000 above book value.Abaza's investment in Babon was completed in one transaction at a purchase price $10,000 in excess of the book value.The purchase price differential for all three investments was attributable to goodwill.(There were no fair value/book value differences in assets and liabilities for each investment. )Pace's separate net income for the current year is $100,000.Abaza's separate net income is $190,000,which includes a $10,000 unrealized loss on the sale of land to Pace.Babon's separate net income is $150,000.Separate net incomes exclude investment income. -The amount of noncontrolling interest share for the current year is

Use the following information to answer the question(s)below. Pahm Corporation owns 80% of the outstanding voting common stock of Abussi Corporation,which was purchased for $60,000 over Abussi's book value.The excess purchase price was attributable to goodwill.Abussi Corporation owns 60% of the outstanding common stock of Badock Corporation,which was purchased at book value.The separate net incomes of Pahm,Abussi,and Badock (excluding investment income)for the year are $200,000,$240,000,and $260,000,respectively.There were no fair value/book value differences in the assets and liabilities of Pahm,Abussi and Badock. -The amount of income for the current year assigned to the noncontrolling shareholders of Badock Corporation is

Packer Corporation owns 100% of Abel Corporation,Abel Corporation owns 95% of Bacon Corporation and Bacon Corporation owns 80% of Cab Corporation.The separate net incomes (excluding investment income)of Packer,Abel,Bacon,and Cab are $300,000,$100,000,$200,000,and $300,000,respectively.All of the investments were made at times when the investee's book values were equal to their fair values.There were no cost/book value differentials for each investment. Required: Determine the controlling interest share of consolidated net income and noncontrolling interest shares for Packer Corporation and Subsidiaries for the current year.

Paine Corporation owns 90% of Achan Corporation,Achan Corporation owns 85% of Badge Corporation,and Badge Corporation owns 5% of Achan Corporation.The separate net incomes (excluding investment income)of Paine,Achan,and Badge are $400,000,$160,000,and $220,000,respectively.Assume the investments were acquired at a cost equal to the book value of each investment,which also equals the fair value. Required: 1.Calculate revised net incomes for Paine,Achan,and Badge by using the conventional method. 2.Determine the controlling interest share of consolidated net income and the noncontrolling interest shares.

On January 1,2011,Peabody Corporation acquired a 90% interest in Salisbury Company for $270,000 when Salisbury's stockholders' equity was $300,000;with Common stock $200,000 and Retained earnings $100,000. On January 1,2011,Salisbury purchased a 10% interest in Peabody for $70,000 when Peabody's total stockholders' equity was $700,000;with Common stock $500,000 and Retained earnings $200,000. The following data was available for the year ending December 31,2011: Use the conventional approach to account for the mutually-held stock.Assume there were no book value/fair value differentials for each investment.The separate net incomes do not include investment income. Required: 1.Prepare the journal entry for Peabody on January 1,2011. 2.Prepare the journal entry for Salisbury on January 1,2011. 3.Prepare the journal entry to record the constructive retirement of 10% of Peabody's outstanding stock due to Salisbury's purchase of Peabody's stock. 4.Determine the incomes of Peabody and Salisbury on a consolidated basis with mutual income for 2011 using simultaneous equations. 5.What is controlling interest share of consolidated net income and noncontrolling interest shares for 2011?

On January 1,2012,Pauline Company acquired 90% of Stephen Company at a cost of $90,000.On January 1,2012,Stephen Company acquired 10% of Pauline Company at a cost of $10,000. On January 1,2012,the following data is available: At December 31,2012,the following data is available: Assuming the treasury stock method is used,what elimination entry is needed for the Investment in Pauline at December 31,2012?

Padhy Corporation owns 80% of Abrams Corporation,Abrams Corporation owns 60% of Bacud Corporation,and Bacud Corporation owns 10% of Abrams Corporation.The separate net incomes (excluding investment income)of Padhy,Abrams,and Bacud are $300,000,$100,000,and $80,000,respectively.Assume the investments were acquired at a cost equal to the book value of each investment,which also equals the fair value. Required: Calculate the controlling interest share of consolidated net income and the noncontrolling interest shares for Padhy Corporation and its subsidiaries.Use the conventional method for your solution.

Use the following information to answer the question(s)below. Pahm Corporation owns 80% of the outstanding voting common stock of Abussi Corporation,which was purchased for $60,000 over Abussi's book value.The excess purchase price was attributable to goodwill.Abussi Corporation owns 60% of the outstanding common stock of Badock Corporation,which was purchased at book value.The separate net incomes of Pahm,Abussi,and Badock (excluding investment income)for the year are $200,000,$240,000,and $260,000,respectively.There were no fair value/book value differences in the assets and liabilities of Pahm,Abussi and Badock. -The amount of income for the current year assigned to the noncontrolling shareholders of Abussi Corporation is

Paco Corporation owns 90% of Aber Corporation,Aber Corporation owns 85% of Back Corporation,and Back Corporation owns 5% of Aber Corporation.The separate net incomes (excluding investment income)of Paco,Aber,and Back are $100,000,$40,000,and $55,000,respectively.Assume the investments were acquired at a cost equal to the book value of each investment,which also equals the fair value. Required: 1.Calculate revised net incomes for Paco,Aber,and Back by using the conventional method. 2.Determine the controlling interest share of consolidated net income and the noncontrolling interest shares.

Pacini Corporation owns an 80% interest in Abdoo Corporation,acquired on January 1,2010 for $700,000 when Abdoo's stockholders' equity consisted of $600,000 of Capital Stock and $200,000 of Retained Earnings. Abdoo Corporation acquired a 60% interest in Bach Corporation on July 1,2010 for $180,000 when Bach had Capital Stock of $200,000 and Retained Earnings of $50,000.On January 1,2011,Abdoo acquired a 70% interest in Cabo Corporation for $270,000 when Cabo had Capital Stock of $250,000 and Retained Earnings of $100,000. No change in outstanding stock of any of the affiliated companies has occurred since the investments were made.All cost-book value differentials are goodwill.There are no fair value/book value differentials.The stockholders' equity section of the separate balance sheets of Abdoo,Bach,and Cabo at December 31,2011 are as follows: Required: 1.Compute the amount at which goodwill should be shown in the consolidated balance sheet of Pacini Corporation and Subsidiaries at December 31,2011. 2.Pacini and Abdoo have applied the equity method correctly.Determine the balances of the three investment accounts at December 31,2011.

Use the following information to answer the question(s)below. Paiva Corporation owns 80% of Ackroyd Corporation's outstanding common stock and Ackroyd owns 80% of the outstanding common stock of Bailey Corporation.Bailey Corporation owns 10% of the outstanding common stock of Ackroyd Corporation.The cost of the investments was equal to book value and there were not fair value/book value differences for the investments.The separate net incomes for the three affiliated companies for the year ended December 31,2011 (excluding investment income)are as follows: Paiva Corporation,$100,000,Ackroyd Corporation,$50,000,and Bailey Corporation,$30,000.Use the conventional approach. Symbols used: P = Income of Paiva on a consolidated basis A = Income of Ackroyd on a consolidated basis B = Income of Bailey on a consolidated basis -Ackroyd's noncontrolling interest share for 2011 is

Paik Corporation owns 80% of Acdol Corporation and 60% of Ben Corporation.Acdol Corporation owns 10% of Ben Corporation.All subsidiary investments were acquired at book value.There are no fair value/book value differentials associated with each investment.Separate net incomes (excluding investment income)of the affiliated companies for 2011 are: Paik: $600,000 which includes $60,000 unrealized losses on inventory items sold to Ben Acdol: $360,000 Ben: $340,000 which includes $100,000 unrealized profit on land sold to Acdol Required: Determine controlling interest share of consolidated net income and noncontrolling interest shares for Paik Corporation and Subsidiaries for 2011.

Use the following information to answer the question(s)below. Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation.For the current year,the separate net incomes (excluding investment income)of Paint,Achille,and Badrack are $120,000,$100,000,and $50,000,respectively.The cost of each investment was equal to the book value of the investment,which was also equal to the fair value. -Noncontrolling interest share for Achille is

Paice Corporation owns 80% of the voting common stock of Accardi Corporation.Paice owns 60% of the voting common stock of Badger Corporation.Accardi owns 20% of the voting common stock of Badger.There are no cost/book value/fair value differentials to consider.The separate net incomes (excluding investment income)of these affiliated companies for 2011 are: Required: Calculate controlling interest share of consolidated net income and noncontrolling interest shares for Paice Corporation and Subsidiaries for 2011.

On January 1,2011,Paul Corporation acquired a 90% interest in Satorius Company for $360,000 when Satorius' stockholders' equity was $400,000;with Common stock $200,000 and Retained earnings $200,000. On January 1,2011,Satorius Company purchased a 10% interest in Paul Company for $90,000 when Paul's total stockholders' equity was $900,000;with Common stock $500,000 and Retained earnings $400,000. The following data was available for the year ending December 31,2011: Use the conventional approach to account for the mutually-held stock.Assume there were no book value/fair value differentials for each investment.The separate net incomes do not include investment income. Required: 1.Prepare the journal entry for Paul on January 1,2011. 2.Prepare the journal entry for Satorius on January 1,2011. 3.Prepare the journal entry to record the constructive retirement of 10% of Paul's outstanding stock due to Satorius' purchase of Paul's stock. 4.Determine the incomes of Paul and Satorius on a consolidated basis with mutual income for 2011 using simultaneous equations. 5.What is controlling interest share of consolidated net income and noncontrolling interest shares for 2011? 6.What is consolidated net income?

Use the following information to answer the question(s)below. Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation.For the current year,the separate net incomes (excluding investment income)of Paint,Achille,and Badrack are $120,000,$100,000,and $50,000,respectively.The cost of each investment was equal to the book value of the investment,which was also equal to the fair value. -Noncontrolling interest share for Badrack is

Separate earnings and investment percentages for three affiliates for 2011 are as follows: Assume the investments were acquired at a cost equal to the book value of each investment,which also equals the fair value.Separate earnings do not include investment income. Required: 1.Calculate revised net incomes for Palace,Acres,and Bain by using the conventional method. 2.Determine the controlling interest share of consolidated net income and the noncontrolling interest shares.

On January 1,2011,Klode Corporation acquired an 80% interest in Savy Company for $400,000 when Savy's stockholders' equity was $500,000;with Common stock $400,000 and Retained earnings $100,000. On January 1,2011,Savy purchased a 10% interest in Klode for $50,000 when Klode's total stockholders' equity was $500,000;with Common stock $400,000 and Retained earnings $100,000. The following data was available for the year ending December 31,2011: Use the conventional approach to account for the mutually-held stock.Assume there were no book value/fair value differentials for each investment.The separate net incomes do not include investment income. Required: 1.Prepare the journal entry for Klode on January 1,2011. 2.Prepare the journal entry for Savy on January 1,2011. 3.Prepare the journal entry to record the constructive retirement of 10% of Klode's outstanding stock due to Savy's purchase of Klode's stock. 4.Determine the incomes of Klode and Savy on a consolidated basis with mutual income for 2011 using simultaneous equations. 5.What is controlling interest share of consolidated net income and noncontrolling interest shares for 2011?

Paglia Corporation owns 80% of Aburn Corporation and has separate net income of $200,000 for 2010.Aburn Corporation has separate net income of $100,000 and owns 70% of the outstanding stock of Badley Corporation.Badley Corporation has separate net income of $80,000.(Separate net incomes exclude investment income. )The cost of each investment was equal to book value and fair value.The controlling interest share of consolidated net income for 2010 is

Use the following information to answer the question(s)below. Paiva Corporation owns 80% of Ackroyd Corporation's outstanding common stock and Ackroyd owns 80% of the outstanding common stock of Bailey Corporation.Bailey Corporation owns 10% of the outstanding common stock of Ackroyd Corporation.The cost of the investments was equal to book value and there were not fair value/book value differences for the investments.The separate net incomes for the three affiliated companies for the year ended December 31,2011 (excluding investment income)are as follows: Paiva Corporation,$100,000,Ackroyd Corporation,$50,000,and Bailey Corporation,$30,000.Use the conventional approach. Symbols used: P = Income of Paiva on a consolidated basis A = Income of Ackroyd on a consolidated basis B = Income of Bailey on a consolidated basis -The equation,in a set of simultaneous equations,that computes Paiva Corporation income on a consolidated basis is