Exam 9: Indirect and Mutual Holdings

On January 1,2011,Adam Corporation purchased a 90% interest in Rodney Corporation.On January 1,2011,Rodney Corporation purchased an 80% interest in Ben Corporation. In all investment acquisitions,the cost of the interest was equal to the book value of the interest and the fair value of the interest.The following information is available for 2011: The separate net incomes do not include investment income. Required: 1.What is controlling interest share of consolidated net income for 2011? 2.What is noncontrolling interest shares of consolidated net income for 2011?

When mutually-held stock involves subsidiaries holding the stock of each other,the ________ method is not used.

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 -Bailey's noncontrolling interest share for 2011 is

On January 1,2011,Wrobel Company acquired a 90 percent interest in Sally Company for $270,000.On January 1,2011,Sally's total stockholders' equity was $300,000.The fair value and book value of Sally's individual assets and liabilities were equal. On January 2,2011,Sally Company acquired a 10 percent interest in Wrobel Company for $70,000.On January 2,2011,Wrobel's total stockholders' equity was $700,000.The fair value and book value of Wrobel's individual assets and liabilities were equal. For the year ending December 31,2011,the following data is available: The treasury stock method is used to account for the mutual stock holdings between Wrobel and Sally.The separate net incomes do not include investment income. Required: 1.What is Sally's income from Wrobel for 2011? 2.What is Wrobel's income from Sally for 2011? 3.What is the noncontrolling interest share associated with Sally Company for 2011? 4.Prepare the elimination entry for Sally's Investment in Wrobel Company.

Pabari Corporation owns an 80% interest in Alders Corporation and Alders owns a 60% interest in Babao Corporation.Both interests were acquired at a cost equal to book value equal to fair value.During 2010,Alders sells land to Babao at a profit of $12,000.Babao still holds the land at December 31,2010.Net income(loss)of the three companies (excluding investment income)for 2010 are: Controlling interest share of consolidated net income and noncontrolling interest share,respectively,for 2010 are

On January 1,2011,Singh Company acquired an 80 percent interest in Gonzalez Company for $300,000.On January 1,2011,Gonzalez's total stockholders' equity was $375,000.The fair value and book value of Gonzalez's individual assets and liabilities were equal. On January 2,2011,Gonzalez Company acquired a 10 percent interest in Singh Company for $50,000.On January 2,2011,Singh's total stockholders' equity was $500,000.The fair value and book value of Singh's individual assets and liabilities were equal. For the year ending December 31,2011,the following data is available: The treasury stock method is used to account for the mutual stock holdings between Singh and Gonzalez.The separate net incomes do not include investment income. Required: 1.What is Gonzalez's income from Singh for 2011? 2.What is Singh's income from Gonzalez for 2011? 3.What is the noncontrolling interest share associated with Gonzalez Company for 2011? 4.Prepare the elimination entry for Gonzalez's Investment in Singh Company.

Pallet Corporation owns 80% of Adelt Corporation and Adelt owns 60% of Bajo Inc.Which of the following is correct?

On January 1,2011 Paki Inc.bought 75% interest in Adam Corporation.At the time of purchase,Adam owned 80% of Baird Company.In all acquisitions,the book value equals the fair value,which equals the acquisition cost.Separate earnings (loss)(excluding investment income)for the three affiliates for 2011 are as follows: Required: Compute controlling interest share of consolidated net income and noncontrolling interest shares for Paki and affiliates for 2011.

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. -Controlling interest share of consolidated net income for the current year is

On January 1,2011,Wrobel Company acquired a 90 percent interest in Sally Company for $270,000.On January 1,2011,Sally's total stockholders' equity was $300,000.The fair value and book value of Sally's individual assets and liabilities were equal. On January 2,2011,Sally Company acquired a 10 percent interest in Wrobel Company for $70,000.On January 2,2011,Wrobel's total stockholders' equity was $700,000.The fair value and book value of Wrobel's individual assets and liabilities were equal. For the year ending December 31,2011,the following data is available: The treasury stock method is used to account for the mutual stock holdings between Wrobel and Sally.The separate net incomes do not include investment income. A partial working paper is available for the year ending December 31,2011. Required: Prepare the elimination entries for the year ending December 31,2011. Do not enter them onto the worksheet.Instead,list them below.

Raymond Company owns 90% of Rachel Company.Rachel Company owns 10% of Raymond Company.The treasury stock method is used.On the books of Rachel Company,we maintain the Investment in Raymond using the ________ method.The ending balance in Investment in Raymond is ________ stockholders' equity in the consolidated balance sheet.

On January 1,2011,Singh Company acquired an 80 percent interest in Gonzalez Company for $300,000.On January 1,2011,Gonzalez's total stockholders' equity was $375,000.The fair value and book value of Gonzalez's individual assets and liabilities were equal. On January 2,2011,Gonzalez Company acquired a 10 percent interest in Singh Company for $50,000.On January 2,2011,Singh's total stockholders' equity was $500,000.The fair value and book value of Singh's individual assets and liabilities were equal. For the year ending December 31,2011,the following data is available: The treasury stock method is used to account for the mutual stock holdings between Singh and Gonzalez.The separate net incomes do not include investment income.A partial consolidating worksheet is below. Required: Prepare the elimination entries for the year ending December 31,2011. Do not enter them onto the worksheet.Instead,list them below.

Pablo Corporation acquired 60% of Abagia Corporation on January 1,2010,at a cost of $20,000 in excess of book value.Also,on July 1,2010,Pablo acquired 60% of Babin Corporation at book value.On January 1,2011,Abagia acquired a 20% interest in Babin at a cost of $10,000 in excess of book value.The excess purchase costs paid by Pablo and Abagia were attributed to goodwill. On July 1,2011,Pablo sold land with a book value of $20,000 to Abagia for $40,000.The $20,000 unrealized gain is included in Pablo's separate income.Separate net incomes for the affiliated companies (excluding investment income)for 2011 are: Controlling interest share of consolidated net income for 2011 is

Controlling interest share of consolidated net income for Paint Corporation and Subsidiaries is:

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 controlling interest share of consolidated net income 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 net income reported for Pahm Corporation for the current year is

Page Corporation acquired a 60% interest in Ace Corporation at a price $40,000 in excess of book value and fair value on January 1,2010.On the same date,Ace acquired a 70% interest in Bader Corporation at a price $30,000 in excess of book value and fair value.The excess purchase cost paid by Page and Ace was attributed to goodwill.Separate net incomes (excluding investment income)for the three affiliates for 2010 are as follows: Page,$500,000,Ace,$300,000,and Bader,$400,000. Page's controlling interest share of consolidated net income for 2010 is