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mon stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling date of acquisition. Buildings and equipment held by Slice had a fair value $25,000 higher than book value rential was assigned to a copyright held by Slice. Buildings and equipment had a 10-year remaining life and life at the date of acquisition. balances for Putt and Slice on December 31, 20X5, are as follows: Putt Corporation Credit Slice Company Debit Debit Cre sh counts Receivable terest & Other Receivables ventory nd ildings & Equipment nd Discount vestment in Slice Company st of Goods Sold 15,850 $ 58,000 65,000 70,000 30,000 10,000 150,000 180,000 80,000 60,000 315,000 240,000 15,000 157,630 375,000 25,000 110,000 preciation Expense terest Expense her Expense 10,000 24,000 33,000 28,000 17,000 vidends Declared 30,000 5,000 cumulated $ 120,000 $ 60 preciation-Buildings and Equipment counts Payable her Payables nds Payable mmon Stock ditional Paid-in Capital tained Earnings 61,000 28 30,000 20 250,000 300 150,000 100 30,000 165,240 100 les 450,000 190 her Income in on Sale of Equipment 28,250 come from Slice Company 10,990 tal $1,295,480 $1,295,480 $808,000 $808 sold land it had purchased for $21,000 to Slice on September 20, 20X4, for $32,000. Slice plans to use the

mon stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling date of acquisition. Buildings and equipment held by Slice had a fair value $25,000 higher than book value rential was assigned to a copyright held by Slice. Buildings and equipment had a 10-year remaining life and life at the date of acquisition. balances for Putt and Slice on December 31, 20X5, are as follows: Putt Corporation Credit Slice Company Debit Debit Cre sh counts Receivable terest & Other Receivables ventory nd ildings & Equipment nd Discount vestment in Slice Company st of Goods Sold 15,850 $ 58,000 65,000 70,000 30,000 10,000 150,000 180,000 80,000 60,000 315,000 240,000 15,000 157,630 375,000 25,000 110,000 preciation Expense terest Expense her Expense 10,000 24,000 33,000 28,000 17,000 vidends Declared 30,000 5,000 cumulated $ 120,000 $ 60 preciation-Buildings and Equipment counts Payable her Payables nds Payable mmon Stock ditional Paid-in Capital tained Earnings 61,000 28 30,000 20 250,000 300 150,000 100 30,000 165,240 100 les 450,000 190 her Income in on Sale of Equipment 28,250 come from Slice Company 10,990 tal $1,295,480 $1,295,480 $808,000 $808 sold land it had purchased for $21,000 to Slice on September 20, 20X4, for $32,000. Slice plans to use the

SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
42nd Edition
ISBN:9780357161548
Author:Raabe
Publisher:Raabe
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 36P
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Putt Corporation acquired 70 percent of Slice Company's voting common stock on January 1, 20X3, for $158,900. Slice reported common stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling interest was $68,100 at the date of acquisition. Buildings and equipment held by Slice had a fair value $25,000 higher than book value. The remainder of the differential was assigned to a copyright held by Slice. Buildings and equipment had a 10-year remaining life and the copyright had a 5- year life at the date of acquisition. Trial balances for Putt and Slice on December 31, 20X5, are as follows: Putt Corporation Slice Company Debit Credit Debit Credit Cash $ 15,850 $ 58,000 Accounts Receivable 65,000 70,000 Interest & Other Receivables 30,000 10,000 Inventory 150,000 180,000 Land 80,000 60,000 Buildings & Equipment 315,000 240,000 Bond Discount 15,000 Investment in Slice Company 157,630 Cost of Goods Sold 375,000 110,000 Depreciation Expense 25,000 10,000 Interest Expense 24,000 33,000 Other Expense 28,000 30,000 17,000 5,000 Dividends Declared Accumulated $ 60,000 Depreciation-Buildings and Equipment Accounts Payable Other Payables Bonds Payable $ 120,000 61,000 28,000 30,000 20,000 250,000 300,000 Common Stock 150,000 100,000 Additional Paid-in Capital Retained Earnings 30,000 100,000 190,400 165,240 Sales 450,000 Other Income 28,250 Gain on Sale of Equipment Income from Slice Company 9,600 10,990 Total $1,295,480 $1,295,480 $808,000 $808,000 Putt sold land it had purchased for $21,000 to Slice on September 20, 20X4, for $32,000. Slice plans to use the land for future plant expansion. On January 1, 20X5, Slice sold equipment to Putt for $91,600. Slice purchased the equipment on January 1, 20X3, for $100,000 and depreciated it on a 10-year basis, including an estimated residual value of $10,000. The residual value and estimated economic life of the equipment remained unchanged as a result of the transfer, and both companies use straight-line depreciation. Assume Putt uses the fully adjusted equity method.
Transcribed Image Text:Putt Corporation acquired 70 percent of Slice Company's voting common stock on January 1, 20X3, for $158,900. Slice reported common stock outstanding of $100,000 and retained earnings of $85,000. The fair value of the noncontrolling interest was $68,100 at the date of acquisition. Buildings and equipment held by Slice had a fair value $25,000 higher than book value. The remainder of the differential was assigned to a copyright held by Slice. Buildings and equipment had a 10-year remaining life and the copyright had a 5- year life at the date of acquisition. Trial balances for Putt and Slice on December 31, 20X5, are as follows: Putt Corporation Slice Company Debit Credit Debit Credit Cash $ 15,850 $ 58,000 Accounts Receivable 65,000 70,000 Interest & Other Receivables 30,000 10,000 Inventory 150,000 180,000 Land 80,000 60,000 Buildings & Equipment 315,000 240,000 Bond Discount 15,000 Investment in Slice Company 157,630 Cost of Goods Sold 375,000 110,000 Depreciation Expense 25,000 10,000 Interest Expense 24,000 33,000 Other Expense 28,000 30,000 17,000 5,000 Dividends Declared Accumulated $ 60,000 Depreciation-Buildings and Equipment Accounts Payable Other Payables Bonds Payable $ 120,000 61,000 28,000 30,000 20,000 250,000 300,000 Common Stock 150,000 100,000 Additional Paid-in Capital Retained Earnings 30,000 100,000 190,400 165,240 Sales 450,000 Other Income 28,250 Gain on Sale of Equipment Income from Slice Company 9,600 10,990 Total $1,295,480 $1,295,480 $808,000 $808,000 Putt sold land it had purchased for $21,000 to Slice on September 20, 20X4, for $32,000. Slice plans to use the land for future plant expansion. On January 1, 20X5, Slice sold equipment to Putt for $91,600. Slice purchased the equipment on January 1, 20X3, for $100,000 and depreciated it on a 10-year basis, including an estimated residual value of $10,000. The residual value and estimated economic life of the equipment remained unchanged as a result of the transfer, and both companies use straight-line depreciation. Assume Putt uses the fully adjusted equity method.
Required: a. Compute the amount of income assigned to the noncontrolling interest in the consolidated income statement for 20X5. Income to noncontrolling interest $ 4,710 b. Prepare a reconciliation between the balance in the Investment in Slice Company account reported by Putt at December 31, 20X5, and the underlying book value of net assets reported by Slice at that date. (Enter the proportion of stock held as a fraction (i.e., 0.75), not in percent.) Underlying book value of Slice Company stock: Common stock outstanding $ 100,000 Retained earnings, January 1, 20X5 100,000 Net income for 20X5 30,000 Dividends paid in 20X5 5,000 Net book value $ 225,000 Portion of ownership held by Putt 0.70 Net book value of ownership held by Putt $ 157,500 Unamortized differential: Buildings and equipment 12,250 Соpyright 4,760 Gain on sale of land 11,000 Deferred gross profit on sale of equipment Realized deferred gain Investment in Slice Company 163,510
Transcribed Image Text:Required: a. Compute the amount of income assigned to the noncontrolling interest in the consolidated income statement for 20X5. Income to noncontrolling interest $ 4,710 b. Prepare a reconciliation between the balance in the Investment in Slice Company account reported by Putt at December 31, 20X5, and the underlying book value of net assets reported by Slice at that date. (Enter the proportion of stock held as a fraction (i.e., 0.75), not in percent.) Underlying book value of Slice Company stock: Common stock outstanding $ 100,000 Retained earnings, January 1, 20X5 100,000 Net income for 20X5 30,000 Dividends paid in 20X5 5,000 Net book value $ 225,000 Portion of ownership held by Putt 0.70 Net book value of ownership held by Putt $ 157,500 Unamortized differential: Buildings and equipment 12,250 Соpyright 4,760 Gain on sale of land 11,000 Deferred gross profit on sale of equipment Realized deferred gain Investment in Slice Company 163,510
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