Pie Corporation acquired 75 percent of Slice Company’s common stock on December 31, 20X5, at underlying book value. The book values and fair values of Slice’s assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 25 percent of the total book value of Slice. Slice provided the following trial balance data at December 31, 20X5: Debit Credit Cash $ 27,600 Accounts Receivable 65,650 Inventory 89,400 Buildings and Equipment (net) 213,000 Cost of Goods Sold 105,700 Depreciation Expense 23,500 Other Operating Expenses 31,220 Dividends Declared 14,100 Accounts Payable $ 33,080 Notes Payable 113,000 Common Stock 84,600 Retained Earnings 125,000 Sales 214,490 Total Assets $ 570, Total Liabilities & Equity $170 $ 570,170 Required: a. How much did Pie pay to purchase its shares of Slice? (Round your answer to nearest whole dollar amount.) b. If consolidated financial statements are prepared at December 31, 20X5, what amount will be assigned to the noncontrolling interest in the consolidated balance sheet? (Round your answer to nearest whole dollar amount.) c. If Pie reported income of $142,250 from its separate operations for 20X5, what amount of consolidated net income will be reported for 20X5? d. If Pie had purchased its ownership of Slice on January 1, 20X5, at underlying book value and Pie reported income of $142,250 from its separate operations for 20X5, what amount of consolidated net income would be reported for 20X5?
Pie Corporation acquired 75 percent of Slice Company’s common stock on December 31, 20X5, at underlying book value. The book values and fair values of Slice’s assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 25 percent of the total book value of Slice. Slice provided the following
Debit Credit
Cash $ 27,600
Inventory 89,400
Buildings and Equipment
(net) 213,000
Cost of Goods Sold 105,700
Depreciation Expense 23,500
Other Operating Expenses 31,220
Dividends Declared 14,100
Accounts Payable $ 33,080
Notes Payable 113,000
Common Stock 84,600
Sales 214,490
Total Assets $ 570, Total Liabilities & Equity $170 $ 570,170
Required: a. How much did Pie pay to purchase its shares of Slice? (Round your answer to nearest whole dollar amount.)
b. If consolidated financial statements are prepared at December 31, 20X5, what amount will be assigned to the noncontrolling interest in the consolidated balance sheet? (Round your answer to nearest whole dollar amount.)
c. If Pie reported income of $142,250 from its separate operations for 20X5, what amount of consolidated net income will be reported for 20X5?
d. If Pie had purchased its ownership of Slice on January 1, 20X5, at underlying book value and Pie reported income of $142,250 from its separate operations for 20X5, what amount of
consolidated net income would be reported for 20X5?
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
