Pal Corporation paid $595,000 cash for 70 percent of the outstanding voting stock of Sin Corporation on

Question:

Pal Corporation paid $595,000 cash for 70 percent of the outstanding voting stock of Sin Corporation on January 2, 2011, when Sin's stockholders' equity consisted of $500,000 of $10 par common stock and $250,000 retained earnings. The book values of Sin's assets and liabilities were equal to their fair values on this date.

During 2011, Pal Corporation had separate income of $300,000 and paid dividends of $150,000. Sin's net income for 2011 was $90,000 and its dividends were $50,000. At December 31, 2011, the stockholders' equities of Pal and Sin were as follows (in thousands):

There were no intercompany transactions between Pal Corporation and Sin Corporation during 2011. Pal uses the equity method of accounting for its investment in Sin.REQUIRED1. Assume that Pal Corporation uses parent-company theory for preparing consolidated financial statements for 2011. Determine the following amounts:(a) Pal Corporation's income from Sin for 2011(b) Goodwill that will appear in the consolidated balance sheet at December 31, 2011(c) Consolidated net income for 2011(d) Noncontrolling interest expense for 2011(e) Noncontrolling interest at December 31, 20112. Assume that Pal Corporation uses entity theory for preparing consolidated financial statements for 2011.Determine the following amounts:(a) Pal Corporation's income from Sin for 2011(b) Goodwill that will appear in the consolidated balance sheet at December 31, 2011(c) Total consolidated income for 2011(d) Noncontrolling interest share for 2011(e) Noncontrolling interest at December 31,2011

Goodwill
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
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