Pan Corporation purchased an 80 percent interest in Set for $170,000 on January 1, 2011, when Set's

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Pan Corporation purchased an 80 percent interest in Set for $170,000 on January 1, 2011, when Set's equity was $200,000. The excess of fair value over book value is due to goodwill.
At December 31, 2012, the balance of Pan's Investment in Set account is $208,000, and the stockholders' equity of the two corporations is as follows:
Pan Set
Capital stock ................ $600,000 .............. $150,000
Retained earnings ........... 200,000 ................ 100,000
Total ........................ $800,000 ............... $250,000
On January 2, 2013, Set acquires a 10 percent interest in Pan for $80,000. Earnings and dividends for 2013 are:
Pan Set
Separate earnings ........... $100,000 .............. $40,000
Dividends ...................... 50,000 ................ 20,000
REQUIRED
1. Compute controlling and noncontrolling interest shares of consolidated net income for 2013 using the conventional approach.
2. Prepare journal entries to account for Pan's investment in Set for 2013 under the equity method (conventional approach).
3. Prepare journal entries on Set's books to account for its investment in Pan under the equity method (conventional approach).
4. Compute Pan's and Set's net incomes for 2013.
5. Determine the balances of Pan's and Set's investment accounts on December 31, 2013.
6. Determine the total stockholders' equity of Pan and Set on December 31, 2013.
7. Compute the noncontrolling interest in Set on December 31, 2013.
8. Prepare the adjusting and eliminating entries needed to consolidate the financial statements of Pan and Set for the year ended December 31, 2013.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 978-0133451863

12th edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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