Question
Pie Corporation acquired 65 percent of Slice Company's common stock on December 31, 20X5, at underlying book value. The book values and fair values of
Pie Corporation acquired 65 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 35 percent of the total book value of Slice. Slice provided the following trial balance data at December 31, 20X5:
Cash 28,000DB
Accounts Receivable64,900 DB
Inventory91,000DB
Buildings and Equipment (net)208,000DB
Cost of Goods Sold105,400DB
Depreciation Expense24,250DB
Other Operating Expenses30,820 DB
Dividends Declared14,600DB
Accounts Payable$33,800 CR
Notes Payable114,000CR
Common Stock87,600 CR
Retained Earnings127,500 CR
Sales204,070CR
Total $566,970DB $566,970CR
a. How much did Pie pay to purchase its shares of Slice?
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?
c. If Pie reported income of $144,250 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 $144,250 from its separate operations for 20X5, what amount of consolidated net income would be reported for 20X5?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started