Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Thumbs up for quick answers: Prime Company holds 8 0 percent of Suspect Company s stock, acquired on January 1 , 2 0 X 2
Thumbs up for quick answers: Prime Company holds percent of Suspect Companys stock, acquired on January X for $ On the acquisition date, the fair value of the noncontrolling interest was $ Suspect reported retained earnings of $ and had $ of common stock outstanding. Prime uses the fully adjusted equity method in accounting for its investment in Suspect.
Trial balance data for the two companies on December X are as follows:
Item Prime Company Suspect Company
Debit Credit Debit Credit
Cash and Accounts Receivable $ $
Inventory
Land
Buildings and Equipment
Investment in Suspect Company
Cost of Goods Sold
Depreciation and Amortization Expense
Other Expenses
Dividends Declared
Accumulated Depreciation $ $
Accounts Payable
Bonds Payable
Common Stock
Retained Earnings
Sales
Gain on Sale of Equipment
Income from Suspect Company
Total $ $ $ $
Additional Information
At the date of combination, the book values and fair values of all separately identifiable assets and liabilities of Suspect were the same. At December X the management of Prime reviewed the amount attributed to goodwill as a result of its purchase of Suspect stock and concluded an impairment loss of $ should be recognized in X and shared proportionately between the controlling and noncontrolling shareholders.
On January X Suspect sold land that had cost $ to Prime for $
On January X Prime sold to Suspect equipment that it had purchased for $ on January X The equipment has a total economic life of years and was sold to Suspect for $ Both companies use straightline depreciation.
There was $ of intercompany receivables and payables on December X
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