Pitino acquired 90 percent of Brey’s outstanding shares on January 1, 2013, in e
ID: 2461856 • Letter: P
Question
Pitino acquired 90 percent of Brey’s outstanding shares on January 1, 2013, in exchange for $531,000 in cash. The subsidiary’s stockholders’ equity accounts totaled $515,000 and the noncontrolling interest had a fair value of $59,000 on that day. However, a building (with a ten-year remaining life) in Brey’s accounting records was undervalued by $30,000. Pitino assigned the rest of the excess fair value over book value to Brey’s patented technology (six-year remaining life.
Brey reported net income from its own operations of $85,000 in 2013 and $101,000 in 2014. Brey declared dividends of $29,500 in 2013 and $33,500 in 2014.
What was the annual amortization resulting from the acquisition-date fair-value allocations?
What unrealized gross profit existed as of January 1, 2015?
What unrealized gross profit existed as of December 31, 2015?
What amounts make up the $114,615 equity earnings of Brey account balance for 2015?
What is the net income attributable to the noncontrolling interest for 2015?
What amounts make up the $662,625 Investment in Brey account balance as of December 31, 2015?
Prepare the 2015 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.
Pitino acquired 90 percent of Brey’s outstanding shares on January 1, 2013, in exchange for $531,000 in cash. The subsidiary’s stockholders’ equity accounts totaled $515,000 and the noncontrolling interest had a fair value of $59,000 on that day. However, a building (with a ten-year remaining life) in Brey’s accounting records was undervalued by $30,000. Pitino assigned the rest of the excess fair value over book value to Brey’s patented technology (six-year remaining life.
Brey reported net income from its own operations of $85,000 in 2013 and $101,000 in 2014. Brey declared dividends of $29,500 in 2013 and $33,500 in 2014.
What was the annual amortization resulting from the acquisition-date fair-value allocations?
Were the intra-entity transfers upstream or downstream?What unrealized gross profit existed as of January 1, 2015?
What unrealized gross profit existed as of December 31, 2015?
What amounts make up the $114,615 equity earnings of Brey account balance for 2015?
What is the net income attributable to the noncontrolling interest for 2015?
What amounts make up the $662,625 Investment in Brey account balance as of December 31, 2015?
Prepare the 2015 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.
Explanation / Answer
Cost of investment = 531000
Shareholders equity = 515000
Non Controlling interest = 59000
Shareholders equity attributable to Pitino = 515000-59000,= 456000
Add: share in revaluation of Building (30000 x 90 %) = 27000
Value acquired = 456000 + 27000,= 483000
Now Excess Paid attributable to patent = cost of investment - value acquired
= 531000 - 483000,= 48000
Amount to be amortised = Excess Fair Value / Life of patent
= 48000 / 6,= 8000 per year