Reference no: EM131130941
Assignment
Adam Company acquired 70% of the outstanding common stock of Saul Company on June 30, 2011 for $331,100. On that date, the fair value of the non-controlling interest was $141,900. On the acquisition date, Saul Company had retained earnings in the amount of $60,000, and the fair value of its recorded assets and liabilities was equal to their book value. The excess of cost over the fair value of the recorded net assets was attributed to an unrecorded manufacturing formula held by Saul Company, which had an expected remaining useful life of five years from June 30, 2011. On December 31, 2011, Adam company sold equipment (with an original cost of $200,000 and accumulated depreciation of $50,000) to Saul Company for $175,000. This equipment has since been depreciated at an annual rate of 20% of the purchase price. During 2012, Saul Company sold land to Adam Company at a profit of $30,000. Adam still holds the land acquired from Saul. The inventory of Adam Company on December 31, 2012 included goods purchased from Saul Company on which Saul recognized a profit of $7,500. During 2013, Saul Company sold goods to Adam Company for $375,000, of which $60,000 was unpaid at December 31, 2013. The December 31, 2013 inventory of Paul Company included goods acquired from Saul Company on which Saul recognized a profit of $10,500. During 2013 Adam Company sold goods to Saul Company for $600,000 at a markup on sales of 20%. At December 31, 2013, 30% of these goods remain unsold by Saul Company. Saul Company still owes Adam Company $100,000 for these inventory purchases. On January 1, 2013 Saul Company reports $600,000 in bonds outstanding with a book value of $564,000. Adam purchases half of these bonds on the open market for $291,000. Attribute the income effects of this transaction to the parent company.
Required: Carefully Follow and label each step. Follow instructions in Spreadsheet. Use cell references.
1. Prepare the acquisition analysis as of acquisition date. Compute the unamortized differential as of 1/1/2013.
2. Analyze each intercompany transaction. Label as either upstream downstream.
3. Calculate Net income to the controlling interest for the year 2013
4. Verify the calculation of the balance in the account equity in sub earnings and record the parent company entries with respect to its investment during 2013
5. Prepare all elimination entries for 2013.
6. Complete the consolidating spreadsheet for the year ended 2013.
Bonds outstanding that mature in thirteen years
: Maple Industries has 7 percent bonds outstanding that mature in thirteen years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $1,021.16. What is the firm’s pre-tax cost of debt?
|
Current cost of generating electricity
: The passage implies which of the following about the current cost of generating electricity? It is higher than it would be if better technologies for capturing carbon dioxide were available
|
Draw the consumption possibilities curves
: Suppose each country specializes in the good for which it has a comparative advantage, and it exchanges 14 tables for some quantity of chairs. Compute the consumption bundles bundles mean the consumption of tables and chairs for each country.
|
The number of failures during the fourth
: (b) Suppose that exactly five failures have occurred during the first four weeks considered. Let M be the number of failures during the fourth of these four weeks. Calculate E[M | M > 0].
|
Calculate net income to the controlling interest
: Calculate Net income to the controlling interest for the year 2013. Verify the calculation of the balance in the account equity in sub earnings and record the parent company entries with respect to its investment during 2013.
|
Identify an ethical issue the organization either faces
: Describe some of the key decisions its management has faced within the past year or two. Identify an ethical issue the organization either faces or has faced in the past. If it has not been resolved, provide an analysis of how the issue should ..
|
The durations of the various power failures
: The power failures in a certain region occur according to a Poisson process with rate λ1 = 1/5 per week. Moreover, the duration X (in hours) of a given power failure has an exponential distribution with parameter λ2 = 1/2.
|
Compute the net benefit from trade for each country
: Suppose the two countries split the difference between the willingness to pay for computers and the willingness to accept computers. Compute the terms of trade, that is, the rate at which the two countries will exchange computers and shoes.
|
Explanation in the chart in the section ic label
: Be sure to use each element following the explanation in the chart in the Section I.C. Label the elements you are demonstrating by putting the label in parenthesis just like the samples - description, effect, reason, and problem solving
|