accounts data bank accounts data bank Question 11. The Paris Company purchased a 70% interest in Seine, Inc. for $278,000 on July 1, 20X1, when Seine had the following balance sheet: Assets Save your time! Proper editing and formatting Free revision, title page, and bibliography Flexible prices and money-back guarantee ORDER NOW $ 50,000 Accounts receivable.................................... Make sure you submit a unique essay Our writers will provide you with an essay sample written from scratch: any topic, any deadline, any instructions. 100% ORIGINAL ORDER NOW Inventory.............................................. 110,000 Land................................................... 80,000 Building and Equipment................................. 160,000 Total................................................ $400,000 ======== Liabilities and Equity $160,000 Current liabilities.................................... Common stock, $5 par................................... 50,000 Paid-in capital in excess of par....................... 150,000 Retained earnings - 7/1................................ 100,000 Total................................................ $400,000 ======== The inventory is understated by $50,000 and is sold in the third quarter of 20X1. The land has a fair value of $100,000. The equipment has a fair value of $130,000 and a remaining life of 3 years. Any remaining excess is attributed to a patent with a 10-year life. The following net incomes (earned evenly throughout the year) and dividends paid (on 12/1 each year) are reported by Seine: ................................. Net income 20X1 20X2 $150,000 $100,000 Dividends paid............................. 10,000 10,000 Required: a. Prepare a determination and distribution of excess schedule as of July 1, 20X1. b. Prepare the 20X1 and 20X2 entries made by Paris to record the net income and dividends paid information on its books under the sophisticated equity method. c. Prepare the 20X1 and 20X2 entries made by Paris to record the net income and dividends paid information on its books under the cost method. 3-28 Chapter 3 12. The Paris Company purchased an 70% interest in Seine, Inc. for $300,000 on July 1, 20X1, when Seine had the following balance sheet: Assets $ 50,000 Accounts receivable.................................... Inventory.............................................. 110,000 Land................................................... 80,000 Building and Equipment................................. 160,000 Total................................................ $400,000 ======== Liabilities and Equity $160,000 Current liabilities.................................... Common stock, $5 par................................... 50,000 Paid-in capital in excess of par....................... 150,000 Retained earnings - 7/1................................ 100,000 Total................................................ $400,000 ======== Assume that all assets and liabilities have fair values equal to their book values. Any excess cost is attributed to patent with a 10-year life. The following net incomes (earned evenly throughout the year) and dividends paid (on 12/1 each year) are reported by Seine: ................................. Net income 20X1 20X2 $60,000 $80,000 Dividends paid............................. 10,000 10,000 Required: a. Prepare the 20X1 & 20X2 entries made by Paris to record the net income and dividends paid information on its books under the simple equity method. b. Prepare the 20X1 & 20X2 entries made by Paris to record the net income and dividends paid information on its books under the cost method. 13. The Paris Company purchased a 70% interest in Seine, Inc. for $300,000 on July 1, 20X1, when Seine had the following balance sheet: Assets $ 50,000 Accounts receivable.................................... Inventory.............................................. 110,000 Land................................................... 80,000 Building and Equipment................................. 160,000 Total................................................ $400,000 ======== Liabilities and Equity $160,000 Current liabilities.................................... Common stock, $5 par................................... 50,000 Paid-in capital in excess of par....................... 150,000 Retained earnings - 7/1................................ 100,000 Total................................................ $400,000 ======== Assume that all assets and liabilities have fair values equal to their book values. Any excess cost is attributed to patent with a 10-year life. The following net incomes (earned evenly throughout the year) and dividends paid (on 12/1 each year) are reported by Seine: ................................. Net income 20X1 20X2 $60,000 $80,000 Dividends paid............................. 10,000 10,000 Required: a. Prepare a determination and distribution of excess schedule as of July 1, 20X1. b. Prepare the 20X1 and 20X2 entries made by Paris to record the net income and dividends paid information on its books under the sophisticated equity method. 3-31 Chapter 3 14. Pablo Company purchased an 80% interest in Sand Company on July 1, 20X1, for $260,000. On July 1, 20X1, Sand Company had the following information available: Common stock outstanding ($10 par)..................... $100,000 Retained earnings, January 1, 20X1..................... 120,000 Net income, January 1-June 30, 20X1.................... 10,000 Dividends paid, June 30, 20X1.......................... 2,000 Equipment is undervalued by $30,000 and has a 6-year remaining life. Any remaining excess is attributable to patent with a 20-year life. Required: a. Prepare a determination and distribution of excess schedule. b. Complete the Figure 3-8 partial worksheet for the year ended December 31, 20X1. Subsidiary books were not closed on the purchase date. Provide keyed explanations for all worksheet entries and key each amortization of excess separately. Include income distribution schedules. 3-32 Chapter 3 3-33 Chapter 3 15. Puddle Corporation acquired 90% of Suds Company's common stock on January 1, 20X1 for $32,000 cash when Sud's stockholders' equity consisted of: Common Stock $20,000 Retained Earnings $ 4,000 A determination and distribution schedule was prepared for the difference between the price paid by Puddles and the underlying equity acquired in Suds with the excess of cost over book value being allocated as: Inventory (undervalued) $ 400 Building & Equipment (undervalued) 2,000 Patent 8,000 Allocated excess cost over book value $10,400 ======= The inventory was sold during 20X1, and the building and equipment are being depreciated for 5 years using the straight-line method. The Patent is expected to have a 10-year useful life. Required: The separate December 31, 20X1 financial statements for Puddle and Suds is provided in Figure 3-7. Complete the worksheet and provide supporting calculations as needed and an explanation of the elimination and adjustment entries.