On January 1, 2019, Aspen Company acquired 80 percent of Birch Company's voting stock for $520,000. Birch reported a $53
Posted: Wed May 04, 2022 7:27 am
On January 1, 2019, Aspen Company acquired 80 percent of Birch
Company's voting stock for $520,000. Birch reported a $530,000 book
value, and the fair value of the noncontrolling interest was
$130,000 on that date. Then, on January 1, 2020, Birch acquired 80
percent of Cedar Company for $152,000 when Cedar had a $127,000
book value and the 20 percent noncontrolling interest was valued at
$38,000. In each acquisition, the subsidiary's excess
acquisition-date fair over book value was assigned to a trade name
with a 30-year remaining life.
These companies report the following financial information.
Investment income figures are not included.
Assume that each of the following questions is independent:
If all companies use the equity method for internal reporting
purposes, what is the December 31, 2020, balance in Aspen's
Investment in Birch Company account?
What is the consolidated net income for this business
combination for 2021?
What is the net income attributable to the noncontrolling
interest in 2021?
Assume that Birch made intra-entity inventory transfers to Aspen
that have resulted in the following intra-entity gross profits in
inventory at the end of each year:
What is the accrual-based net income of Birch in 2020 and 2021,
respectively?
a. If all companies use the equity method for internal reporting
purposes, what is the December 31, 2020, balance in Aspen's
Investment in Birch Company account?
b. What is the consolidated net income for this business
combination for 2021?
c. What is the net income attributable to the noncontrolling
interest in 2021?
Show less
$28,372
Assume that Birch made intra-entity inventory transfers to Aspen
that have resulted in the following intra-entity gross profits in
inventory at the end of each year:
What is the accrual-based net income of Birch in 2020 and 2021,
respectively?
Show less
Company's voting stock for $520,000. Birch reported a $530,000 book
value, and the fair value of the noncontrolling interest was
$130,000 on that date. Then, on January 1, 2020, Birch acquired 80
percent of Cedar Company for $152,000 when Cedar had a $127,000
book value and the 20 percent noncontrolling interest was valued at
$38,000. In each acquisition, the subsidiary's excess
acquisition-date fair over book value was assigned to a trade name
with a 30-year remaining life.
These companies report the following financial information.
Investment income figures are not included.
Assume that each of the following questions is independent:
If all companies use the equity method for internal reporting
purposes, what is the December 31, 2020, balance in Aspen's
Investment in Birch Company account?
What is the consolidated net income for this business
combination for 2021?
What is the net income attributable to the noncontrolling
interest in 2021?
Assume that Birch made intra-entity inventory transfers to Aspen
that have resulted in the following intra-entity gross profits in
inventory at the end of each year:
What is the accrual-based net income of Birch in 2020 and 2021,
respectively?
a. If all companies use the equity method for internal reporting
purposes, what is the December 31, 2020, balance in Aspen's
Investment in Birch Company account?
b. What is the consolidated net income for this business
combination for 2021?
c. What is the net income attributable to the noncontrolling
interest in 2021?
Show less
$28,372
Assume that Birch made intra-entity inventory transfers to Aspen
that have resulted in the following intra-entity gross profits in
inventory at the end of each year:
What is the accrual-based net income of Birch in 2020 and 2021,
respectively?
Show less