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    When Accounting For The Deconsolidation of A Subsidiary 1

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    Louiza Kyla Arida
    The document discusses accounting for the acquisition of a subsidiary. It provides details of Bailey Company acquiring a 30% interest in Moloney for $250,000. The total value of Moloney was $700,000. The journal entry includes a $30,000 gain on revaluation of Moloney. It also discusses how to account for the sale of a portion of an investment in a subsidiary if control is maintained, allocating the difference between the sales proceeds and book value to additional paid-in capital.

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    When Accounting For The Deconsolidation of A Subsidiary 1

    Uploaded by

    Louiza Kyla Arida
    277 views1 page
    The document discusses accounting for the acquisition of a subsidiary. It provides details of Bailey Company acquiring a 30% interest in Moloney for $250,000. The total value of Moloney was $700,000. The journal entry includes a $30,000 gain on revaluation of Moloney. It also discusses how to account for the sale of a portion of an investment in a subsidiary if control is maintained, allocating the difference between the sales proceeds and book value to additional paid-in capital.

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    When accounting for the deconsolidation of a subsidiary 1

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    The document discusses accounting for the acquisition of a subsidiary. It provides details of Bailey Company acquiring a 30% interest in Moloney for $250,000. The total value of Moloney was $700,000. The journal entry includes a $30,000 gain on revaluation of Moloney. It also discusses how to account for the sale of a portion of an investment in a subsidiary if control is maintained, allocating the difference between the sales proceeds and book value to additional paid-in capital.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    277 views1 page

    When Accounting For The Deconsolidation of A Subsidiary 1

    Uploaded by

    Louiza Kyla Arida
    The document discusses accounting for the acquisition of a subsidiary. It provides details of Bailey Company acquiring a 30% interest in Moloney for $250,000. The total value of Moloney was $700,000. The journal entry includes a $30,000 gain on revaluation of Moloney. It also discusses how to account for the sale of a portion of an investment in a subsidiary if control is maintained, allocating the difference between the sales proceeds and book value to additional paid-in capital.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    When accounting for the deconsolidation of a subsidiary (parent loses control)

    the parent recognizes a gain or loss on the deconsolidation


    Assume that Bailey Company gains control of Moloney, its subsidiary, with the purchase of a
    30% interest paid in cash. The Equity Investment account reports a balance of $250,000 on the
    acquisition date and represents a 40% interest in Moloney. The total value of Moloney on the
    acquisition date is $700,000 (assume no premium for control). The journal entry to record the
    acquisition includes:
    Gain on revaluation of Moloney, credit, $30,000
    Christie Company sells inventory to its parent, Finn Company, at a profit during 2020. Which of
    the following would be a debit entry in the consolidated worksheet for 2020?Cost of goods sold
    On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House
    Inc., for a purchase price of $12,400,000. It was determined that the fair value of the
    noncontrolling interest in the subsidiary is $3,100,000. The book value of the House’s
    stockholders’ equity on the date of acquisition is $10,000,000 and its fair value of net assets is
    $11,000,000. The acquisition-date acquisition accounting premium (AAP) is allocated $600,000
    to equipment with a remaining useful life of 10 years, and $250,000 to a patent with a remaining
    useful life of 5 years. What portion of the AAP should be assigned to noncontrolling interest?
    $1,070,000
    On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House
    Inc., for a purchase price of $12,400,000. It was determined that the fair value of the
    noncontrolling interest in the subsidiary is $3,100,000. The book value of the House’s
    stockholders’ equity on the date of acquisition is $10,000,000 and its fair value of net assets is
    $11,000,000. The acquisition-date acquisition accounting premium (AAP) is allocated $600,000
    to equipment with a remaining useful life of 10 years, and $250,000 to a patent with a remaining
    useful life of 5 years.Determine the total goodwill to be recognized at acquisition date. $
    4,650,000
    How does a parent corporation account for the sale of a portion of an investment in a subsidiary?
    If control is maintained after the sale, then the difference between the sales proceeds and the
    book value is an adjustment to the parent's owners' equity (APIC)
    Adamson Co. owns 60% of the voting common stock of Kilgore Corp. During 2020, Kilgore had
    revenues of $400,000 and expenses of $80,000. The amortization of the acquisition accounting
    premium totaled $34,000 in 2020. What amount should be reported in the consolidated income
    statement for income from noncontrolling interests? $114,400
    On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House
    Inc., for a purchase price of $12,400,000. It was determined that the fair value of the
    noncontrolling interest in the subsidiary is $3,100,000. The book value of the House’s
    stockholders’ equity on the date of acquisition is $10,000,000 and its fair value of net assets is
    $11,000,000. The acquisition-date acquisition accounting premium (AAP) is allocated $600,000

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