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On January 1 2011 Telconnect acquires 70 percent of Bandmor for $490000 cash The remaining 30 percent of Bandmor’s shares continued to trade at a total value of $210000 The new subsidiary

On January 1 2011 Telconnect acquires 70 percent of Bandmor for $490000 cash The remaining 30 percent of Bandmor’s shares continued to trade at a total value of $210000 The new subsidiary

On January 1, 2011, Telconnect acquires 70 percent of Bandmor for $490,000 cash. The re- maining 30 percent of Bandmor’s shares continued to trade at a total value of $210,000. The new subsidiary reported common stock of $300,000 on that date, with retained earnings of

$180,000. A patent was undervalued in the company’s financial records by $30,000. This pat- ent had a 5-year remaining life. Goodwill of $190,000 was recognized and allocated propor- tionately to the controlling and noncontrolling interests. Bandmor earns income and pays cash dividends as follows:

 

ear

Ne Income

Dividend Paid

2011

$ 75,000

$39,000

2012

96,000

44,000

2013

110,000

60,000

 

On December 31, 2013, Telconnect owes $22,000 to Bandmor.

a. If Telconnect has applied the equity method, what consolidation entries are needed as of

December 31, 2013?

b. If Telconnect has applied the initial value method, what Entry *C is needed for a 2013 consolidation?

c. If Telconnect has applied the partial equity method, what Entry *C is needed for a 2013 consolidation?

d. What noncontrolling interest balances will appear in consolidated financial statements for

2013?

Tripti 10-Jul-2020

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