1) On 1/1/2015, Falcon Inc. purchased 10% of the stock in University Co. for $200,000
University reported the following information for in 2015 & 2016:
2015:
Net Income 75,000
Dividends 60,000
2016:
Net Income 25,000
Dividends 45,000
Record all journal entries for 2015 and 2016 including the initial purchase:
(Assume that a significant influence does NOT exist)
2) Assume the same information as above, except Falcon Inc. purchased 40% of the stock in University Co. fo $500,000
Record all journal entries for 2015 and 2016 including the initial purchase:
(Assume that a significant influence exists)
3) Using the information reported below for Calvin Inc. and Hobbes Corporation, a wholly-owned subsidiary of Calvin Inc., Prepare a Consolidation Worksheet.
(Assume that Calvin purchased 100% of Hobbes on 1/1/2016 for $300,000. The information below is the ending financials for each company on 12/31/16.)
|
|
Calvin Inc. |
|
|
|
Hobbes Corp. |
| Income Statement |
|
|
Income Statement |
|
| Sales |
|
800,000 |
|
Sales |
|
250,000 |
| Less: COGS |
|
(350,000) |
|
Less: COGS |
(75,000) |
| Income from Hobbes |
175,000 |
|
|
|
|
| Net Income |
625,000 |
|
Net Income |
175,000 |
|
|
|
|
|
|
|
| Statement of RE |
|
|
Statement of RE |
|
| Beg. RE |
|
225,000 |
|
Beg. RE |
|
200,000 |
| Add: Net Income |
625,000 |
|
Add: Net Income |
175,000 |
| Less: Dividends |
(100,000) |
|
Less: Dividends |
(50,000) |
| End RE |
|
750,000 |
|
End RE |
|
325,000 |
|
|
|
|
|
|
|
| Balance Sheet |
|
|
Balance Sheet |
|
| Cash |
|
230,000 |
|
Cash |
|
100,000 |
| Accounts Rec. |
155,000 |
|
Accounts Rec. |
75,000 |
| Inventory |
|
115,000 |
|
Inventory |
|
65,000 |
| Investment in Hobbes |
425,000 |
|
|
|
|
| PP&E |
|
500,000 |
|
PP&E |
|
300,000 |
| Less: Accum. Depr |
(200,000) |
|
Less: Accum. Depr |
(70,000) |
| Total Assets |
1,225,000 |
|
Total Assets |
470,000 |
|
|
|
|
|
|
|
| Accounts Payable |
75,000 |
|
|
|
45,000 |
| Common Stock |
400,000 |
|
Common Stock |
100,000 |
| Retained Earnings |
750,000 |
|
Retained Earnings |
325,000 |
| Total Liab. & Equity |
1,225,000 |
|
Total Liab. & Equity |
470,000 |
4) How would the investment in Hobbes Corporation at the end of 2016 and the elimination entries be different if Calvin Inc. only owned 80% of Hobbes Corporation?
(Assume that Calvin purchased 80% of Hobbes on 1/1/2016 for $240,000.) 15 Points
Provide the amount that would be reported on Calvin's Balance Sheet as Investment in Hobbes.
Record all Elimination Entries including NCI entries (a consolidation worksheet is not needed).