On January 1 2014 Pearce Company purchased an 80

interest #6357
On January 1, 2014, Pearce Company purchased an 80% interest in the capital stock of Searl
Company for $2,460,000. At that time, Searl Company had capital stock of $1,500,000 and
retained earnings of $300,000. The difference between book of value Searl equity and the value
implied by the purchase price was attributed to specific assets of Searl Company as
follows:375,000 to equipment of Searl Company with a five-year remaining life.187,500 ....... To
land held by Searl Company.112,500 ..... To inventory of Searl Company. Searl uses the FIFO
assumption in pricing its inventory, and600,000 ...... That could not be assigned to specific
assets or liabilities of Searl Company.$1,275,000 ...TotalAt year-end 2014 and 2015, Searl had
in its inventory merchandise that it had purchased from Pearce at a 25% markup on cost during
each year in the following amounts:2014 .............. $ 90,0002015 ............ $ 105,000During
2014, Pearce reported net income from independent operations (including sales to affiliates) of
$1,500,000, while Searle reported net income of $600,000. In 2015, Pearce's net income from
independent operations (including sales to affiliates) was $1,800,000 and Searl's was
$750,000.Required:Calculate the controlling interest in consolidated net income for 2014 and
2015?View Solution:
On January 1 2014 Pearce Company purchased an 80 interest

ANSWER
http://paperinstant.com/downloads/on-january-1-2014-pearce-company-purchased-
an-80-interest/

1/1
Powered by TCPDF (www.tcpdf.org)