P9-23 Subsidiary Stock Transactions

a.

(1) Book value of Beta Company stock outstanding $500,000

Cost of treasury shares repurchased (68,000)

Book value of remaining shares outstanding $432,000

Proportion of remaining shares held by noncontrolling Interest

(1,500 / 9,000) x 0.1667

Adjusted book value of shares held $ 72,000

Book value of shares held before treasury stock repurchase by Beta Company

($500,000 x 0.25) (125,000)

Reduction of noncontrolling interest $ 53,000

Consideration given by Beta Company (68,000)

Decrease in equity attributable to parent $ (15,000)

(2) Journal entry recorded by Apex Corporation:

Retained Earnings 15,000

Investment in Beta Company Stock 15,000

(3) Eliminating entries:

Apex Add.
NCI Corp. Common Paid-In Treasury   Retained
  16.7% +  83.3%  = Stock  + Capital +  Stock + Earnings
Beginning book
value 125,000   375,000   100,000   80,000       320,000
+ Net Income 7,500   37,500               45,000
Shares
repurchased -53,000   -15,000           -68,000    
Ending book 397,500
value 79,500   1   100,000   80,000   -68,000   365,000
Common stock 100,000

Additional paid-in capital 80,000

Retained earnings 320,000

Income from Beta Co. 37,500

NCI in NI of Beta Co. 7,500

Treasury stock 68,000

Investment in Beta Co. 397,500

NCI in NA of Beta Co. 79,500

b. (1) Book value of Beta Company stock outstanding $500,000

Cost of treasury shares repurchased (68,000)

Book value of remaining shares outstanding $432,000

Proportion of remaining shares held by noncontrolling Interest

(2,500 / 9,000) x .2778

Adjusted book value of shares held by noncontrolling Interest $120,000

Book value of shares held before treasury stock repurchase by Beta Company

($500,000 x 0.25) (125,000)

Increase in equity attributable to parent $ 5,000

(2) Journal entry recorded by Apex Corporation:

Cash 68,000

Investment in Beta Company Stock 63,000

Additional Paid-In Capital 5,000

(3) Eliminating entries:

Apex Add.
NCI   Corp. Common Paid-In   Treasury   Retained
  27.8% + 72.2% = Stock +  Capital + Stock + Earnings
Beginning book
value 125,000   375,000   100,000   80,000       320,000
+ Net Income 12,500   32,500               45,000
Shares
repurchased -5,000   -63,000           -68,000    
Ending book
value 132,500   344,500   100,000   80,000   -68,000   365,000

Common stock 100,000

Additional paid-in capital 80,000

Retained earnings 320,000 Income from Beta Co. 32,500

NCI in NI of Beta Co. 12,500

Treasury stock 68,000

Investment in Beta Co. 344,500

NCI in NA of Beta Co. 132,500