Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Financial Accounting Expert

Problem: At the beginning of 20X2, Dahl Ltd. acquired 8% of the outstanding common shares of Tippy Ltd. for $400,000. This amounted to 80,000 shares. 

At the beginning of 20X4, Dahl acquired an additional 270,000 shares of Tippy for $1,512,000.  At this acquisition date, Tippy’s shareholders’ equity consisted of the following:

4% non-cumulative preferred shares                       $1,000,000
Common shares, 1,000,000 outstanding shares      2,400,000
Retained earnings                                                     2,160,000

At this acquisition date, the fair values of the net identifiable assets equalled their carrying values except for the following:

                        Excess of fair value over carrying value
Inventory         $  96,000
Land                 800,000

At the beginning of 20X5, Dahl acquired an additional 450,000 shares of Tippy for 2,880,000.  The shares were trading for $6 per share.  At this acquisition date, Tippy’s shareholders’ equity consisted of the following:

4% non-cumulative preferred shares                       $1,000,000
Common shares, 1,000,000 outstanding shares      2,400,000
Retained earnings                                                     2,560,000

At this acquisition date, the fair values of the net identifiable assets equalled their carrying values except for the following:

                                                    Excess of fair value over/(under) carrying value

Accounts receivable                    $W(48,000)
Building and equipment (net)      720,000
Long-term debt                           160,000

The building and equipment have an estimated remaining life of 10 years and the long-term debt matures in 10 years.

The condensed separate-entity financial statements for December 31, 20X6 are as follows:

1930_Balance sheets.jpg

620_income statements.jpg

Additional information:

a) Dahl and Tippy declared and paid dividends during 20X6 of $400,000 and $160,000, respectively.

b) At the end of 20X5, the inventories of Dahl and Tippy included goods with intercompany profits of $68,000 and $152,000 respectively.

c) During 20X6, Dahl sold goods to Tippy for $3,120,000 at a gross margin of 45%.  At the end of 20X6, $200,000 of these goods were still in Tippy’s inventory.

d) During 20X6, Tippy sold goods to Dahl for $2,080,000 at a gross margin of 35%.  At the end of the year, $320,000 of these goods were still in Dahl’s inventory.

e) On January 1, 20X6, Tippy sold some equipment to Dahl for $360,000.  At that time, the equipment had a book value of $192,000 and an estimated remaining life of 8 years.  Dahl has paid Tippy $252,000 and will pay the balance on January 31, 20X7.

f) Both Dahl and Tippy use the straight-line method of amortization for their buildings and equipment.

g) In 20X5, a goodwill impairment of $73,600 was recognized and a further impairment of $46,400 occurred in 20X6.  Impairment losses are allocated 80% to Dahl and 20% to the non-controlling interest.

g) Both companies are taxed at an average rate of 40%.

Required:

find out Dahl’s 20X6 consolidated net income and identify the amount attributable to Dahl’s shareholders and to the non-controlling interest. Be sure to show all your computations. You are not needed to prepare a consolidated income statement.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M981

Have any Question? 


Related Questions in Financial Accounting

In its first year of operations cullumber company

In its first year of operations, Cullumber Company recognized $31,800 in service revenue, $6,600 of which was on account and still outstanding at year-end. The remaining $25,200 was received in cash from customers. The c ...

A review of the ledger of oriole company at december 31

A review of the ledger of Oriole Company at December 31, 2017, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $19,404. The company has separate insurance policies on i ...

Supply and demand graphto complete this assignment address

Supply and Demand Graph To complete this assignment, address the following requests: 1. Based on the information from the US Energy Information Administration, create the supply and demand graph in the space below. This ...

Accounting financial assignment -question - in recent years

Accounting Financial Assignment - Question - In recent years a number of companies have gone into liquidation (been 'wound up') because they have not been able to meet their liabilities when they fell due. In Australia, ...

Budgets and managerial responsibilitythis module explores

Budgets and Managerial Responsibility This module explores budgets and the benefits of creating budgets. In recent years, many organizations faced one of the hardest economic conditions with the recession. Many organizat ...

What has been strides position on dividend payouts in the

What has been Strides' position on dividend payouts in the past (pattern, relationship with earnings, etc.)? What factors affected its dividend policy?

Listed below are selected account balances for pinnacle

Listed below are selected account balances for Pinnacle Corporation at December 31, Year 1 and Year 2.  Also available for you is selected information from the income statement for Pinnacle for the year ended December 31 ...

At the start of 2013 shasta corporation has 15000

At the start of 2013, Shasta Corporation has 15,000 outstanding shares of preferred stock, each with a $60 par value and a cumulative 7% annual dividend. The company also has 28,000 shares of common stock outstanding wit ...

Can you please help me with thishow do restrictions affect

Can you please help me with this. How do restrictions affect net assets in Not- For -Profit organization or health care?

Finance final exam -answer the following questions based on

FINANCE Final Exam - Answer the following questions based on the course presentation, text, and any outside relevant sources. Use citations and show your work where applicable. 1. Strategic and Financial Planning a. Defi ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As