On January 1, 2011, Aspen Company acquired 80 percent of Birch Company\'s outsta
ID: 2381988 • Letter: O
Question
On January 1, 2011, Aspen Company acquired 80 percent of Birch Company's outstanding voting stock for $288,000. Birch reported a $300,000 book value and the fair value of the noncontrolling interest was $72,000 on that date. Also, on January 1, 2012, Birch acquired 80 percent of Cedar Company for $104,000 when Cedar had a $100,000 book value and the 20 percent noncontrolling interest was valued at $26,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year life.
These companies report the following financial information. Investment income figures are not included.
Sales 2011 2012 2013
Aspen 415,000 545,000 688,000
Birch 200,000 280,000 400,000
Cedar Company N/A 160,000 210,000
Expenses:
Aspen 310,000 420,000 510,000
Birch 160,000 220,000 335,000
Cedar Company N/A 150,000 180,000
Dividends paid :
Aspen 20,000 40,000 50,000
Birch 10,000 20,000 20,000
Cedar Company N/A 2,000 10,000
Assume that each of the following questions is independent:
a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2012, balance in Aspen's Investment in Birch Company account?
b. What is the consolidated net income for this business combination for 2013?
c. What is the noncontrolling interests
On January 1, 2011, Aspen Company acquired 80 percent of Birch Company's outstanding voting stock for $288,000. Birch reported a $300,000 book value and the fair value of the no controlling interest was $72,000 on that date. Also, on January 1, 2012, Birch acquired 80 percent of Cedar Company for $104,000 when Cedar had a $100,000 book value and the 20 percent no controlling interest was valued at $26,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year life. These companies report the following financial information. Investment income figures are not included. Assume that each of the following questions is independent: If all companies use the equity method for internal reporting purposes, what is the December 31, 2012, balance in Aspen's Investment in Birch Company account? What is the consolidated net income for this business combination for 2013? What is the no controlling interests' share of the consolidated net income in 2013? Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following unrealized gross profits at the end of each year:Explanation / Answer
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