Question: What is a statement of partnership liquidation,

> Pam Corporation paid $7,200,000 for 360,000 shares of Sun Corporation’s outstanding voting common stock on January 1, 2016, when the stockholders’ equity of Sun consisted of (in thousands): 10% cumulative, preferred stock, $100 par. Liquidation.........

> On January 3, 2016, Pam Corporation purchased a 90% interest in Sun Corporation at a price $120,000 in excess of book value and fair value. The excess is goodwill. During 2016, Pam sold inventory items to Sun for $100,000, and $15,000 in profit from the

> The pretax operating incomes of Pop Corporation and Son Corporation, its 70 percent–owned subsidiary, for 2016 are as follows (in thousands): ADDITIONAL INFORMATION: 1. Pop received $280,000 dividends from Son during 2016. 2. Goodwill

> Pop Corporation acquired all the stock of Son Corporation on January 1, 2016, for $280,000 cash, when the book values and fair values of Son’s assets and liabilities were as follows (in thousands): Son’s buildings ha

> Pam Corporation acquired a 90 percent interest in Sun Corporation in a taxable transaction on January 1, 2016, for $900,000, when Sun had $500,000 capital stock and $400,000 retained earnings. The $100,000 excess cost over book value is due to goodwill.

> Taxable incomes for Pop Corporation and Son Corporation, its 70 percent–owned subsidiary, for 2016 are as follows (in thousands): ADDITIONAL INFORMATION: 1. Pop acquired its interest in Son at a fair value equal to book value on Decem

> Pam Corporation paid $1,155,000 cash for a 70 percent interest in Sun Corporation’s outstanding common stock on January 2, 2016, when the equity of Sun consisted of $1,000,000 common stock and $600,000 retained earnings. The excess fair

> Pop Corporation and its 100 percent–owned subsidiary, Son Corporation, are members of an affiliated group with pretax accounting incomes as follows (in thousands): The gain reported by Pop relates to land sold to Son during the curren

> Pam Corporation’s net income for 2016 consists of the following: ADDITIONAL INFORMATION: 1. Pam has 100,000 shares of common stock, and Sun has 50,000 shares of common and 10,000 shares of $10 cumulative, convertible, preferred stock

> Pet Company owns 90 percent of the stock of Man Corporation and 70 percent of the stock of Nun Company. Man owns 70 percent of the stock of Oak Corporation and 10 percent of the stock of Nun Company. Nun Company owns 20 percent of the stock of Oak Corpor

> Pop Company owns 40,000 of 50,000 outstanding shares of Son Company, and during 2016, it recognizes income from Son as follows: Share of Son net income ($500,000 × 80%)............................ $ 400,000 Patent amortization...........................

> Pam Corporation owns 80 percent of Sun Corporation’s outstanding common stock. The 80 percent interest was acquired in 2016 at $40,000 in excess of book value due to undervalued equipment with an eight-year remaining useful life. Outsta

> Pop Corporation owns an 80 percent interest in Son Corporation. Throughout 2016, Pop had 20,000 shares of common stock outstanding. Son had the following securities outstanding: â–  10,000 shares of common stock â–  Option

> 1. A parent company and its 100 percent–owned subsidiary have only common stock outstanding (10,000 shares for the parent and 3,000 shares for the subsidiary), and neither company has issued other potentially dilutive securities. The equation to compute

> Pam Corporation purchased 60 percent of Sun Corporation’s outstanding preferred stock for $6,500,000 and 70 percent of its outstanding common stock for $35,000,000 on January 1, 2017. Sun’s stockholders’ equity on December 31, 2016, consisted of the foll

> The stockholders’ equity of Son Corporation on December 31, 2016, was as follows (in thousands): 15% preferred stock, $100 par, cumulative, nonparticipating, with..............$1,000 one year’s dividends in arrears Common stock, $10 par.................

> Pam Corporation owns 80 percent of Sun Corporation’s common stock, having acquired the interest at a fair value equal to book value on December 31, 2016. During 2017, Pam’s separate income is $6,000,000 and Sun Corpora

> The stockholders’ equity of Son Corporation at December 31, 2015, was as follows (in thousands): 12% preferred stock, cumulative, nonparticipating,............................ $1,200 $100 par, callable at $105 Common stock, $10 par......................

> The stockholders’ equity of Sun Corporation at December 31, 2016, was as follows (in thousands): 10% cumulative preferred stock, $100 par, callable at $105,..................... $2,000 20,000 shares issued and outstanding, with one year’s dividends in a

> 1. During 2017, Pop Corporation owns 20 percent of Son Corporation’s preferred stock and 80 percent of its common stock. Son’s stock outstanding on December 31, 2017, is as follows: 10% cumulative preferred stock.....

> Pal Corporation owns 80 percent each of the voting common stock of Sal and Tea Corporations. Sal owns 60 percent of the voting common stock of Won Corporation and 10 percent of the voting stock of Tea. Tea owns 70 percent of the voting stock of Val and 1

> Pop Corporation recognizes a deferred tax asset (benefit) of $150,000 related to its acquisition of Son Company. Pop has determined that the tax position qualifies for recognition and should be measured. Pop has determined the amounts and the probabiliti

> Pam Corporation recognizes a deferred tax asset (benefit) of $1,000,000 related to its acquisition of Sun Company. Pam has determined that the tax position qualifies for recognition and should be measured. Pam has determined the amounts and the probabili

> Son Corporation, an 80 percent–owned subsidiary of Pop Corporation, sold equipment with a book value of $600,000 to Pop for $1,000,000 at December 31, 2016. Separate income tax returns are filed, and a 34 percent income tax rate is applicable to both Pop

> Sun Corporation is a 100 percent–owned subsidiary of Pam Corporation. During the current year, Pam sold merchandise that cost $200,000 to Sun for $400,000. A 34 percent income tax rate is applicable, and 80 percent of the merchandise remains unsold by Su

> Pop Corporation and its 70 percent–owned subsidiary, Son Corporation, have pretax operating incomes for 2016 as follows (in thousands): Pop received $280,000 dividends from Son during 2016. A previously unrecorded patent from Pop&acir

> The pretax accounting incomes of Pam Corporation and its 100 percent–owned subsidiary, Sun Company, for 2016 are as follows (in thousands): The only intercompany transaction during 2016 was a gain on land sold to Sun. Assume a 34 perc

> 1. When Pop Corporation acquired its 100 percent interest in Son Corporation in a tax-free reorganization, Son’s equipment had a fair value of $12,000,000 and a book value and tax basis of $8,000,000. If Pop’s effective tax rate is 34 percent, how much o

> 1. Income taxes are currently due on intercompany profits when: a Profits originate from upstream sales b Separate-company tax returns are filed c Consolidated tax returns are filed d Affiliates are accounted for as consolidated subsidiaries 2. The righ

> Pow Corporation owns an 80 percent interest in Soy Corporation. Pow does not have common stock equivalents or other potentially dilutive securities outstanding, so it calculated its EPS for 2016 as follows: An examination of Pow’s inc

> The income statements of Pop Corporation and its 80 percent–owned subsidiary, Son Corporation, for 2016 are as follows: Note: Income from Son is computed as [($26,400 reported income × 80%) - $2,000 patent amortization -$

> The affiliation structure for Pin Corporation and its subsidiaries is as follows: Separate incomes of Pin, Son, and Tan Corporations for 2016 are $360,000, $160,000, and $100,000, respectively. 1. The equation for determining Pin’s i

> The following information is available regarding Pam Corporation and its 80 percent–owned subsidiary, Sun Corporation, at and for the year ended December 31, 2016: REQUIRED: Determine consolidated earnings per share (both basic and di

> Pop Corporation’s net income for 2016 is $316,000, including $160,000 income from Son Corporation, its 80 percent– owned subsidiary. The income from Son consists of $176,000 equity in income less $16,000 patent amortization. Pop has 300,000 shares of $10

> In using the schedule approach for allocating income of subsidiaries to controlling and noncontrolling stockholders in an indirect holding affiliation structure, why is it necessary to begin with the lowest subsidiary in the affiliation tier?

> P owns a 60 percent interest in S, and S owns a 40 percent interest in T. Should T be consolidated? If not, how should T be included in the consolidated statements of P and Subsidiaries?

> If companies in an affiliation structure account for investments on an equity basis, how can noncontrolling interests be determined without the use of simultaneous equations?

> How do consolidation procedures for mutual holdings involving the father-son-grandson type of affiliation structure differ from those for mutually held parent stock?

> What is the right of offset rule? How does it affect the amount to be distributed to partners in liquidation?

> If a partnership is insolvent, how is the amount of cash distributed to individual partners determined?

> How do safe payments computations affect partnership ledger account balances?

> What assumptions are made in determining the amount of distributions (or safe payments) to individual partners prior to the recognition of all gains and losses on liquidation?

> UPA specifies a priority ranking for distribution of partnership assets in liquidation. What is the ranking?

> What is simple partnership liquidation, and how are distributions to partners computed?

> How does partnership liquidation differ from partnership dissolution?

> P’s separate earnings are $100,000, and S’s separate earnings are $40,000. P owns an 80 percent interest in S, and S owns a 10 percent interest in P. What is the controlling share of consolidated net income?

> When all partnership assets have been distributed in the liquidation of a partnership, some partners may have debit capital balances and others may have credit capital balances. How are such balances eliminated if the partners with debit balances are per

> What are vulnerability ranks? How are they used in the preparation of cash distribution plans for partnership liquidations?

> A partnership in liquidation has satisfied all of its nonpartner liabilities and has cash available for distribution to partners. Under what circumstances would it be permissible to divide available cash in the profitand loss-sharing ratios of the partne

> What are partner equities? Why are partner equities rather than partner capital balances used in the preparation of safe payments schedules?

> What events would require partnership liquidation?

> Eli, Joe, and Ned agree to liquidate their consulting practice as soon as possible after the close of business on July 31, 2016. The trial balance on that date shows the following account balances: The partners share profits and losses 20 percent, 30 p

> The partnership of Gil, Hal, Ian, and Joe is preparing to liquidate. Profit- and loss-sharing ratios are shown in the summarized balance sheet at December 31, 2016, as follows: REQUIRED: 1. The partners anticipate an installment liquidation. Prepare a

> Fed, Flo, and Wil announced the liquidation of their partnership beginning on January 1, 2016. Profits and losses are divided 30 percent to Fed, 20 percent to Flo, and 50 percent to Wil. Balance sheet items are summarized as follows: REQUIRED: Prepare

> The December 31, 2016, balance sheet of the Cam, Doc, and Guy partnership, along with the partners’ residual profit- and loss-sharing ratios, is summarized as follows: The partners agree to liquidate their partnership as soon as possi

> Under the treasury stock approach, a mutually held subsidiary accounts for its investment in the parent on a cost basis. Are dividends received by the subsidiary from the parent included in investment income of the parent under the equity method?

> Ben, Bev, and Ron are partners in a business that is in the process of liquidation. On January 1, 2016, the ledger accounts show the balances indicated: The cash is distributed to partners on January 1, 2016. Inventory and supplies are sold for a lump-

> The after-closing trial balances of the Bea, Pat, and Tim partnership at December 31, 2016, included the following accounts and balances: Cash...................................................................... $120,000 Accounts receivable—net........

> The adjusted trial balance of the Jee, Moe, and Ole partnership at December 31, 2016, is as follows: Cash.................................................... $ 50,000 Accounts receivable—net.................... 100,000 Nonmonetary assets................

> Account balances for the Rob, Tom, and Val partnership on October 1, 2016, are as follows: The partners have decided to liquidate the business. Activities for October and November are as follows: October 1. Rob is short of funds, and the partners agre

> The balance sheet of Ron, Sue, and Tom, who share partnership profits 30 percent, 30 percent, and 40 percent, respectively, included the following balances on January 1, 2016, the date of dissolution: During January 2016, parts of the firmâ€

> Jax, Kya, and Bud, who share partnership profits 50 percent, 30 percent, and 20 percent, respectively, decide to liquidate their partnership. They need the cash from the partnership as soon as possible but do not want to sell the assets at fire-sale pric

> The after-closing trial balance of the Lin, Mae, and Nel partnership at December 31, 2016, was as follows: ADDITIONAL INFORMATION: 1. The partnership is to be liquidated as soon as the assets can be converted into cash. Cash realized on conversion of a

> Jon, Sam, and Tad are partners in a furniture store that began liquidation on January 1, 2016, when the ledger contained the following account balances: The following transactions and events occurred during the liquidation process: January

> The profit- and loss-sharing agreement of the partnership of Ali, Bob, and Kia provides a salary allowance for Ali and Kia of $10,000 each. Partners receive a 10 percent interest allowance on their average capital balances for the year. The remainder is

> Jan, Kim, and Lee announce plans to liquidate their partnership immediately. The assets, equities, and profit- and loss sharing ratios are summarized as follows. The other assets are sold for $120,000, and an overlooked bill for landscaping services of

> How is the treasury stock approach applied to the elimination of mutually held stock?

> Fed, Ela, and Luc have decided to liquidate their partnership. Account balances on January 1, 2016, are as follows: The partners agree to keep a $30,000 contingency fund and to distribute available cash immediately. REQUIRED: Determine the amount of c

> After closing entries were made on December 31, 2016, the ledger of Mac, Nan, and Obe contained the following balances: Due to unsuccessful operations, the partners decide to liquidate the business. During January some of the inventory is sold at cost

> The partnership of Flo and Fay is in the process of liquidation. On January 1, 2016, the ledger shows account balances as follows: On January 10, 2016, the lumber inventory is sold for $40,000, and during January, accounts receivable of $41,000 is coll

> 1. In partnership liquidation the final cash distribution to the partners should be made in accordance with the: a Partner profit- and loss-sharing ratios b Balances of partner capital accounts c Ratio of the capital contributions by partners d Safe paym

> The assets and equities of the Sam, Red, and Sal partnership at the end of its fiscal year on October 31, 2016, are as follows: The partners decide to liquidate the partnership. They estimate that the noncash assets, other than the loan to Red, can be

> The partnership of Dee, Ema, Lyn, and Geo is being liquidated over the first few months of 2016. The trial balance at January 1, 2016, is as follows: ADDITIONAL INFORMATION: 1. The partners agree to retain $20,000 cash on hand for contingencies and to

> The partnership of Ace, Ben, Cid, and Don is dissolved on January 5, 2016, and the account balances at June 30, 2016, after all noncash assets are converted into cash, are as follows: ADDITIONAL INFORMATION: 1. The percentages indicated represent the r

> After all partnership assets were converted into cash and all available cash distributed to creditors, the ledger of the Dan, Edd, and Fed partnership showed the following balances: The percentages indicated are residual profit- and loss-sharing ratios

> The partnership of Ali, Bev, and Cal became insolvent during 2016, and the partnership ledger shows the following balances after all partnership assets have been converted into cash and all available cash distributed: Profit- and loss-sharing percentag

> A condensed balance sheet with profit-sharing percentages for the Eve, Fae, and Gia partnership on January 1, 2016, shows the following: On January 2, 2016, the partners decide to liquidate the business, and during January they sell assets with a book

> If a parent owns 80 percent of the voting stock of a subsidiary, and the subsidiary in turn owns 20 percent of the stock of the parent, what kind of affiliation structure is involved? Explain.

> The affiliation structure for Place Corporation and its affiliates is as follows: During 2016 the separate incomes of the affiliates were as follows: Place.......................... $400,000 Lake............................ $160,000 Marsh.............

> Are partner salary allowances expenses of the partnership?

> Why do some profit-sharing agreements provide for salary and interest allowances?

> In the absence of an agreement for the division of profits, how are they divided under UPA? Does your answer also apply to losses? Does it apply if one partner invests three times as much as the other partners?

> What alternative approaches can be used in recording the admission of a new partner?

> If a partner sells his or her partnership interest directly to a third party, the partnership may or may not be dissolved. Under what conditions is the partnership dissolved?

> When a profit-sharing agreement specifies that profits should be divided using the ratio of capital balances, how should capital balances be computed?

> Explain how a partner could have a loss from partnership operations for a period even though the partnership had net income.

> Is there a conceptual difference between partner drawings and withdrawals? Is there a practical difference?

> Explain why the noncash investments of partners should be recorded at their fair values.

> Bob invests $10,000 cash for a 25 percent interest in the capital and earnings of the BOP Partnership. Explain how this investment could give rise to (a) recording goodwill, (b) the write-down of the partnership assets, (c) a bonus to old partners, and (

> Parent Company owns 70 percent of the voting stock of Subsidiary A, and Subsidiary A owns 70 percent of the stock of Subsidiary B. Is the inside ownership of Subsidiary B more than 50 percent? Should Subsidiary B be included in the consolidated statement

> The goodwill procedure was used to record the investment of a new partner in the XYZ Partnership, but immediately thereafter, the entire business was sold for an amount equal to the recorded capital of the partnership. Under what conditions would the amo

> Explain the bonus procedure for recording an investment in a partnership. When is the bonus applicable to old partners, and when is it applicable to new partners?

> Why is the goodwill procedure best described as a revaluation procedure?

> How does the purchase of an interest from existing partners differ from the acquisition of an interest by investment in a partnership?

> The concept of partnership dissociation has a technical meaning under the provisions of UPA. Explain the concept.

> What defines a business as a partnership? What factors need to be examined to determine if an individual is a partner, and not some other type of participant in the business?

> Under what circumstances can a partnership expel a partner?

> A summary of changes in the capital accounts of the Kat, Lyn, and Mol partnership for 2016, before closing partnership net income to the capital accounts, is as follows: REQUIRED: Determine the allocation of the 2016 net income to the partners under ea

> The partnership agreement of Ale, Car, and Eri provides that profits are to be divided as follows: 1. Ale is to receive a salary allowance of $10,000 for managing the partnership business. 2. Partners are to receive 10 percent interest on average capital

> Ash and Bar are partners with capital balances on January 1, 2016, of $70,000 and $80,000, respectively. The partnership agreement provides that each partner is allowed 10 percent interest on beginning capital balances; that Ash receives a salary allowan