At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the time of purchase, the carrying value of Sky Tech's net assets was $80 million. The fair value of Sky Tech's depreciable assets was $20 million in excess of their book value. For this year, Sky Tech reported a net income of $80 million and declared and paid $20 million in dividends. The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is: Multiple Choice OOO O $6.0 million. $20 milion $30 million. None of these answer choices are correct.
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- At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $45 million. At the time of purchase, the carrying value of Sky Tech's net assets was $75 million. The fair value of Sky Tech's depreciable assets was $15 million in excess of their book value. For this year, Sky Tech reported a net income of $75 million and declared and paid $15 million in dividends.The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is:At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $51 million. At the time of purchase, the carrying value of Sky Tech's net assets was $80 million. The fair value of Sky Tech's depreciable assets was $20 million in excess of their book value. For this yeat, Sky Tech reported a net income of $80 million and declared and paid S20 million in dividends. The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is: Multiple Choice $6.0 million. $20 million. $30 million. None of these answer choices are correct.Twilight Co. paid $2,800,000 to acquire all of the common stock of Aurna Corp. on January 1, 2022. Aurna's reported earnings for 2022 totaled $512,000, and it paid $160,000 in dividends during the year. The amortization of allocations related to the investment was $28,000. Twilight's net income, not including any income from this investment, was $3,310,000, and it paid dividends of $930,000. On the consolidated financial statements for 2022, what amount should be shown for consolidated dividends? OL $160,000 O. $902,000 O.$930,000 OV.$950,000 OV. $1,090,000
- On January 1, 2022, Green Corporation purchased 25% of the outstanding voting common stock of Gold Company for $500,000. The book value of Gold Company as a whole was $1,700,000. The excess of cost over book value is attributable to a license (intangible asset) to be amortized over fifteen years. For the year ended December 31, 2022, Gold reported net income of $300,000 and paid cash dividends of $12,000. What is the carrying value of Green's investment in Gold at December 31, 2022? O $417,000. O $567,000. O $572,000. O $550,000.On January 1, Barnyard Corporation acquired common stock of Fresh Hay Corporation. At the time of acquisition, the book value and the fair value of Fresh Hay Corporation's net assets were $1 billion. During the year, Fresh Hay Corporation reported net income of $480 million and declared dividends of $160 million. The fair value of the shares increased by 10 percent during the year. How much income would Barnyard Corporation report for the year related to its investment under the assumption that it: A. Paid $150 million for 15 percent of the common stock and uses the fair value method to account for its investment in Fresh Hay Corporation. (Pay attention to the "fair value method" mention, others who attempted to answer this question got it wrong because they missed that). B. Paid $300 million for 30 percent of the common stock and uses the equity method to account for its investment in Fresh Hay Corporation. Please show all your steps so we can follow what…On January 1, Barnyard Corporation acquired common stock of Fresh Hay Corporation. At the time of acquisition, the book value and the fair value of Fresh Hay Corporation's net assets were $1 billion. During the year, Fresh Hay Corporation reported net income of $480 million and declared dividends of $160 million. The fair value of the shares increased by 10 percent during the year. How much income would Barnyard Corporation report for the year related to its investment under the assumption that it:A. Paid $150 million for 15 percent of the common stock and uses the fair value method to account for its investment in Fresh Hay Corporation. (Pay attention to the "fair value method" mention, some who attempted to answer this question got it wrong because they missed that). B. Paid $300 million for 30 percent of the common stock and uses the equity method to account for its investment in Fresh Hay Corporation. Please show all your steps so we can follow what we might be doing wrong.
- GIGİ Group completed an acquisition of an interest in another business, Venice Company, during the year and paid $300,000 in purchasing 25% interests in Venice. At the acquisition date, the acquisition-date fair value of the net assets of Venice was $800,000 while the net assets of Venice in the financial statements amounted to $600,000. At financial year end of GiGi, the net assets of Venice increased to $700,000. Determine the carrying amount of the investment in Venice at financial year end. Select one: a. $200,000 b. $275,000 c. $175,000 d. $325,000As a long-term investment, Painters’ Equipment Company purchased 20% of AMC Supplies Ltd’s 400,000 shares for OMR480,000 at the beginning of the financial year of both companies. On the purchase date, the fair value and the book value of AMC’s net assets were equal. During the year, AMC earned net income of OMR250,000 and distributed cash dividends of OMR0.250 per share. At year-end, the fair value of the shares is OMR505,000. Required: 1.Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. (Cost Method) 2.Assume significant influence was acquired. Re-enact the appropriate journal entries from the purchase through the end of the year to report the investment balance in the consolidated financial statements of Painters’ Equipment Company. (Equity Method)At the beginning of current year, Small company purchased 25% of Big Company. No "excess" resulted from the purchase. Small company appropriately carried this investment at equity and the carrying amount of the investment was P1,900,000 at year-end. Big company reported net income of P1,200,000 for the current year and paid cash dividend of P480,000 at year-end. What amount did Small Company pay for the 25% interest in Big Company?
- Vaughn Inc. acquired all of the outstanding common stock of Roberts Co. on January 1, 2020, for $276,000. Annual amortization of $21,000 resulted from this acquisition. Vaughn reported net income of $80,000 in 2020 and $60,000 in 2021 and paid $24,000 in dividends each year. Roberts reported net income of $50,000 in 2020 and $57,000 in 2021 and paid $12,000 in dividends each year. What is the Investment in Roberts Co. balance on Vaughn's books as of December 31, 2021, if the equity method has been applied?Matrix, Inc., acquired 25% of Neo Enterprises for $2,000,000 on January 1,2021. The fair value and book value of 25% of Neo's identifiable net assets was$2,000,000 and $1,600,000 on that date, and the difference was attributable toassets that would be depreciated over 10 years. During 2021 Neo recognized netincome of $500,000 and paid dividends of $400,000. Neo had a total fair value of$10,000,000 as of December 31, 2021.Required:Prepare the journal entries necessary to account for the Neo investment, assuming thatMatrix accounts for that investment as an equity method investment.2. Prepare the journal entries necessary to account for the Neo investment, assuming thatMatrix elects the fair-value option.Matrix, Inc., acquired 25% of Neo Enterprises for $2,000,000 on January 1, 2021. The fair value and book value of 25% of Neo’s identifiable net assets was $2,000,000 and $1,600,000 on that date, and the difference was attributable to assets that would be depreciated over 10 years. During 2021 Neo recognized net income of $500,000 and paid dividends of $400,000. Neo had a total fair value of $10,000,000 as of December 31, 2021. Required:1. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix accounts for that investment as an equity-method investment2. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix elects the fair value option.