CASE 3 (QS 17-19);Casper Co. paid $2,400,000 to acquire all of the common stock of Janet Corp. on January 1,2012. Janet's reported earnings for 2012 totaled $432,000, and it paid $120,000 individends during the year. The amortization of allocations related to the investment was$24,000. Casper's net income, not including the investment, was $3,180,000, and it paiddividends of $900,000.Question 17On the consolidated financial statements for 2012, what amount should have been shownfor Equity in Subsidiary Earnings?A) $432,000.B) $ -0-C) $408,000.D) $120,000.E) $288,000.On the consolidated financial statements for 2012, what amount should have been shownfor consolidated dividends?A) $ 900,000.B) $1,020,000.C) $ 876,000.D) $ 996,000.E) $ 948,000.What is the amount of consolidated net income for the year 2012?A) $3,180,000.B) $3,612,000.C) $3,300,000.D) $3,588,000.E) $3,420,000.

Step 1: Understanding the meaning of the consolidation statement: When one entity acquires another…

Answered: CASE 3 (QS 17-19); Casper Co. paid…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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24 At the beginning of the year, Fairbridge, Inc. purchased an investment in Miller Milling Mills for $500,000, representing 10% of the book value of Miller. During the year, Miller reported net income of $800,000 and pays cash dividends of $92,000. At the end of the year, the fair value of Fairbridge’s investment is $525,000. Required At what amount is the investment reported on Fairbridge’s balance sheet at year-end? What amount of income from investments does Fairbridge report? Prepare journal entries to record the transactions for Fairbridge Company.
The investments of Harlon Enterprises included the following cost and fair value amounts: ($ in millions) Fair Value, Dec. 31 Securities Available-for-Sale 2016 Cost 2017 A Corporation shares B Corporation bonds C Corporation shares $ 20 $14 na $ 37 35 35 15 14 na D Industries shares 50 46 45 Totals $115 $95 $101 Harlon Enterprises sold its holdings of A Corporation shares on June 1, 2017, for $15 million. On September 12, 2017, it purchased the C Corporation shares. Required: 1. What is the effect of the sale of the A Corporation shares and the purchase of the C Corporation shares on Harlon's 2017 pretax earnings? 2. At what amount should Harlon's securities available-for-sale portfolio be reported in its 2017 balance sheet? What adjusting entry is needed to accomplish this? What is the effect of the adjustment on Harlon's 2017 pre- tax earnings?
(TCO A) Bend Inc. holds 25% of the outstanding voting shares of Calico Co. and appropriately applies the equity method of accounting. Amortization associated with this investment equals $9,000 per year. For 20X3, Calico reported earnings of $80,000 and paid cash dividends of $30,000. During 20X3, Calico acquired inventory for $57,600, which was then sold to Bend for $90,000. At the end of 20X3, Bend still held some of this inventory at its transfer price of $40,000.Required:(1) Determine the amount of intra-entity profit at the end of 20X3.(2) Determine the amount of Equity in Investee Income that Bend should have reported for 20X3.
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Pearl Corporation paid $300,000 on January 1, 2010 for a 35% interest in Sandlin Inc. On January 1, 2010, the book value of Sandlin's stockholders' equity consisted of $400,000 of common stock and $400,000 of retained earnings. All the excess purchase cost over book value acquired was attributable to a patent with an estimated life of 5 years. During 2010 and 2011, Sandlin paid $6,000 of dividends each quarter and reported net income of $120,000 for 2010 and S160,000 for 2011. Pearl used the equity method. Required: 1. Calculate Pearl's income from Sandlin for 2010. 2. Determine the balance of Pearl's Investment in Sandlin account on December 31, 2010
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On July 1. 2015 ABC Company, an SME, paid P755,000 cash for the net assets of XYZ Company and also incurred 12,000 directacquisition costs. The recorded assets and liabilities of XYZ are: Cash, P74,000; Inventory, P215,000; Land, P200,000; Building (net),P208,000 and liabilities of P220,000. At the same date XYZ's inventories had a fair value of P184,000, the land, P271,500 and thebuilding (net), P187,500. - Determine the amount goodwill resulting from the business combination
Porter Corporation purchased 80% of the common stock of Salem Company for $850,000 on January 1, 2013. During the next three years, Salem had the following income and Dividends paid: Year Income Dividends 2013 $100,000 $25,000 2014 $110,000 $35,000 2015 $170,000 $60,000 Prepare the journal entries made under both methods and then compute the ending balance in the "investment" account under both methods.
1. On July 1, 2010, Jablonski Products purchased the net assets of Duquesne Industries for $285,000 (cash of $85,000 and a short-term note payable of $200,000). The assets included current assets of $125,000, property, plant, and equipment with a fair value of $250,000 (book value of $300,000), and a trademark valued at $150,000. Jablonski assumed liabilities totaling $200,000. The entry to record the purchase would include: O A) A debit to Goodwill of $40,000 B) A credit to Gain on Purchase of $90,000 O C) A credit to Goodwill of $40,000 D) A debit to Goodwill of $90,000 O E) A credit to Gain on Purchase of $40,000

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