FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- ABC Inc. purchased 35,000 voting shares out of 123 Inc.'s 50,000 outstanding voting shares for $350,000 on January 1, 2020. On the date of acquisition, 123's common shares and retained earnings were valued at $120,000 and $180,000, respectively. 123's book values approximated its fair values on the acquisition date with the exception of a patent and a trademark, neither of which had been previously recorded. The fair values of the patent and trademark on the date of acquisition were $30,000 and $20,000 respectively. On January 2, 2020, ABC sold 7,000 shares of 123 on the open market for $57,750. ABC Inc. uses the equity method to account for its investment in 123 Inc. What is the carrying value of the trademark after the sale? A. $12,600 B. $18,000 C. $20,000 D. $30,000arrow_forwardOn January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,666,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,070,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $300,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $656,250 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2017 2018 $525,000 $701,000 Net…arrow_forwardOn January 1, 2019, Aronsen Company acquired 90 percent of Sledel Company's outstanding shares. Sledel had a net book value on that date of $504,300: common stock ($10 par value) of $207,500 and retained earnings of $296,800. Aronsen paid $600,300 for this Investment. The acquisition-date fair value of the 10 percent noncontrolling Interest was $66,700. The excess fair value over book value associated with the acquisition was used to increase land by $82,220 and to recognize copyrights (16-year remaining life) at $80,480. Subsequent to the acquisition, Aronsen applied the Initial value method to its Investment account In the 2019-2020 period, the subsidiary's retained earnings Increased by $100,600. During 2021, Siedel earned Income of $81,500 while declaring $20,300 in dividends. Also, at the beginning of 2021, Siedel Issued 4,150 new shares of common stock for $38 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and…arrow_forward
- On January 1, 2017, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $312,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $208,000 and Rockne's assets and liabilities had a collective net fair value of $520,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $150,000 in 2018. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $210,000 in 2017 and $310,000 in 2018. Approximately 35 percent of the inventory purchased during any one year is not used until the following year. a. What is the noncontrolling interest's share of Rockne's 2018 income? b. Prepare Doone's 2018 consolidation entries required by the intra-entity inventory transfers. Complete this question by entering your answers in the tabs below. Required A Required B What is the…arrow_forwardOn January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,125,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,170,000 and Retained Earnings of $58,500. The acquisition-date fair value of the 10 percent noncontrolling interest was $125,000. QuickPort attributed the $21,500 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following: Net Income Dividends Declared 2020 $ 30,100 $ 4,300 2021 43,000 4,300 On July 1, 2020, QuickPort sold communication equipment to NetSpeed for $27,500. The equipment originally cost $30,500 and had accumulated depreciation of $5,400 and an estimated remaining life of three years at the date of the intra-entity transfer. Compute the equity method balance in QuickPort's Investment in NetSpeed, Inc., account as of December 31, 2021.…arrow_forward
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