Company P purchased an 80% interestin Company S on January 1, 2016, for$800,000. Onthe purchase date, Company Sstockholders'equity was $800,000.Any excess of fair value overbook value was attributed to a patentwith a 10-year remaining life. In 2016,Company P reportedinternally generated net incomebefore taxes of $150,000. Company Sreported a net incomebefore taxes of $70,000. The firms filea consolidated tax return at a 30% taxrate. Thenondeductible portion of excessamortization isA - 20 000B 15 000C - 4 000D - $0 (The amortization is fullydeductible)

The amortization deduction is taken over the useful life of the asset, which is generally the period…

Answered: Company P purchased an 80% interest in…

Company P purchased an 80% interest in Company S on January 1, 2016, for $800,000. On the purchase date, Company S stockholders' equity was $800,000. Any excess of fair value over

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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On January 1, 2017, Grace Company (Grace) purchased 79% of the outstanding ordinary share of Hilda Limited (Hilda) for $2,800,000. On that date, Hilda's shareholders' equity consisted of share capital, $400,000; and retained earnings, $2,345,000. The book value of Hilda's net assets approximated their fair value. The fair value of the non-controlling interest at acquisition date is estimated to be $663,000. The following financial data are from Hilda's records. Net Income for the Divide nds de Retained year ended Earnings ($) ($) clared ($) December 86,000 2,651,000 --- 31, 201 December 130,000 31, 2020 75,000 2,706,000 December| 147,000 | 76,000 2,777,000 31, 2021 The group uses the full goodwill method to account for its non-controlling interest. Determine the reported balance of Non-controlling Interest account in the consolidated statement of financial position as at December 31, 2021.
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On 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.…