ADVANCED ACCT CUSTOM W/CONNECT
14th Edition
ISBN: 9781307697711
Author: Hoyle
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Question
error_outline
This textbook solution is under construction.
Students have asked these similar questions
Niagara Company is contemplating to acquire Toronto, Inc. on January 1, 2020. The information
on Toronto's profit and net assets for the last five years is as follows:
Net Assets
P20,200,000
Profit
2019
P 4,000,000
2018
3,200,000
3,000,000
3,800,000
20,000,000
2017
18,500,000
2016
17,900,000
2015
2,500,000
15,600,000
It is agreed that Niagara is willing to pay for goodwill measured by capitalizing at 40% excess of
the average profits over normal return on net assets. The normal return on average net assets for
the industry to which Toronto belongs is 10%.
How much should Niagara Company pay to Toronto, Inc. in the acquisition of the latter's net
assets?
Jackson Inc. purchased 30,000 shares of common stock of the Pixel Corporation for
$10 per share on January 2, 2020. During 2020, Pixel had 100,000 shares of
common stock outstanding, reported net income of $200,000, and paid cash
dividends of $100,000. The fair value of Pixel stock on December 31, 2020 is $12
per share.
On December 31, 2020, what will Jackson report on its Balance Sheet for its
investment in Pixel?
How much revenue should Jackson report for 2020 on its investment in Pixel?
Round your answers to the nearest whole number. Dot not use dollar signs($) or
commas(,).
Blank # 1
Blank # 2
Jack, chief finance officer for sitcom products,
convinced the president of the company to enter
in to a 90days, forward contract to sell 500,000
kronas as a speculative venture. When the
forward contract was acquired on November 1,
2019, the spot rate for the krona was OMR .8041
and the 90days future rate was OMR .8321. At
December 31 2019, the end of the firm's fiscal
year, the spot rate was $.9483 and the future rate
for kronas to be sold on January 30, 2020, was
$.9948. On January 30, 2020, the spot rate was
$.9830.
Required: Prepare all necessary journal entries
in regard to the forward contract.
Knowledge Booster
Similar questions
- Jack, chief finance officer for sitcom products, convinced the president of the company to enter in to a 90days, forward contract to sell 500,000 kronas as a speculative venture. When the forward contract was acquired on November 1, 2019, the spot rate for the krona was OMR .8041 and the 90days future rate was OMR .8321. At December 31 2019, the end of the firm’s fiscal year, the spot rate was $.9483 and the future rate for kronas to be sold on January 30, 2020, was $.9948. On January 30, 2020, the spot rate was $.9830.Required: Prepare all necessary journal entries in regard to the forward contract.arrow_forwardH Company acquires 100% of the voting stock of R Company on January 1, 2021 for P400,000 cash. A contingent payment of P16,500 will be paid on April 15, 2022 if Ron Company generates cash flows from operations of P27,000 or more next year. H Company estimates that there is a 20% probability that R Company will generate at least P27,000 next year and uses an interest rate of 5% to incorporate the time value of money. The fair value of P16,500 at 5%, using a probability weighted approach is P3,142. What will H Company record as the acquisition price on January 1, 2021? Your answerarrow_forwardH Company acquires 100% of the voting stock of R Company on January 1, 2021 for P400,000 cash. A contingent payment of P16,500 will be paid on April 15, 2022 if Ron Company generates cash flows from operations of P27,000 or more next year. H Company estimates that there is a 20% probability that R Company will generate at least P27,000 next year and uses an interest rate of 5% to incorporate the time value of money. The fair value of P16,500 at 5%, using a probability weighted approach is P3,142. What will H Company record as the acquisition price on January 1, 2021?arrow_forward
- Johnstone Company is facing several decisions regarding investing and financing activities. Address each decision independently.1. On June 30, 2021, the Johnstone Company purchased equipment from Genovese Corp. Johnstone agreed to pay Genovese $10,000 on the purchase date and the balance in five annual installments of $8,000 on each June 30 beginning June 30, 2022. Assuming that an interest rate of 10% properly reflects the time value of money in this situation, at what amount should Johnstone value the equipment?2. Johnstone needs to accumulate sufficient funds to pay a $400,000 debt that comes due on December 31, 2026. The company will accumulate the funds by making five equal annual deposits to an account paying 6% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2021.3. On January 1, 2021, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments of $120,000 beginning on…arrow_forwardOn January 1, 2016, Guava Co. bought a patent for P270,000. Amortization is being made over its remaining life of 10 years expiring on January 1, 2026. During 2020, Guava Co. estimated that the economic life of the patent will be 7 years from the date of acquisition. What amount should Guava Co. report as patent net of accumulated amortization in its December 31, 2020 balance sheet?arrow_forwardDuring 2020, Cullumber Company purchased 69000 shares of Marigold Corporation common stock for $1150000 as an equity investment. The fair value of these shares was $1101000 at December 31, 2020. Cullumber sold all of the Marigold stock for $18 per share on December 3, 2021, incurring $45000 in brokerage commissions. Cullumber Company should report a realized gain on the sale of stock in 2021 of $96000. $47000. $141000. $92000.arrow_forward
- During 2020, Tanso purchased 20,000 shares of Ginto common stock for P315,000 as an equity investment at FVTPL. The fair value of these shares was P300,000 on December 31, 2020. Tanso sold all of the Ginto stock for P17 per share on February 3, 2021, incurring P14,000 in brokerage commissions. Tanso should report a net realized gain/loss on the sale of stocks in 2021 amounting toarrow_forwardA company buys an oil rig for P1,000,000 on January 1, 2020. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is P200,000 (present value at 10% is P77,110). 10% is an appropriate interest rate for this company. What is the amount of liability should be presented under the 2020 balance sheet as a result of these events?arrow_forwardPresented below is selected information for Alatorre Company. 1. Alatorre purchased a patent from Vania Co. for $1,000,000 on January 1, 2018. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2028. During 2020, Alatorre determined that the economic benefits of the patent would not last longer than 6 years from the date of acquisition. What amount should be reported in the balance sheet for the patent, net of accumulated amortization, at December 31, 2020? 2. Alatorre bought a franchise from Alexander Co. on January 1, 2019, for $400,000. The carrying amount of the franchise on Alexander's books on January 1, 2020, was $400,000. The franchise agreement had an estimated useful life of 30 years. Because Alatorre must enter a competitive bidding at the end of 2021, it is unlikely that the franchise will be retained beyond 2028. What amount should be amortized for the year ended December 31, 2020? 3. On January 1, 2020, Alatorre incurred…arrow_forward
- On December 31, 2020, Pearl Limited acquired a machine from Pronghorn Corporation by issuing a $520,000, non–interest-bearing note that is payable in full on December 31, 2024. The company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The machine is expected to have a five-year life and a $80,000 residual value.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the value of the note and prepare the journal entry for the purchase on December 31, 2020. (Hint: Refer to Chapter 3 for tips on calculating and use the amount arrived at by using the time value of money tables for the journal entry.) Please help with the solution in excelarrow_forwardOn June 30, 2024, the Stone Company purchased equipment from Paper Corporation. Stone agreed to pay $14,000 on the purchase date and the balance in five annual installments of $6,000 on each June 30 beginning June 30, 2025. Assuming that an interest rate of 11% properly reflects the time value of money in this situation, at what amount should Stone value the equipment? Stone needs to accumulate sufficient funds to pay a $440, 000 debt that comes due on December 31, 2029. The company will accumulate the funds by making five equal annual deposits to an account paying 6% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2024. On January 1, 2024, Stone leased an office building. Terms of the lease require Stone to make 20 annual lease payments of $124,000 beginning on January 1, 2024. An 11% interest rate is implicit in the lease agreement. At what amount should Stone record the lease liability on January 1, 2024, before any…arrow_forwardOn January 1, 2016, Guava Co. bought a patent for P270,000. Amortization is being made over its remaining life of 10 years expiring on January 1, 2026. During 2020, Guava Co. estimated that the economic life of the patent will be 7 years from the date of acquisition. What amount should Guava Co. report as patent net of accumulated amortization in its December 31, 2020 balance sheet? * P1,600,000 P108,000 P54,000 P23,143 answer not givenarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
