Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 1, Problem 28P
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Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $210,000 in cash. The book value of Kinman’s net assets on that date was $400,000, although one of the company’s buildings, with a $60,000 carrying amount, was actually worth $100,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $85,000.
Kinman sold inventory with an original cost of $60,000 to Harper during 2017 at a price of $90,000. Harper still held $15,000 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018.
Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2017. The company still manages to declare and pay a $10,000 cash dividend during the year.
During 2018, Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory sales of…
Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $210,000 in cash. The book value of Kinman’s net assets on that date was $400,000, although one of the company’s buildings, with a $60,000 carrying amount, was actually worth $100,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $85,000.Kinman sold inventory with an original cost of $60,000 to Harper during 2017 at a price of $90,000. Harper still held $15,000 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018.Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2017. The company still manages to declare and pay a $10,000 cash dividend during the year.During 2018, Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory sales of $80,000…
Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $316,100 in cash. The book value of Kinman's net assets on that date was $610,000, although one of the company's buildings, with a $69,800 carrying amount, was actually worth $128,050. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $122,000.
Kinman sold inventory with an original cost of $75,600 to Harper during 2017 at a price of $108,000. Harper still held $15,150 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018.
Kinman reported a $46,200 net loss and a $25,600 other comprehensive loss for 2017. The company still manages to declare and pay a $19,000 cash dividend during the year.
During 2018, Kinman reported a $41,000 net income and declared and paid a cash dividend of $21,000. It made additional inventory sales…
Chapter 1 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 3QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 5QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 7QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 13QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Which of the following does not indicate an...Ch. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - In January 2017, Domingo, Inc., acquired 20...Ch. 1 - Prob. 8PCh. 1 - Evan Company reports net income of 140,000 each...Ch. 1 - Perez, Inc., applies the equity method for its 25...Ch. 1 - Prob. 11PCh. 1 - Alex, Inc., buys 40 percent of Steinbart Company...Ch. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - On January 1, 2017, Alison, Inc., paid 60,000 for...Ch. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Echo, Inc., purchased 10 percent of ProForm...Ch. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - Prob. 25PCh. 1 - Prob. 26PCh. 1 - Belden, Inc. acquires 30 percent of the...Ch. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - On July 1, 2016, Killearn Company acquired 88,000...Ch. 1 - Prob. 31PCh. 1 - On January 1, 2017, Stream Company acquired 30...Ch. 1 - EXCEL CASE 1 On January 1, 2018, Acme Co. is...Ch. 1 - Access The Coca-Cola Companys SEC 10-K filing at...Ch. 1 - Prob. 4DYSCh. 1 - Prob. 5DYS
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- Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $276,500 in cash. The book value of Kinman's net assets on that date was $530,000, although one of the company's buildings, with a $71,600 carrying amount, was actually worth $122,850. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $110,000. Kinman sold inventory with an original cost of $52,500 to Harper during 2017 at a price of $75,000. Harper still held $15,900 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018. Kinman reported a $58,200 net loss and a $29,900 other comprehensive loss for 2017. The company still manages to declare and pay a $11,000 cash dividend during the year. During 2018, Kinman reported a $44,600 net income and declared and paid a cash dividend of $13,000. It made additional inventory sales…arrow_forwardHarper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $276,500 in cash. The book value of Kinman's net assets on that date was $530,000, although one of the company's buildings, with a $71,600 carrying amount, was actually worth $122,850. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $110,000. Kinman sold inventory with an original cost of $52,500 to Harper during 2017 at a price of $75,000. Harper still held $15,900 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018. Kinman reported a $58,200 net loss and a $29,900 other comprehensive loss for 2017. The company still manages to declare and pay a $11,000 cash dividend during the year. During 2018, Kinman reported a $44,600 net income and declared and paid a cash dividend of $13,000. It made additional inventory sales…arrow_forwardHarper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2020, for $347,200 in cash. The book value of Kinman's net assets on that date was $680,000, although one of the company's buildings, with a $64,800 carrying amount, was actually worth $117,800. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $135,000. Kinman sold inventory with an original cost of $77,700 to Harper during 2020 at a price of $111,000. Harper still held $24,900 (transfer price) of this amount in inventory as of December 31, 2020. These goods are to be sold to outside parties during 2021. Kinman reported a $45,600 net loss and a $24,200 other comprehensive loss for 2020. The company still manages to declare and pay a $13,000 cash dividend during the year. During 2021, Kinman reported a $49,600 net income and declared and paid a cash dividend of $15,000. It made additional inventory sales…arrow_forward
- Harper, Incorporated, acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2023, for $277,700 in cash. The book value of Kinman's net assets on that date was $540,000, although one of the company's buildings, with a $68,800 carrying amount, was actually worth $118,550. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $104,500. Kinman sold inventory with an original cost of $35,700 to Harper during 2023 at a price of $51,000. Harper still held $26,250 (transfer price) of this amount in inventory as of December 31, 2023. These goods are to be sold to outside parties during 2024. Kinman reported a $57,800 net loss and a $25,500 other comprehensive loss for 2023. The company still manages to declare and pay a $13,000 cash dividend during the year. During 2024, Kinman reported a $50,600 net income and declared and paid a cash dividend of $15,000. It made additional inventory…arrow_forwardOn January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $293,600. Excess patent cost amortization of $12,000 is still being recognized each year. During 2018, Seacrest reports net income of $342,000 and a $120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 8,000 shares of Seacrest on August 1, 2018, for $93,000 in cash. However, Pine retains the ability to significantly influence the investee.During the last quarter of 2017, Pine sold $50,000 in inventory (which it had originally purchased for only $30,000) to Seacrest. At the end of that fiscal year, Seacrest’s inventory retained $10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of…arrow_forwardOn January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $293,600. Excess patent cost amortization of $12,000 is still being recognized each year. During 2018, Seacrest reports net income of $342,000 and a $120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 8,000 shares of Seacrest on August 1, 2018, for $93,000 in cash. However, Pine retains the ability to significantly influence the investee. During the last quarter of 2017, Pine sold $50,000 in inventory (which it had originally purchased for only $30,000) to Seacrest. At the end of that fiscal year, Seacrest’s inventory retained $10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of…arrow_forward
- Duckworth Corporation purchases an 80% interest in Panda Corporation on January 1, 2017, in exchange for 5,000 Duckworth shares (market value of $18) plus $155,000 cash. The fair value of the NCI is proportionate to the price paid by Duckworth for its interest. The appraisal shows that some of Panda’s equipment, with a 4-year estimated remaining life, is undervalued by $20,000. The excess is attributed to goodwill. Panda Corporation’s balance sheet on December 31, 2016 is attached.The following information relates to the activities of the two companies for 2017:a. Panda pays off $10,000 of its long-term debt.b. Duckworth purchases production equipment for $76,000.c. Consolidated net income is $103,200; the NCI’s share is $5,000. Depreciation expense taken by Duckworth and Panda on their separate books is $92,000 and $28,000, respectively.d. Duckworth pays $30,000 in dividends; Panda pays $15,000.Prepare the consolidated statement of cash flows for the year ended December 31, 2017, for…arrow_forwardOn January 1, 2018, Pine Company owns 40 percent (124,000 shares) of Seacrest, Inc., which it purchased several years ago for $700,600. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $905,200. Excess patent cost amortization of $37,200 is still being recognized each year. During 2018, Seacrest reports net income of $846,000 and a $372,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 24,800 shares of Seacrest on August 1, 2018, for $236,528 in cash. However, Pine retains the ability to significantly influence the investee. During the last quarter of 2017, Pine sold $71,000 in inventory (which it had originally purchased for only $42,600) to Seacrest. At the end of that fiscal year, Seacrest's inventory retained $12,800 (at sales price) of this merchandise, which was subsequently sold in the first…arrow_forwardParker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet: (attached)The excess of the price paid over book value is attributable to the fixed assets, which have a fair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parker Company uses the simple equity method to record its investment in Sargent Company. The following trial balances of the two companies are prepared on December 31, 2015: Parker Sargent Current Assets . . . . . . . . . . . . . . . . . . . . . . . . 10,000 130,000 Depreciable Fixed A . . . . . . . . . . . . . . . . . . 400,000 200,000 Accumulated Depreciation . . . .. . . . . . . (106,000) (20,000) Investment in Sargent . .. .. . . . . . . . . . . . . 316,000 Current Liabilities. . . . . . . . . . . . . . . . . . . . . (60,000)…arrow_forward
- On 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_forwardBrown purchases 30% of Orange Company on Jan. 1, 2016 for $300,000. This acquisition gave Brown the ability to exercise signiticant influence over Oranges operating and financing policies. Orange reports assets on that date of $800,000 with liabilities of $250,000. One building with a 10-year remaining life is undervalued on Orange's books by $70,000 while the book value for its trademark (7-year remaining life) is undervalued by $105,000. During the year, Orange reports net income of $45,000 while declaring dividends of $15,000. Requirement: Prepare 2016 journal entries.arrow_forwardDunker Company purchases an 80% interest in the common stock of Fennig Company for $850,000 on January 1, 2017. The fair value of the NCI is $212,500. At the time of the purchase, the total stockholders’ equity of Fennig is $968,750. The price paid is $75,000 in excess of the book value of the controlling portion of Fennig equity. The excess is attributed to a patent with a 10-year life.During 2019, Dunker Company and Fennig Company report the following internally generated income before taxes: Dunker Company Fennig CompanySales . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000 $120,000Cost of goods sold . . . . . . . . .. . . . . (200,000) (90,000)Gain on machine. . . . . . . . . . . . . . . . . . 5,000Expenses . . . . . . . . . . . . . . . . . . . . . . . . (40,000) (20,000)Income before taxes . . . . . .. . . . . . . $ 65,000 $ 10,000Fennig…arrow_forward
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