ADVANCED ACCT.,SEL.CH.-W/ACCESS>CUSTOM<
14th Edition
ISBN: 9781307566574
Author: Hoyle
Publisher: MCG
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Chapter 1, Problem 8P
To determine
Identify the appropriate value of Investment in Company J balance (equity method) in Company F’s financial records as of December 31 from the given choices.
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Franklin purchases 40 percent of Johnson Company on January 1 for $500,000. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson’s operating and financing policies. Johnson reports assets on that date of $1,400,000 with liabilities of $500,000. One building with a seven-year remaining life is undervalued on Johnson’s books by $140,000. Also, Johnson’s book value for its trademark (10-year remaining life) is undervalued by $210,000. During the year, Johnson reports net income of $90,000 while declaring dividends of $30,000. What is the Investment in Johnson Company balance (equity method) in Franklin’s financial records as of December 31?a. $504,000b. $507,600c. $513,900d. $516,000
Franklin purchases 40 percent of Johnson Company on January 1 for $576,700. Although Franklin did not use it, this acquisition gave Franklin the ability
to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $1,484,000 with liabilities of
$544,000. One building with a seven-year remaining life is undervalued on Johnson's books by $229,250. Also, Johnson's book value for its trademark
(10-year remaining life) is undervalued by $272,500. During the year, Johnson reports net income of $137,000 while declaring dividends of $80,000.
What is the Investment in Johnson Company balance (equity method) in Franklin's financial records as of December 31?
Multiple Choice
$575,500.
$588,600.
$599,500.
$630,300.
The fair value of Wallis, Inc.’s depreciable assets exceeds their book value by $50 million. The assets have an average remaining useful life of 15 years and are being depreciated by the straight-line method. Park Industries buys 30% of Wallis’s common shares. When Park adjusts its investment revenue and the investment by the equity method, how will the situation described affect those two accounts?
Chapter 1 Solutions
ADVANCED ACCT.,SEL.CH.-W/ACCESS>CUSTOM<
Ch. 1 - What advantages does a company achieve when it...Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 4QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 6QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 8QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 14QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Prob. 2PCh. 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 - Prob. 7PCh. 1 - Prob. 8PCh. 1 - Evan Company reports net income of $140,000 each...Ch. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - Prob. 16PCh. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Prob. 23PCh. 1 - Matthew, Inc., owns 30 percent of the outstanding...Ch. 1 - Prob. 26PCh. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - Prob. 30PCh. 1 - Prob. 31P
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