Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 9P
To determine
Identify the appropriate answer for the given statement from the given choices.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Camille, Inc., bought all outstanding shares of
Jordan Corporation on January 1, 2019, for
$792,000 in cash. This portion of the
consideration transferred results in a fair-
value allocation of $41,700 to equipment and
goodwill of $108,300. At the acquisition date,
Camille also agrees to pay Jordan's previous
owners an additional $159,000 on January 1,
2021, if Jordan earns a 10 percent return on
the fair value of its assets in 2019 and 2020.
Jordan's profits exceed this threshold in both
years. Which of the following is true?
The additional $159,000 payment is reported
as an adjustment to the beginning balance of
consolidated retained earnings.
Consolidated goodwill as of January 1, 2021,
increases by $159,000.
The $159,000 is recorded as a revaluation
gain in 2021.
The fair value of the expected contingent
payment increases goodwill at the acquisition
date.
Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $700,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $35,000 to equipment and goodwill of $88,000. At the acquisition date, Camille also agrees to pay Jordan’s previous owners an additional $110,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan’s profits exceed this threshold in both years. Which of the following is true?
Â
The $110,000 is recorded as a revaluation gain in 2021.
Â
The additional $110,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings.
Â
Consolidated goodwill as of January 1, 2021, increases by $110,000.
Â
The fair value of the expected contingent payment increases goodwill at the acquisition date.
Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $700,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $35,000 to equipment and goodwill of $88,000. At the acquisition date, Camille also agrees to pay Jordan’s previous owners an additional $110,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan’s profits exceed this threshold in both years. Which of the following is true?
Â
Multiple Choice
Â
Consolidated goodwill as of January 1, 2021, increases by $110,000.
Â
The $110,000 is recorded as a revaluation gain in 2021.
Â
The fair value of the expected contingent payment increases goodwill at the acquisition date.
Â
The additional $110,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings.
Chapter 3 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - When a parent company applies the initial value...Ch. 3 - Several years ago, Jenkins Company acquired a...Ch. 3 - Benns adopts the equity method for its 100 percent...Ch. 3 - Prob. 8QCh. 3 - Prob. 9QCh. 3 - Prob. 10Q
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Paar Corporation bought 100 percent of Kimmel,...Ch. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - If no legal, regulatory, contractual, competitive,...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - What is Phoenixs consolidated retained earnings...Ch. 3 - On its December 31, 2018, consolidated balance...Ch. 3 - Prob. 13PCh. 3 - Herbert, Inc., acquired all of Rambis Companys...Ch. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Following are selected account balances from...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - On January 1, 2017, Pinnacle Corporation exchanged...Ch. 3 - Following are selected accounts for Mergaronite...Ch. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39APCh. 3 - Prob. 40APCh. 3 - Prob. 1DYSCh. 3 - FASB ASC AND IASB RESEARCH CASE A vice president...Ch. 3 - Prob. 4DYSCh. 3 - Prob. 5DYS
Knowledge Booster
Similar questions
- Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $880,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $36,600 to equipment and goodwill of $101,700. At the acquisition date, Camille also agrees to pay Jordan’s previous owners an additional $147,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan’s profits exceed this threshold in both years. Which of the following is true?  Multiple Choice  Consolidated goodwill as of January 1, 2021, increases by $147,000.  The additional $147,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings.  The $147,000 is recorded as a revaluation gain in 2021.  The fair value of the expected contingent payment increases goodwill at the acquisition date.arrow_forwardCamille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $734,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $53,400 to equipment and goodwill of $112,200. At the acquisition date, Camille also agrees to pay Jordan’s previous owners an additional $152,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan’s profits exceed this threshold in both years. Which of the following is true?  Multiple Choice  Consolidated goodwill as of January 1, 2021, increases by $152,000.  The additional $152,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings.  The fair value of the expected contingent payment increases goodwill at the acquisition date.  The $152,000 is recorded as a revaluation gain in 2021.arrow_forwardOn January 1, 2018, Morey, Inc., exchanged $178,000 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values.On June 30, 2018, Morey paid $560,000 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill.Amsterdam reports the following amounts at December 31, 2018 (credit balances shown in parentheses):Amsterdam’s revenue and expenses were distributed evenly throughout the year and no changes in Amsterdam’s stock have occurred.Using the acquisition method, compute the following:a. The acquisition-date fair value of Amsterdam to be included in…arrow_forward
- ProForm acquired 70 percent of ClipRite on June 30, 2017, for $910,000 in cash. Based on Clip- Rite’s acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition.The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2018 financial statements are as follows:ProForm sold ClipRite inventory costing $72,000 during the last six months of 2017 for $120,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $200,000 during 2018 for $250,000. At year-end, 10 percent is left. With these facts, determine the consolidated balances for the following:SalesCost of Goods SoldOperating ExpensesDividend IncomeNet Income Attributable to Noncontrolling InterestInventoryNoncontrolling Interest in Subsidiary, 12/31/18arrow_forwardChoose the correct. Dosmann, Inc., bought all outstanding shares of Lizzi Corporation on January 1, 2016, for $700,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $35,000 to equipment and goodwill of $88,000. At the acquisition date, Dosmann also agrees to pay Lizzi’s previous owners an additional $110,000 on January 1, 2018, if Lizzi earns a 10 percent return on the fair value of its assets in 2016 and 2017. Lizzi’s profits exceed this threshold in both years. Which of the following is true?a. The additional $110,000 payment is a reduction in consolidated retained earnings.b. The fair value of the expected contingent payment increases goodwill at the acquisition date.c. Consolidated goodwill as of January 1, 2018, increases by $110,000.d. The $110,000 is recorded as an expense in 2018.arrow_forwardProForm acquired 70 percent of ClipRite on June 30, 2017, for $910,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2018 financial statements are as follows: ProForm ClipRite $ (800,000) $ (600,000) 400,000 Sales Cost of goods sold Operating expenses 535,000 100,000 100,000 Dividend income (35,000) $ (200,000) $ (100,000) -0- Net income $ (1,300,000) $ (850,000) (100,000) 50,000 Retained earnings, 1/1/18 Net income (200,000) Dividends declared 100,000 Retained earnings, 12/31/18 $ (1,400,000) $ (900,000) $ 400,000 $ 300,000 700,000 Cash and receivables Inventory .... Investment in ClipRite. 290,000 910,000 -0- Fixed assets 1,000,000 600,000 Accumulated depreciation (300,000) $ 2,300,000 (200,000) Totals $1,400,000 $ (600,000) $…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_forwardMighty Company purchased a 60 percent interest in Lowly Company on January 1, 2017, for $420,000 in cash. Lowly’s book value at that date was reported as $600,000 and the fair value of the noncontrolling interest was assessed at $280,000. Any excess acquisition-date fair value over Lowly’s book value is assigned to trademarks to be amortized over 20 years. Subsequently, on January 1, 2018, Lowly acquired a 20 percent interest in Mighty. The price of $240,000 was equivalent to 20 percent of Mighty’s book and fair value.Neither company has paid dividends since these acquisitions occurred. On January 1, 2018, Lowly’s book value was $800,000, a figure that rises to $840,000 (common stock of $300,000 and retained earnings of $540,000) by year-end. Mighty’s book value was $1.7 million at the beginning of 2018 and $1.8 million (common stock of $1 million and retained earnings of $800,000) at December 31, 2018. No intra-entity transactions have occurred and no additional stock has been sold.…arrow_forwardOn January 1, 2018, Morey, Inc., exchanged $167,900 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values. On June 30, 2018, Morey paid $602,000 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill. Amsterdam reports the following amounts at December 31, 2018 (credit balances shown in parentheses):      Revenues $ (381,000 ) Expenses  221,000  Retained earnings, January 1  (212,400 ) Dividends declared, October 1  20,000  Common stock  (500,000 )  Amsterdam’s revenue and expenses were distributed evenly…arrow_forward
- Moon Company is contemplating the acquisition of Yount, Inc., on January 1, 2015. If Moon acquires Yount, it will pay $730,000 in cash to Yount and acquisition costs of $20,000. The January 1, 2015, balance sheet of Yount, Inc., is anticipated to be as attached:Fair values agree with book values except for the inventory and the depreciable fixed assets, which have fair values of $70,000 and $400,000, respectively. Your projections of the combined operations for 2015 are as follows: Combined sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $200,000 Combined cost of goods sold, including Yount’s beginning inventory, at book value, which will be sold in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Other expenses not including depreciation of Yount assets . . . . . . . . . . . . . . . . . . . . . . . . 25,000Depreciation on Yount fixed assets is…arrow_forwardCarson, Inc., acquires 80 percent of the outstaniding common stock of Gardena corporation on January 1, 2020, in exchange for $900,000 cash.    At the acquisition date, Gardena's total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date,    Gardena's book value was $690,000.            Several individual items on Gardena's financial records had fair values that differed from their book values as follows:              Book value  Fair value     Trademark (indefinite life)      $360,000  $383,000     Property and equipment (net, 8-year remaining useful life)    290,000  330,000     Patent (14-year remaining useful life)     132,000  272,000                    For internal reporting purposes, Carson, inc., employs the equity method to account for this investment. The following account balances are for the year   ending December 31,…arrow_forwardCarson, Inc., acquires 80 percent of the outstaniding common stock of Gardena corporation on January 1, 2020, in exchange for $900,000 cash.  At the acquisition date, Gardena's total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date,  Gardena's book value was $690,000.          Several individual items on Gardena's financial records had fair values that differed from their book values as follows:            Book value  Fair value   Trademark (indefinite life)      $360,000  $383,000   Property and equipment (net, 8-year remaining useful life)    290,000  330,000   Patent (14-year remaining useful life)     132,000  272,000                For internal reporting purposes, Carson, inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2020, for both companies. At year-end, there…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning