Homework Answers
Additional Investment made by Rogers Inc Convert it investment in Procter into companies Associates
Balance of Equity as on 01-01-2021
Opening Balance $ 70000 + Purchase Value $ 310000 = $ 380000 ( Assumed that company carries value Investment at Book Value
and Value will be same at End of year as assumed that company value investment at Book Value
2. Companies Measure Investment at Fair Value:
Opening Balance $ 70000 - $ 2000 ( Fair Value Loss ) + $ 21000 ( Share in Distribute Profit) = $ 89000
Add : Purchase Value of Equity $ 310000
Value as on 1.1.2021 $ 399000
Closing Value of Investment $ 399000+ $ 117000 = $ 516000
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Rogers, Inc., acquires 15% of Procter Corporation on January 1, 2020, for $70,000. During 2020, Procter...
Rogers, Inc., acquires 15% of Procter Corporation on January 1, 2020, for $70,000. During 2020, Procter...
Rogers, Inc., acquires 15% of Procter Corporation on January 1, 2020, for $70,000. During 2020, Procter reported net income of $180,000 and paid total dividends of $40,000. At the year end of 2020, the market value of this 15% investment indicates the value of $68,000. On January 1, 2021, Rogers purchased an additional 30% of Procter for $310,000. During 2021, Procter reported net income of $300,000 and paid dividends of $40,000. a. Prepare the January 1, 2021 entry to adjust...
3. Potter, Inc., acquires 10% of Weasley Corporation on January 1, 2020, for $300,000. During 2020,...
3. Potter, Inc., acquires 10% of Weasley Corporation on January 1, 2020, for $300,000. During 2020, Weasley reported net income of $250,000 and paid total dividends of $50,000. On January 1, 2021, Potter purchased an additional 30% of Weasley for $900,000. During 2021, Weasley reported net income of $420,000 and paid dividends of $20,000. Required: a. Prepare the January 1, 2021 entry to adjust the equity investment account for the initial adoption of the Equity Method. b. Compute the balance...
2. On January 1, 2020, Allan acquires 9 percent of Bellevue's outstanding common stock for $40,000....
2. On January 1, 2020, Allan acquires 9 percent of Bellevue's outstanding common stock for $40,000. Allan classifies the investment as an available-for-sale security and records any unrealized holding gains or losses directly in owners' equity. On January 1, 2021, Allan buys an additional 13 percent of Bellevue for $54,600, providing Allan the ability to significantly influence Bellevue's decisions. During the next two years, the following information is available for Bellevue: Income Dividends Common stock fair value (12/31) 2020 2021...
Comet, Inc. acquires 15% of Flash Co. on January 1, 2017 for $147,000 when the book...
Comet, Inc. acquires 15% of Flash Co. on January 1, 2017 for $147,000 when the book value of Flash was $800,000. During 2017, Flash reported net income of $320,000 and paid dividends of $50,000. On January 1, 2018, Comet purchased an additional 25% of Flash for $287,500, achieving the ability to exert significant influence over Flash. Any excess cost was attributable to an undervalued patent with a 5-year remaining life for the first purchase and a 4-year life for the...
On January 1, 2020, Allan acquires 8 percent of Bellevue’s outstanding common stock for $41,110. Allan...
On January 1, 2020, Allan acquires 8 percent of Bellevue’s outstanding common stock for $41,110. Allan classifies the investment as an available-for-sale security and records any unrealized holding gains or losses directly in owners’ equity. On January 1, 2021, Allan buys an additional 13 percent of Bellevue for $54,560, providing Allan the ability to significantly influence Bellevue’s decisions. During the next two years, the following information is available for Bellevue: Income Dividends Common stock fair value (12/31) 2020 $70,000 $30,000...
On January 1, 2020, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company...
On January 1, 2020, Palka, Inc., acquired 70 percent of the
outstanding shares of Sellinger Company for $1,789,900 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 $2,250,000. 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
$297,000. On January 1, 2021, Palka acquired an additional...
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $510,000 cash. Immediately after...
Adams, Inc., acquires Clay Corporation on January 1, 2020, in
exchange for $510,000 cash. Immediately after the acquisition, the
two companies have the following account balances. Clay’s equipment
(with a five-year remaining life) is actually worth $440,000.
Credit balances are indicated by parentheses.
Adams
Clay
Current assets
$
300,000
$
220,000
Investment in Clay
510,000
0
Equipment
600,000
390,000
Liabilities
(200,000)
(160,000)
Common stock
(350,000)
(150,000)
Retained earnings, 1/1/20
(860,000)
(300,000)
In 2020, Clay earns a net income of $55,000...
16 10 points On January 1, 2020. Palka, Inc., acquired 70 percent of the outstanding shares...
16 10 points On January 1, 2020. Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1.297,100 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 $1.510,000. 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 $333.000. On January 1, 2021. Palka...
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $476,100 cash. Immediately after...
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $476,100 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $459,300. Credit balances are indicated by parentheses. Adams Clay Current assets $ 460,000 $ 226,000 Investment in Clay 476,100 0 Equipment 651,300 408,000 Liabilities (270,000 ) (220,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (967,400 ) (264,000 ) In 2020, Clay...
Anderson acquires 11 percent of the outstanding voting shares of Barringer on January 1, 2019, for...
Anderson acquires 11 percent of the outstanding voting shares of Barringer on January 1, 2019, for $109,000 and categorizes the investment as an available-for-sale security. An additional 20 percent of the stock is purchased on January 1, 2020, for $220,000, which gives Anderson the ability to significantly influence Barringer. Barringer has a book value of $900,000 at January 1, 2019, and records net income of $140,000 for that year. Barringer paid dividends of $60,000 during 2019. The book values of...
3. Potter, Inc., acquires 10% of Weasley Corporation on January 1, 2020, for $300,000. During 2020, Weasley reported net income of $250,000 and paid total dividends of $50,000. On January 1, 2021, Potter purchased an additional 30% of Weasley for $900,000. During 2021, Weasley reported net income of $420,000 and paid dividends of $20,000. Required: a. Prepare the January 1, 2021 entry to adjust the equity investment account for the initial adoption of the Equity Method. b. Compute the balance...
2. On January 1, 2020, Allan acquires 9 percent of Bellevue's outstanding common stock for $40,000. Allan classifies the investment as an available-for-sale security and records any unrealized holding gains or losses directly in owners' equity. On January 1, 2021, Allan buys an additional 13 percent of Bellevue for $54,600, providing Allan the ability to significantly influence Bellevue's decisions. During the next two years, the following information is available for Bellevue: Income Dividends Common stock fair value (12/31) 2020 2021...
Comet, Inc. acquires 15% of Flash Co. on January 1, 2017 for $147,000 when the book value of Flash was $800,000. During 2017, Flash reported net income of $320,000 and paid dividends of $50,000. On January 1, 2018, Comet purchased an additional 25% of Flash for $287,500, achieving the ability to exert significant influence over Flash. Any excess cost was attributable to an undervalued patent with a 5-year remaining life for the first purchase and a 4-year life for the...
On January 1, 2020, Palka, Inc., acquired 70 percent of the
outstanding shares of Sellinger Company for $1,789,900 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 $2,250,000. 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
$297,000. On January 1, 2021, Palka acquired an additional...
Adams, Inc., acquires Clay Corporation on January 1, 2020, in
exchange for $510,000 cash. Immediately after the acquisition, the
two companies have the following account balances. Clay’s equipment
(with a five-year remaining life) is actually worth $440,000.
Credit balances are indicated by parentheses.
Adams
Clay
Current assets
$
300,000
$
220,000
Investment in Clay
510,000
0
Equipment
600,000
390,000
Liabilities
(200,000)
(160,000)
Common stock
(350,000)
(150,000)
Retained earnings, 1/1/20
(860,000)
(300,000)
In 2020, Clay earns a net income of $55,000...
16 10 points On January 1, 2020. Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1.297,100 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 $1.510,000. 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 $333.000. On January 1, 2021. Palka...
Anderson acquires 11 percent of the outstanding voting shares of Barringer on January 1, 2019, for $109,000 and categorizes the investment as an available-for-sale security. An additional 20 percent of the stock is purchased on January 1, 2020, for $220,000, which gives Anderson the ability to significantly influence Barringer. Barringer has a book value of $900,000 at January 1, 2019, and records net income of $140,000 for that year. Barringer paid dividends of $60,000 during 2019. The book values of...
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