Homework Answers
The computation of the ending balance is as follows:
| Investment in John Corp. (1/1/17) | 14,50,000 |
| Additional Shares Purchased (7/1/18) | 27,40,000 |
| Adjustment for 2017 income (prior period) | 74,000 |
| Adjustment for 2018 income (prior period) | 51,000 |
| Income (7/1/2018 to 12/31/2018) 759000 x 30% | 2,27,700 |
| Dividends 1.4 x 72000 | (1,00,800) |
| Investment in John Corp. At year end | 44,41,900 |
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On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Shamrock Co. purchased 26,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Shamrock Co. purchased 26,000 shares (a 10%
interest) in Elton John Corp. for $1,380,000. At the time, the book
value and the fair value of John’s net assets were
$14,200,000.
On July 1, 2018, Shamrock paid $3,000,000 for 52,000 additional
shares of John common stock, which represented a 20% investment in
John. The fair value of John’s identifiable assets net of
liabilities was equal to their carrying amount of $15,500,000. As a
result of this transaction,...
On January 1, 2017, Pearl Co. purchased 23,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Pearl Co. purchased 23,000 shares (a 10%
interest) in Elton John Corp. for $1,330,000. At the time, the book
value and the fair value of John’s net assets were
$12,300,000.
On July 1, 2018, Pearl paid $2,840,000 for 46,000 additional shares
of John common stock, which represented a 20% investment in John.
The fair value of John’s identifiable assets net of liabilities was
equal to their carrying amount of $13,300,000. As a result of this
transaction,...
Exercise 22-22 On January 1, 2017, Teal Co. purchased 27,000 shares (a 10% interest) in Elton...
Exercise 22-22 On January 1, 2017, Teal Co. purchased 27,000 shares (a 10% interest) in Elton John Corp. for $1,500,000. At the time, the book value and the fair value of John's net assets were $12,300,000. On July 1, 2018, Teal paid $3,170,000 for 54,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $13,700,000. As a result of...
Exercise 22-22 On January 1, 2017, Headland Co. purchased 22,000 shares (a 10% interest) in Elton...
Exercise 22-22
On January 1, 2017, Headland Co. purchased 22,000 shares (a 10%
interest) in Elton John Corp. for $1,480,000. At the time, the book
value and the fair value of John’s net assets were
$12,100,000.
On July 1, 2018, Headland paid $3,340,000 for 44,000 additional
shares of John common stock, which represented a 20% investment in
John. The fair value of John’s identifiable assets net of
liabilities was equal to their carrying amount of $13,200,000. As a
result of...
On January 1, 2020, Bramble Co. purchased 22,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were $12,000,000. On July 1, 2021, Bramble paid $3,100,000 for 44,000 additio
On January 1, 2020, Bramble Co. purchased 22,000 shares (a 10% interest) in Elton John Corp. for $1,400,000. At the time, the book value and the fair value of John’s net assets were $12,000,000.On July 1, 2021, Bramble paid $3,100,000 for 44,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Bramble owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)John reported the following net income and...
exercise 22-22
On January 1, 2017, Bridgeport Co. purchased 27,000 shares (a 10% interest) in Elton John Corp. for $1,430,000. At the time, the book value and the fair value of John’s net assets were $12,100,000.On July 1, 2018, Bridgeport paid $2,750,000 for 54,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John’s identifiable assets net of liabilities was equal to their carrying amount of $13,300,000. As a result of this transaction, Bridgeport owns 30% of...
On January 2, Year 1, Kean Co. purchased a 30% interest in Pod Co. for $250,000....
On January 2, Year 1, Kean Co. purchased a 30% interest in Pod Co. for $250,000. On this date, Pod's equity was $500,000. The carrying amounts of Pod's identifiable net assets approximated their fair values, except for land whose fair value exceeded its carrying amount by $200,000. Pod reported net income of $100,000 for Year 1, and paid no dividends. Kean accounts for this investment using the equity method. In its December 31, Year 1, balance sheet, what amount should...
Assume that, on January 1, 2018, Matsui Co. paid $2,688,000 for its investment in 96,000 shares...
Assume that, on January 1, 2018, Matsui Co. paid $2,688,000 for its investment in 96,000 shares of Yankee Inc. Further, assume that Yankee has 300,000 total shares of stock issued. The book value and fair value of Yankee's identifiable net assets were both $600,000 at January 1, 2018. The following information pertains to Yankee during 2018: Net Income Dividends declared and paid Market price of common stock on 12/31/2018 $300,000 $ 90,000 30/share What amount would Matsui report in its...
On July 1, Year 1, Denver Corp. purchased 3,000 shares of Eagle Co.'s 10,000 outstanding shares...
On July 1, Year 1, Denver Corp. purchased 3,000 shares of Eagle Co.'s 10,000 outstanding shares of common stock for $20 per share and did not elect the fair value option. Denver has significant influence over Eagle's operations. On December 15, Year 1, Eagle paid $40,000 in dividends to its common shareholders. Eagle's net income for the year ended December 31, Year 1, was $120,000, earned evenly throughout the year. In its Year 1 income statement, what amount of income...
On January 1, 2017, Marin Inc, paid $705,000 for 9,000 shares of Headland Company's voting common...
On January 1, 2017, Marin Inc, paid $705,000 for 9,000 shares of Headland Company's voting common stock, which was a 10% interest in Headland. At that date, the net assets of Headland totaled $5,916,000. The fair values of all of Headland's identifiable assets and liabilities were equal to their book values. Marin does not have the ability to exercise significant influence over the operating and financial policies of Headland. Marin received dividends of $1.60 per share from Headland on October...
On January 1, 2017, Shamrock Co. purchased 26,000 shares (a 10%
interest) in Elton John Corp. for $1,380,000. At the time, the book
value and the fair value of John’s net assets were
$14,200,000.
On July 1, 2018, Shamrock paid $3,000,000 for 52,000 additional
shares of John common stock, which represented a 20% investment in
John. The fair value of John’s identifiable assets net of
liabilities was equal to their carrying amount of $15,500,000. As a
result of this transaction,...
On January 1, 2017, Pearl Co. purchased 23,000 shares (a 10%
interest) in Elton John Corp. for $1,330,000. At the time, the book
value and the fair value of John’s net assets were
$12,300,000.
On July 1, 2018, Pearl paid $2,840,000 for 46,000 additional shares
of John common stock, which represented a 20% investment in John.
The fair value of John’s identifiable assets net of liabilities was
equal to their carrying amount of $13,300,000. As a result of this
transaction,...
Exercise 22-22 On January 1, 2017, Teal Co. purchased 27,000 shares (a 10% interest) in Elton John Corp. for $1,500,000. At the time, the book value and the fair value of John's net assets were $12,300,000. On July 1, 2018, Teal paid $3,170,000 for 54,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John's identifiable assets net of liabilities was equal to their carrying amount of $13,700,000. As a result of...
Exercise 22-22
On January 1, 2017, Headland Co. purchased 22,000 shares (a 10%
interest) in Elton John Corp. for $1,480,000. At the time, the book
value and the fair value of John’s net assets were
$12,100,000.
On July 1, 2018, Headland paid $3,340,000 for 44,000 additional
shares of John common stock, which represented a 20% investment in
John. The fair value of John’s identifiable assets net of
liabilities was equal to their carrying amount of $13,200,000. As a
result of...
Assume that, on January 1, 2018, Matsui Co. paid $2,688,000 for its investment in 96,000 shares of Yankee Inc. Further, assume that Yankee has 300,000 total shares of stock issued. The book value and fair value of Yankee's identifiable net assets were both $600,000 at January 1, 2018. The following information pertains to Yankee during 2018: Net Income Dividends declared and paid Market price of common stock on 12/31/2018 $300,000 $ 90,000 30/share What amount would Matsui report in its...
On January 1, 2017, Marin Inc, paid $705,000 for 9,000 shares of Headland Company's voting common stock, which was a 10% interest in Headland. At that date, the net assets of Headland totaled $5,916,000. The fair values of all of Headland's identifiable assets and liabilities were equal to their book values. Marin does not have the ability to exercise significant influence over the operating and financial policies of Headland. Marin received dividends of $1.60 per share from Headland on October...
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