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, Shamrock 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 declared and paid the
following dividends.
|
Net Income |
Dividend per Share |
|||
| Year ended 12/31/17 | $750,000 | None | ||
| Six months ended 6/30/18 | 480,000 | None | ||
| Six months ended 12/31/18 | 807,000 | $1.65 |
Determine the ending balance that Shamrock Co. should report as its
investment in John Corp. at the end of 2018.
| Investment in Elton John Corp. | $
|
Homework Answers
A computation of the ending balance that Shamrock Co. should report as its investment in John Corp. at the end of 2018. is as follows:
Investment in John Corp. 1/1/17 = $1,380,000
Additional purchase 7/1/18 = $3,000,000
Adjustment for 2017 income (prior period) ($750,000 * 10%) =
$75,000
Adjustment for 2018 income to 6/30 (prior period) ($480,000 * 10%)
= $48,000
Income (7/1/18–12/31/18) ($807,000 * 30%) = $242,100
Less: Dividends (7/1/18–12/31/18) (78,000 shares * $1.65) =
$(128,700)
Investment in Elton John Corp. as on 12/31/18 =
$4,616,400
Under GAAP, goodwill is not amortized.
Add Answer to:
On January 1, 2017, Shamrock Co. purchased 26,000 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....
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
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The fair value of John’s identifiable assets net of liabilities was
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Exercise 22-22 On January 1, 2017, Headland Co. purchased 22,000 shares (a 10% interest) in Elton...
Exercise 22-22
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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...
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...
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5. Assume that, on January 1, 2018, Matsui Co. paid $1,200,000 for its investment in 60,000...
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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,...
On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1.450.000. At the time, the book value and the fair value of John's net assets were $12,000,000. On July 1, 2018, Bonita paid $2,740,000 for 48,000 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 this transaction,...
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...
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...
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