3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie....
3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie. In 1/1/2016, Choco acquired additional 20% of the voting common stock of Cookie for $210,000. Following is the financial information about Cookie. Book value of net assets 1/1/2015 $800,000 Net income (2015) Net income (2016) $180,000 $210,000 Dividends (2015) Dividends (2016) $80,000 $100,000 Land undervalued 12/31/2015 Land undervalued 12/31/2016 $60,000 $70,000 All excess payment will be recorded using Trademark which has useful life of 9 years in 2016. During the year, there was no fair market value adjustment for Cookie.
Q1: In 2015, what method should be used to record this investment?
Q2: What is the balance of the investment account in Cookie at 12/31/2015?
Q3: What is the journal entry to record for dividends paid by Cookie at 12/31/2015?
Q4: In 2016, after additional 20% acquisition of Cookie, what method should be used to record this investment for 2015 and 2016?
Homework Answers
Q1: In 2015, what method should be used to record this investment
Answer 1: Fair Value
Q2: What is the balance of the investment account in Cookie at 12/31/2015?
Answer 2:
Investment in Cookie 92,000
Cash 92,000
Q3: What is the journal entry to record for dividends paid by Cookie at 12/31/2015?
Answer 3: 12/31/2015
Cash 8,000
Dividends Revenue 8,000
(80, 000 * 0.10 = 8,000)
Q4: In 2016, after additional 20% acquisition of Cookie, what method should be used to record this investment for 2015 and 2016?
Answer 4: Equity method
Add Answer to:
3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting
common stock of Cookie....
3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie....
3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie. In 1/1/2016, Choco acquired additional 20% of the voting common stock of Cookie for $210,000. Following is the financial information about Cookie. Book value of net assets 1/1/2015 S800,000 Net income (2015) Net income (2016) Dividends (2015) Dividends (2016) S180,000 S210,000 S80,000 S100,000 S60,000 Land undervalued 12/31/2015 Land undervalued 12/31/2016 S70,000 All excess payment will be recorded using Trademark which has useful life of...
3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie....
3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie. In 1/1/2016, Choco acquired additional 20% of the voting common stock of Cookie for $210,000. Following is the financial information about Cookie. Book value of net assets 1/1/2015 $800,000 Net income (2015) Net income (2016) $180,000 $210,000 Dividends (2015) Dividends (2016) $80,000 $100,000 Land undervalued 12/31/2015 Land undervalued 12/31/2016 $60,000 $70,000 All excess payment will be recorded using Trademark which has useful life of...
2. On 1/1/2015, Choco paid $150,000 to acquire 40% of the voting common stock of Cookie....
2. On 1/1/2015, Choco paid $150,000 to acquire 40% of the voting common stock of Cookie. Following is the financial information about Cookie. Book value of assets $450,000 Book value of liabilities $125,000 Net income (2015) Net income (2016) $80,000 $100,000 Dividends (2015) Dividends (2016) $40,000 $45,000 Fair market value of investment 1/1/2015 Fair market value of investment 12/31/2016 $160,000 $180,000 Cookie has a patent with book value of $5,000 but actually $25,000 with 8 years remaining life. Q1: What...
On 1/1/2015, Choco paid $150,000 to acquire 40% of the voting common stock of Cookie. Following...
On 1/1/2015, Choco paid $150,000 to acquire 40% of the voting common stock of Cookie. Following is the financial information about Cookie. Book value of assets $450,000 Book value of liabilities $125,000 Net income (2015) Net income (2016) $80,000 $100,000 Dividends (2015) Dividends (2016) $40,000 $45,000 Fair market value of investment 1/1/2015 Fair market value of investment 12/31/2016 $160,000 $180,000 Cookie has a patent with book value of $5,000 but actually $25,000 with 8 years remaining life.\ What is the...
On 1/1/2015, Choco paid $150,000 to acquire 15% of the voting common stock of Cookie. Following...
On 1/1/2015, Choco paid $150,000 to acquire 15% of the voting common stock of Cookie. Following is the financial information about Cookie. Book value of assets $450,000 Book value of liabilities $125,000 Net income (2015) $80,000 Dividends (2015) $40,000 Fair market value of investment 1/1/2015 Fair market value of investment 12/31/2015 $160,000 $180,000 Cookie has a patent with book value of $5,000 but actually $25,000 with 8 years remaining life. Q1: What method should be used to record this investment?...
Q5: Calculate trademark in 2015 that will be recorded in 2016(if any). Q6: Calculate annual amortization...
Q5: Calculate trademark in 2015 that will be recorded in 2016(if any). Q6: Calculate annual amortization of under/overvalued asset and Trademark in 2015. Q7: In 2016, what is the balance of the investment account in Cookie at 12/31/2015 using the equity method? Q8: Calculate trademark in 2016 that will be recorded in 2016(if any). Q9: Calculate annual amortization of under/overvalued asset and Trademark in 2016. Q10: In 2016, what is the balance of the investment account in Cookie at 12/31/2016...
On January 1, Belleville Company paid $2,760,000to acquire 69,000 shares of O'Fallon's voting common stock, which...
On January 1, Belleville Company paid $2,760,000to acquire 69,000 shares of O'Fallon's voting common stock, which represents a 40% investment. No allocations to goodwill or other specific accounts were made. Significant influence over O'Fallon is achieved by this acquisition, and so Bellville applies the equity method. O'Fallon declared a $1 per share dividend during the year and reported net income of $596,000. What is the balance in the investment in O'Fallon account found in Bellvile's financial records as of December...
On January 1, Belleville Company paid $1,970,000 to acquire 98,500 shares of O'Fallon’s voting common stock,...
On January 1, Belleville Company paid $1,970,000 to acquire 98,500 shares of O'Fallon’s voting common stock, which represents a 40 percent investment. No allocations to goodwill or other specific accounts were made. Significant influence over O'Fallon is achieved by this acquisition, and so Belleville applies the equity method. O'Fallon declared a $2 per share dividend during the year and reported net income of $598,000. What is the balance in the Investment in O'Fallon account found in Belleville’s financial records as...
On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of...
On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of Tige was $850,000. A building with a carrying value of $160,000 was actually worth $220,000. The building had a remaining life of twenty years. Tige owned a trademark valued at $90,000 over cost that was to be amortized over 20 years. During 2018, Tige sold to Jolley inventory costing $60,000, at a markup of 50%...
On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of...
On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of Tige was $850,000. A building with a carrying value of $160,000 was actually worth $220,000. The building had a remaining life of twenty years. Tige owned a trademark valued at $90,000 over cost that was to be amortized over 20 years. During 2018, Tige sold to Jolley inventory costing $60,000, at a markup of 50%...
3. On 1/1/2015, Choco paid $92,000 to acquire 10% of the voting common stock of Cookie. In 1/1/2016, Choco acquired additional 20% of the voting common stock of Cookie for $210,000. Following is the financial information about Cookie. Book value of net assets 1/1/2015 S800,000 Net income (2015) Net income (2016) Dividends (2015) Dividends (2016) S180,000 S210,000 S80,000 S100,000 S60,000 Land undervalued 12/31/2015 Land undervalued 12/31/2016 S70,000 All excess payment will be recorded using Trademark which has useful life of...
Q5: Calculate trademark in 2015 that will be recorded in 2016(if any). Q6: Calculate annual amortization of under/overvalued asset and Trademark in 2015. Q7: In 2016, what is the balance of the investment account in Cookie at 12/31/2015 using the equity method? Q8: Calculate trademark in 2016 that will be recorded in 2016(if any). Q9: Calculate annual amortization of under/overvalued asset and Trademark in 2016. Q10: In 2016, what is the balance of the investment account in Cookie at 12/31/2016...
On January 1, 2018, Jolley Corp. paid $250,000 for 25% of the voting common stock of Tige Co. On that date, the book value of Tige was $850,000. A building with a carrying value of $160,000 was actually worth $220,000. The building had a remaining life of twenty years. Tige owned a trademark valued at $90,000 over cost that was to be amortized over 20 years. During 2018, Tige sold to Jolley inventory costing $60,000, at a markup of 50%...
Most questions answered within 3 hours.
-
4. Without doing any calculations, predict whether the observed
∆T would increase, decrease or remain the...
asked 54 minutes ago -
Based on the range, which of the following sets of scores has
the greatest variability? 3,...
asked 2 hours ago -
Ripples in a pond travel at a velocity of 3 m/s with one peak
passing a...
asked 1 hour ago -
A man stands on the roof of a building of height 13.0 mm and
throws a...
asked 1 hour ago -
The extent to which assets are financed by borrowed funds and
other liabilities is indicated by:...
asked 2 hours ago -
Explain in detail
Germany is the fifth largest economy
explain what goods and services Germany specializes...
asked 3 hours ago -
The density of platinum is 21.45 g/mL. If a cube of platinum
with a mass of...
asked 3 hours ago -
Accounts Receivable
Sales
A/R Posting
Extended Sales Invoice
Packing Slip
Compare invoice to packing slip 2...
asked 3 hours ago -
Michaella, age 23, is a full-time law student and is claimed by
her parents as a...
asked 3 hours ago -
Why are polymers not typically casted into products?
asked 3 hours ago -
When rolling a die 129 times, what is the probability of rolling
a 6 no more...
asked 3 hours ago -
4. A call option currently sells for $7.75. It has a strike
price of $85 and...
asked 3 hours ago