ZuoTi.Pro
Question

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 second. During 2018, Flash reported net income of $280,000 and paid dividends of $50,000. Based on the above information: (a) To account for the change to equity method, prepare a journal entry for Comet in the beginning of 2018 to adjust the investment in Flash (Date is omitted). Account Title Debit (b) Compute the amount of equity income that Comet should report for 2018 Answer (c) Compute the balance of Investment in Flash account at the end of 2018 Answer

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
Comet, Inc. acquires 15% of Flash Co. on January 1, 2017 for $147,000 when the book...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Arm, Inc. acquired 15% of Waist Corporation on January 1, 2017, for $410,000 when the book value of Waist’s net assets w...

    Arm, Inc. acquired 15% of Waist Corporation on January 1, 2017, for $410,000 when the book value of Waist’s net assets was $1,050,000. During 2017, Waist reported net income of $230,000 and paid dividends of $90,000. On January 1, 2017, Arm purchased an additional 25% of Waist for $510,000. Any excess of cost over book value was attributable to goodwill (No amortization). On that same date, Arm changed to the equity method. During 2018, Waist reported net income of $480,000...

  • Boardman, Inc. acquires 40% of the outstanding voting shares of Simon, Inc. on January 1, 2017,...

    Boardman, Inc. acquires 40% of the outstanding voting shares of Simon, Inc. on January 1, 2017, for $380,000, which gives Boardman the ability to significantly influence Simon. Simon has a net book value of $900,000 on January 1, 2017. Simon’s asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Boardman’s excess cost over book value in its 40% purchase. The copyright had a remaining life of 10 years on...

  • Harper,  Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017,...

    Harper,  Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $248,800 in cash. The book value of Kinman's net assets on that date was $430,000, although one of the company's buildings, with a $74,800 carrying amount, was actually worth $125,300. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $141,500. Kinman sold inventory with an original cost of $102,900 to Harper...

  • 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...

  • Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1,...

    Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $320,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $828,000 at January 1, 2017. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16...

  • 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...

  • 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...

  • Fill in the blank: Jackson Company acquires 75% of Browne Company for $600,000 on January 1,...

    Fill in the blank: Jackson Company acquires 75% of Browne Company for $600,000 on January 1, 2019. Browne reported common stock of $350,000 and retained earnings of $250,000 on that date. Equipment was undervalued by $20,000 and buildings were undervalued by $60,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.  Browne had net income of $200,000 and paid...

  • Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1,...

    Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $320,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $784,000 at January 1, 2017. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16...

  • Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1,...

    Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $228,600 in cash. The book value of Kinman's net assets on that date was $445,000, although one of the company's buildings, with a $71,000 carrying amount, was actually worth $112,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $85,500. Kinman sold inventory with an original cost of $98,700 to...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT