Homework Answers
Answer :
(1)
| Acquisition cost | $25,000 | |
| Book value of stage 4 | $(5,000) | |
| Excess of acquisition cost over book value | $20,000 | |
| Revaluations | ||
| Land | $(400) | |
| Buildings | $(1,000) | |
| Identifiable intangibles | $4,000 | |
| Long - Term debt | $200 | $2,800 |
| Goodwill | $17,200 |
| (2) | |
| Stage 4's reported net income | $600 |
| Revaluation write - offs | |
| Buildings $(1000)/20 | $50 |
| Long term debt $200/10 | $(20) |
| Goodwill impairment loss | $(60) |
| Equity in net income of stage 4 | $570 |
| (3) | |
| Investment in stage 4,1/1/13 | $25,000 |
| Stage 4's reported income 2013-2020 | $10,000 |
| Stage 4's reported dividends 2013 -2020 | $(3,000) |
| Revaluation write offs 2013 -2020 | |
| Buildings $[1000)/20]*8 | $ 400 |
| Identifiable intangibles (full balance) | $(4,000) |
| Long term debt $[200/10]*8 | $(160) |
| Goodwill impairment loss | $(300) |
| Investment in stage 4, 1/1/21 | $27,940 |
| Equity in net income 2021 | $570 |
| Stage 4's dividends 2021 | $(100) |
| Investment in stage 4 12/31/21 | $28,410 |
| entry C | ||
| Equity in net income of stage 4 | $570 | |
| Dividends - Stage 4 | $100 | |
| Investment in Stage 4 | $470 | |
| Entry E | ||
| Stockholders' equity - stage 4,1/1 | 12,000 | |
| Investment in stage 4 | 12,000 | |
| Stockholders equity January 1,2017 = $5,000+$10,000-$3,000 =$12,000 | ||
| Entry R | ||
| Long term debt | 40 | |
| Goodwill | 16,900 | |
| Buildings net | 600 | |
| Investment in stage 4 | 15,940 | |
| Land | 400 | |
| Entry O | ||
| Interest expense | $20 | |
| Buildings, net | $50 | |
| Goodwill impairment loss | $60 | |
| Long term debt | $20 | |
| Depreciation expense | $50 | |
| Goodwill | $60 | |
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