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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, 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, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
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,...
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,...
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, 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...
Exercise 17-15 Teal Company has the following securities in its portfolio on December 31, 2017. None...
Exercise 17-15 Teal Company has the following securities in its portfolio on December 31, 2017. None of these investments are accounted for under the equity method. Investments Cost Fair Value 1,500 shares of Gordon, Inc., Common $72,600 $68,600 5,000 shares of Wallace Corp., Common 400 shares of Martin, Inc., Preferred 174,800 169,400 57,300 55,600 $303,000 $295,300 All of the securities were purchased in 2017 In 2018, Teal completed the following securities transactions Sold the 1,500 shares of Gordon, Inc., Common,...
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...
The before-tax income for Riverbed Co. for 2020 was $95,000 and $71,200 for 2021. However, the...
The before-tax income for Riverbed Co. for 2020 was $95,000 and $71,200 for 2021. However, the accountant noted that the following errors had been made: 1. Sales for 2020 included amounts of $41,000 which had been received in cash during 2020, but for which the related products were delivered in 2021 Title did not pass to the purchaser until 2021. 2. The inventory on December 31, 2020, was understated by $8,300. 3. The bookkeeper in recording interest expense for both...
Elton Co. has the following postretirement benefit plan balances on January 1, 2017. Accumulated postretirement benefit...
Elton Co. has the following postretirement benefit plan balances
on January 1, 2017.
Accumulated postretirement benefit obligation
$2,250,000
Fair value of plan assets
2,250,000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2018, the company amends the plan so that prior service
costs of $175,000 are created. Other data related to the plan
are:
2017
2018
Service costs
$75,000
$85,000
Prior service costs amortization
0
12,000
Contributions (funding) to the plan
45,000
35,000
Benefits paid...
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, 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,...
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, 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,...
Exercise 17-15 Teal Company has the following securities in its portfolio on December 31, 2017. None of these investments are accounted for under the equity method. Investments Cost Fair Value 1,500 shares of Gordon, Inc., Common $72,600 $68,600 5,000 shares of Wallace Corp., Common 400 shares of Martin, Inc., Preferred 174,800 169,400 57,300 55,600 $303,000 $295,300 All of the securities were purchased in 2017 In 2018, Teal completed the following securities transactions Sold the 1,500 shares of Gordon, Inc., Common,...
The before-tax income for Riverbed Co. for 2020 was $95,000 and $71,200 for 2021. However, the accountant noted that the following errors had been made: 1. Sales for 2020 included amounts of $41,000 which had been received in cash during 2020, but for which the related products were delivered in 2021 Title did not pass to the purchaser until 2021. 2. The inventory on December 31, 2020, was understated by $8,300. 3. The bookkeeper in recording interest expense for both...
Elton Co. has the following postretirement benefit plan balances
on January 1, 2017.
Accumulated postretirement benefit obligation
$2,250,000
Fair value of plan assets
2,250,000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2018, the company amends the plan so that prior service
costs of $175,000 are created. Other data related to the plan
are:
2017
2018
Service costs
$75,000
$85,000
Prior service costs amortization
0
12,000
Contributions (funding) to the plan
45,000
35,000
Benefits paid...
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