Homework Answers
Calculation
| Common stock | 100,000 | ||
| Additional paid in capital | 100,000 | ||
| Retained earnings at end of Year 2017 | 300,000 | ||
| Less: increase in retained earnings (75000-25000) | 50,000 | ||
| Retained earnings at beginning of Year 2017 | 250,000 | ||
| Book value of investee company | 450,000 | ||
| Add: Tangible assets, fair value higher than book value | 112,500 | ||
| Add: Allocated to goodwill | 218,750 | ||
| Costs of investment acquired = Investment value at beginning of Year 2017 | 781,250 |
Answer 22
| Year 2017 | Year 2018 | Year 2019 | |
| Investment value at beginning of Year | 781,250 | 812,500 | 838,750 |
| Add: Net income of investee | 75,000 | 80,000 | 95,000 |
| Less: Dividend received | (25,000) | (35,000) | (40,000) |
| Less: Depreciation on undervalued tangible assets (112500/6) | (18,750) | (18,750) | (18,750) |
| Investment value at end of Year | 812,500 | 838,750 | 875,000 |
| Investment value at end of Year 2019 (Correct Option = B) | 875,000 |
Answer 23
| Year 2019 | |||
| Net income of investee | 95,000 | ||
| Less: Depreciation on undervalued tangible assets (112500/6) | (18,750) | ||
| Income from investee company for the year ended 2019 (Correct Option = C) | 76,250 |
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(At December 31) 2019 2018 2017 Current assets Tangible fixed assets Intangible assets. Total assets.... $285,000...
Question 18-20 are based off this sane chart 2019 2018 2017 (At December 31) Current assets...
Question 18-20 are based off this sane chart
2019 2018 2017 (At December 31) Current assets Tangible fixed assets Intangible assets. Total assets.. $285,000 662,500 40.000 $987,500 $277.500 575,000 45,000 $897.500 $207.000 563.000 50,000 $320,000 Current liabilities Noncurrent liabilities Common stock Additional pald-in capital Retained earnings Stockholders' equity Total liabilities and equity $120,000 266,250 100,000 100,000 400,000 600,000 $110,000 242,500 100,000 100.000 345,000 545,000 $897500 $100,000 220,000 100,000 100,000 300,000 500,000 $820,000 $986250 2012 2018 (For the years ended December...
Review of pre-consolidation equity method (controlling investment in affiliate, fair value equals book value) Assume an...
Review of pre-consolidation equity method (controlling investment in affiliate, fair value equals book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $100,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained...
Assume an investee has the following financial statement information for the three years ending December 31,...
Assume an investee has the following financial statement information for the three years ending December 31, 2013: (At December 31) 2011 2012 2013 Current assets $103,500 $138,850 $142,735 Tangible fixed assets 281,500 287,150 330,865 Intangible assets 25,000 22,500 20,000 Total assets $410,000 $448,500 $493,500 Current liabilities $50,000 $55,000 $60,500 Noncurrent liabilities 110,000 121,000 133, 100 Common stock 50,000 50,000 50,000 Additional paid-in capital 50,000 50,000 50,000 Retained earnings 150,000 172,500 200,000 Total liabilities and equity $410,000 $448,500 $493,500 (At December...
Assume an investee has the following financial statement information for the three years ending December 31,...
Assume an investee has the following financial statement information for the three years ending December 31, 2013: (At December 31) 2011 2012 2013 Current assets $ 103,500 $138,850 $142,735 Tangible fixed assets 281,500 287,150 330,865 Intangible assets 25,000 22,500 20,000 Total assets $410,000 $448,500 $493,500 Current liabilities $50,000 $55,000 $60,500 Noncurrent liabilities 110,000 121,000 133,100 Common stock 50,000 50,000 50,000 Additional paid-in capital 50.000 50.000 50,000 Retained earnings 150,000 172,500 200,000 Total liabilities and equity $410,000 $448,500 $493,500 (At December...
Use the following facts for Multiple Choice problems 38 and 39: Assume on January 1, 2019,...
Use the following facts for Multiple Choice problems 38 and 39: Assume on January 1, 2019, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information is for the investor company and the investee company on January 1, 2019, prepared immediately before this transaction. Book Values Investor Investee Receivables & inventories Land.. Property & equipment, net Total assets. $ 100,000 200,000 225,000 $ 525,000 $ 50.000 +10 80,000 - 5...
Question 7 Not yet answered Marked out of 1.00 P Flag question Review of Investment accounting...
Question 7 Not yet answered Marked out of 1.00 P Flag question Review of Investment accounting (noncontrolling Investment in affiliate) Assume an investor company purchased a controlling financial interest in 100% of the outstanding voting common stock of an investee. Which of the following statements is false about the investor's pre-consolidation bookkeeping and/or the post-consolidation financial reporting in the investor's published financial statements? (Ignore any potential effects of intercompany transactions between the investor and the investee) Oin its published financial...
Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common...
Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor Investee Receivables & inventaries $150,000 $75,000 Land 300,000 150,000 Property & equipment 337,500 150,000 Total assets $787,500 $375,000 Liabilities $225,000 $120,000 Common stock ($2 par) 30,000 15,000 Additional paid-in capital 420,000 225,000 Retained...
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Tax effects of business combinations (taxable, market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company in exchange for $300,000. The transaction is a taxable asset acquisition under the Internal Revenue Code. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Current assets Noncurrent assets Total assets Liabilities Common...
Tax effects of business combinations (nontaxable, market value differs from book value) Assume that on January...
Tax effects of business combinations (nontaxable, market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company in exchange for $225,000 worth of investor company common stock. The transaction is a tax-free reorganization under the Internal Revenue Code. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor...
L01 45. Effects of qualifying as a business on asset acquisitions Assume on January 1, 2019...
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Question 18-20 are based off this sane chart
2019 2018 2017 (At December 31) Current assets Tangible fixed assets Intangible assets. Total assets.. $285,000 662,500 40.000 $987,500 $277.500 575,000 45,000 $897.500 $207.000 563.000 50,000 $320,000 Current liabilities Noncurrent liabilities Common stock Additional pald-in capital Retained earnings Stockholders' equity Total liabilities and equity $120,000 266,250 100,000 100,000 400,000 600,000 $110,000 242,500 100,000 100.000 345,000 545,000 $897500 $100,000 220,000 100,000 100,000 300,000 500,000 $820,000 $986250 2012 2018 (For the years ended December...
Review of pre-consolidation equity method (controlling investment in affiliate, fair value equals book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $100,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained...
Assume an investee has the following financial statement information for the three years ending December 31, 2013: (At December 31) 2011 2012 2013 Current assets $103,500 $138,850 $142,735 Tangible fixed assets 281,500 287,150 330,865 Intangible assets 25,000 22,500 20,000 Total assets $410,000 $448,500 $493,500 Current liabilities $50,000 $55,000 $60,500 Noncurrent liabilities 110,000 121,000 133, 100 Common stock 50,000 50,000 50,000 Additional paid-in capital 50,000 50,000 50,000 Retained earnings 150,000 172,500 200,000 Total liabilities and equity $410,000 $448,500 $493,500 (At December...
Assume an investee has the following financial statement information for the three years ending December 31, 2013: (At December 31) 2011 2012 2013 Current assets $ 103,500 $138,850 $142,735 Tangible fixed assets 281,500 287,150 330,865 Intangible assets 25,000 22,500 20,000 Total assets $410,000 $448,500 $493,500 Current liabilities $50,000 $55,000 $60,500 Noncurrent liabilities 110,000 121,000 133,100 Common stock 50,000 50,000 50,000 Additional paid-in capital 50.000 50.000 50,000 Retained earnings 150,000 172,500 200,000 Total liabilities and equity $410,000 $448,500 $493,500 (At December...
Use the following facts for Multiple Choice problems 38 and 39: Assume on January 1, 2019, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information is for the investor company and the investee company on January 1, 2019, prepared immediately before this transaction. Book Values Investor Investee Receivables & inventories Land.. Property & equipment, net Total assets. $ 100,000 200,000 225,000 $ 525,000 $ 50.000 +10 80,000 - 5...
Question 7 Not yet answered Marked out of 1.00 P Flag question Review of Investment accounting (noncontrolling Investment in affiliate) Assume an investor company purchased a controlling financial interest in 100% of the outstanding voting common stock of an investee. Which of the following statements is false about the investor's pre-consolidation bookkeeping and/or the post-consolidation financial reporting in the investor's published financial statements? (Ignore any potential effects of intercompany transactions between the investor and the investee) Oin its published financial...
Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor Investee Receivables & inventaries $150,000 $75,000 Land 300,000 150,000 Property & equipment 337,500 150,000 Total assets $787,500 $375,000 Liabilities $225,000 $120,000 Common stock ($2 par) 30,000 15,000 Additional paid-in capital 420,000 225,000 Retained...
Tax effects of business combinations (taxable, market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company in exchange for $300,000. The transaction is a taxable asset acquisition under the Internal Revenue Code. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Current assets Noncurrent assets Total assets Liabilities Common...
Tax effects of business combinations (nontaxable, market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company in exchange for $225,000 worth of investor company common stock. The transaction is a tax-free reorganization under the Internal Revenue Code. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor...
L01 45. Effects of qualifying as a business on asset acquisitions Assume on January 1, 2019 an investor company paid $2,250 to an investee company in exchange for the following assets and liabilities transferred from the investee company: Investee's Estimated Fair Value Asset (Liability) Value Production equipment. ... Factory ........ Land Patents. $ 300 1,500 100 0 $ 240 1,200 600 360 fair value of $200 and arty. The contingen erivative financial before the exchange Introduction to Business Combinations and...
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