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Total of 7 questions. See attached photos of questions.
Case I: Grant Company acquired 40% of...
Case IV: Franklin Corporation owns 15% of the voting stock of Grantham Company and has been...
Case IV: Franklin Corporation owns 15% of the voting stock of Grantham Company and has been reporting it as an equity investment with no significant influence. At the beginning of the current year, the investment has a fair value of $50,000,000 Franklin originally purchased its 15% interest for $35,000,000. Franklin purchases an additional 10% interest in Grantham's voting stock for $40,000,000 and determines that the equity method is now appropriate. Any basis difference is attributed to goodwill. Grantham reports net...
Potash Corporation acquired the voting stock of Safestyle Company on January 1, 2019 for $50 million....
Potash Corporation acquired the voting stock of Safestyle Company on January 1, 2019 for $50 million. Safestyle’s book value at the time was $10 million, consisting of $2 million of capital stock and $8 million of retained earnings. The $40 million difference between fair and book value was attributed to goodwill. It is now December 31, 2020, the end of the accounting year and two years after the acquisition. Safestyle’s January 1, 2020 retained earnings balance is $11 million. Safestyle...
Larkland Company acquired 30% of the voting stock of Martin Corporation on January 2, 2017 for...
Larkland Company acquired 30% of the voting stock of Martin Corporation on January 2, 2017 for $50 million. The basis difference was attributed to goodwill. During 2017, Martin Corporation reported net income of $5,000,000, other comprehensive income of $150,000, and declared and paid cash dividends of $2,000,000. Larkland uses the equity method to report its investment in Martin. Prepare Larkland’s 2017 journal entries related to its investment in Martin.
Park Corporation acquired the voting stock of Sequoia Company on January 1, 2020 for $25 million...
Park Corporation acquired the voting stock of Sequoia Company on January 1, 2020 for $25 million in cash and stock. At the date of acquisition, Sequoia's book value totaled $3 million, consisting of $1.6 million in capital stock, $1.8 million in retained earnings, and $400,000 in accumulated other comprehensive losses. Sequoia's reported net assets at the date of acquisition were carried at amounts approximating fair value, except its inventory was overvalued by $500,000 (sold in 2020), its plant assets (10-year...
5.) On January 1, 2017, Vancouver Corporation paid $400,000 to purchase 40% of the outstanding voting...
5.) On January 1, 2017, Vancouver Corporation paid $400,000 to purchase 40% of the outstanding voting stock of Montreal Corporation. The equity method is used to account for the investment. The following data relate to this investment. (20 marks) 2017 Dividends received from Montreal Corporation amounted to $20,000. Net income reported by Montreal Corporation was $200,000. Current market value of Montreal Corporation investment on December 31, 2017, was $700,000. 2018 Dividends received from Montreal Corporation amounted to $30,000. Net income...
Answers given. Can you explain why, with formulas. 1) On January 2, 2020, Maddison Company purchased...
Answers given. Can you explain why, with formulas. 1) On January 2, 2020, Maddison Company purchased 35% of the outstanding common stock of Ellinger, Inc. and subsequently used the equity method to account for the investment. During 2020 Ellinger, Inc. reported net income of $400,000 and distributed dividends of $100,000. The ending balance in the Investment in Ellinger, Inc. account at December 31, 2020 was $500,000 after applying the equity method during 2020. What was the purchase price Maddison paid...
On January 1, 2021, American Corporation purchased 30% of the outstanding voting shares of Short Supplies...
On January 1, 2021, American Corporation purchased 30% of the outstanding voting shares of Short Supplies common stock for $267.000 cash. On that date, Short's book value and fair value were both $890,000. The equity method is deemed appropriate for this investment. Short's net income reported on December 31, 2021, was $85,000. During 2021, Short also paid cash dividends in the amount of $26.500. Required: Compute the amount that would be reported for the investment on American Corporation's financial statements...
Potash Corporation acquired the voting stock of Safestyle Company on January 1, 2019 for $50 million....
Potash Corporation acquired the voting stock of Safestyle Company on January 1, 2019 for $50 million. Safestyle's book value at the time was $10 million, consisting of $2 million of capital stock and $8 million of retained earnings. The $40 million difference between fair and book value was attributed to goodwill. It is now December 31, 2020, the end of the accounting year and two years after the acquisition. Safestyle's January 1, 2020 retained earnings balance is $11 million, and...
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...
On December 30, 2020, Sherlock Co. acquired 100% of Barrett Corporation for $750,000 cash. The post-combination,...
On December 30, 2020, Sherlock Co. acquired 100% of Barrett Corporation for $750,000 cash. The post-combination, but pre-consolidation, balance sheets of the two firms showed total assets of $1,500,000 for the parent and $440,000 for the subsidiary. The book values of the subsidiary’s net assets approximated their fair values, and there are no unrecorded net assets. Total assets on the consolidated balance sheet would be: a. $ 750,000 b. $1,190,000 c. $1,940,000 d. $2,690,000 On January 1, 2020, Sarai, Inc....
Case IV: Franklin Corporation owns 15% of the voting stock of Grantham Company and has been reporting it as an equity investment with no significant influence. At the beginning of the current year, the investment has a fair value of $50,000,000 Franklin originally purchased its 15% interest for $35,000,000. Franklin purchases an additional 10% interest in Grantham's voting stock for $40,000,000 and determines that the equity method is now appropriate. Any basis difference is attributed to goodwill. Grantham reports net...
5.) On January 1, 2017, Vancouver Corporation paid $400,000 to purchase 40% of the outstanding voting stock of Montreal Corporation. The equity method is used to account for the investment. The following data relate to this investment. (20 marks) 2017 Dividends received from Montreal Corporation amounted to $20,000. Net income reported by Montreal Corporation was $200,000. Current market value of Montreal Corporation investment on December 31, 2017, was $700,000. 2018 Dividends received from Montreal Corporation amounted to $30,000. Net income...
On January 1, 2021, American Corporation purchased 30% of the outstanding voting shares of Short Supplies common stock for $267.000 cash. On that date, Short's book value and fair value were both $890,000. The equity method is deemed appropriate for this investment. Short's net income reported on December 31, 2021, was $85,000. During 2021, Short also paid cash dividends in the amount of $26.500. Required: Compute the amount that would be reported for the investment on American Corporation's financial statements...
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...
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