The following information applies to the following 3 Questions: On January 1, 2020, Coldspring Corp. paid...
The following information applies to the following 3 Questions:
On January 1, 2020, Coldspring Corp. paid $770,000 to acquire Whitt Co. Coldspring used the equity method to account for the investment. The following information is available for the assets, liabilities, and stockholders' equity accounts of Whitt:
|
Book Value |
Fair Value |
|
|
Current assets |
$95,000 |
$95,000 |
|
Land |
95,000 |
120,000 |
|
Building (twenty year life) |
255,000 |
310,000 |
|
Equipment (five year life) |
185,000 |
190,000 |
|
Current liabilities |
40,000 |
40,000 |
|
Long-term liabilities |
65,000 |
65,000 |
|
Common stock |
140,000 |
|
|
Additional paid-in capital |
300,000 |
|
|
Retained earnings |
210,000 |
Whitt earned net income for 2020 of $125,000 and paid dividends of $18,000 during the year.
11. What is the AAP amortization expense for 2020?
a. $3,750 Debit
b. $1,750 Debit
c. $3,750 Credit
d. $1,750 Credit
12. For 2020, what is the balance in Equity Income on Coldspring’s books?
a. $121,250
b. $125,000
c. $128,750
d. $143,000
13. What is the balance in Equity Investment at the end of 2020?
a. $873,250
b. $877,000
c. $891,250
d. $895,000
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On January 1, 2020, Coldspring Corp. paid...
On January 1, 2020, Coldspring Corp. paid $770,000 to acquire Whitt Co. Coldspring used the equity...
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