On January 1, 20X7, Green Corp. paid $1,020,000 to acquire Wax Co. Wax maintained separate incorporation....
On January 1, 20X7, Green Corp. paid $1,020,000 to acquire Wax
Co. Wax maintained separate incorporation.
The following information is available for Wax's assets,
liabilities, and stockholders' equity accounts on January 1,
20X7:
| Amounts are Debits or (Credits) | Book value | Fair value |
| Current assets | 120,000 | 120,000 |
| Land | 72,000 | 192,000 |
| Building (20-year remaining life) | 240,000 | 268,000 |
| Equipment (10-year remaining life) | 540,000 | 540,000 |
| Total assets | 972,000 | |
| Liabilities | (144,000) | (144,000) |
| Common stock (no par) | (602,000) | |
| Retained earnings | (216,000) | |
| Total liabilities and SE | (972,000) |
ASSUME GREEN uses the full equity method to account for it's investment in Wax.
Wax earned net income for 20X7 of $126,000 and paid dividends of
$48,000 during the year.
Green earned income for 20X7 of $400,000 before considering any of
the results or activities of Wax. Green did not pay dividends in
20X7.
A. What will Green report as income from Wax on Green's separate income statement for 20X7? ("Income from Wax" is intended to be a generic title to replace equity in income of investee, dividend income, etc.)
B. What will be reported by the Consolidated group as net income for 20X7?
ASSUME GREEN uses the initial value method to account for its investment in Wax.
Wax earned net income for 20X7 of $126,000 and paid dividends of
$48,000 during the year.
Green earned income for 20X7 of $400,000 before considering any of
the results or activities of Wax. Green did not pay dividends in
20X7.
C. What will Green report as income from Wax on Green's separate income statement for 20X7? ("Income from Wax" is intended to be a generic title to replace equity in income of investee, dividend income, etc.)
D. Answer true or false to this statement: Consolidated net income will be the same amount as if Pale had used the Partial Equity Method.
Homework Answers
A. Green will report $48000 as dividend received and $ 78000 as profits from subsidiary company in it's seperats income statement.
B. Net income reoorted as consolidated group is $ 526000.
C.same as answer in A.
Add Answer to:
On January 1, 20X7, Green Corp. paid $1,020,000 to acquire Wax
Co. Wax maintained separate incorporation....
On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation....
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