None 1: ABC Inc. paid $500,000 for 25% of the voting common stock of DEF Inc. on 01/01/2026. DEFInc. had net assets with a book value and fair value of $1,800,000 on 01/01/2026. DEF Inc. incurreda net loss of $60,000 and paid dividends of $100,000 during 2026. Any excess cost over bookvalue is attributable to goodwill with an indefinite life.Required:a. Prepare a schedule to show the amount of goodwill from ABC Inc.'s investment in Jones.b. Prepare a schedule to show the balance in ABC Inc.'s investment account on 12/31/26.

a. Calculation of GoodwillABC Inc. acquired 25% of DEF Inc. for $500,000. To calculate goodwill, we…

Answered: 1: ABC Inc. paid $500,000 for 25% of…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

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Problem 35P

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On July 1, 2023, Jerry Corporation acquired 25% of the shares of Von, Inc. for P1,000,000. At that date, the equity of Von was P4,000,000, with all the identifiable assets and liabilities being measured at amounts equal to fair value. The table below shows the profits and losses made by Von during 2003 to 2007: Year Profit (Loss)2023 P200,0002024 (2,000,000)2025 (2,500,000)2026 160,0002027 300,000 1. The carrying amount of the investment in Von, Inc. as of December 31,2024 is2. The amount to be recognized in 2025 profit or loss related to the investment in Von, Inc. is3. The amount to be recognized in 2026 profit or loss related to the investment in Von, Inc. is4. The amount to be recognized in 2027 profit or loss related to the investment in Von, Inc. is5. The amount of the investment in Von, Inc. as of December 31,2027 is6. Prepare all journal entries from 2023 to 2027
Sheffield Corp.has income from continuing operations of $220,000 for the year ended December 31, 2022. It also has the following items (before considering income taxes). 1. 2 An unrealized loss of $50,300 on available-for-sale securities. A gain of $37.500 on the discontinuance of a division (comprised of a $9.400 loss from operations and a $46,900 gain on disposal). Assume all items are subject to income taxes at a 15% tax rate. D SUPP
Soprano Co. purchased a 90% interest in the Tenor Co. on January 1, 2020 for P600,000. Any excess of cost is attributed to goodwill. The equity balances of Tenor are as follows: 1/1/2020 12/31/2023 Common stock, P10 par 100,000 120,000 Paid in excess of par 200,000 260,000 Retained earnings 250,000 400,000 The only change in paid in capital is a result of a 20% stock dividend paid in 2022. The cost of equity conversion to bring the investment account to its December 31, 2023 balance is? ○ 135,000 ○ 114,000 ○ 207,000 ○ 162,000
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A Co. acquired 60% of the outstanding shares of B Co. on January 2, 2021. A Co. acquired it at book value which is the same as its fair value at the date of acquisition. Income Statement of A Co. and B Co. for 2022 are as follows: A Co. B Co.Net Sales P1,093,750 P437,500Cost of Sales 656,250 262,500Gross Profit 437,500 175,000Operating Expenses 131,250 65,625Operating Income 306,250 109,375Dividend Income 70,000 0Net Income P 376,250 P109,375 B Co. made sales to A Co. of P140,000 in 2021 and P210,000 in 2022. A Co. reported inventory on December 31, 2021 amounting to P87,500 of which 20% comes from B Co. and inventory on December 31, 2022 amounting to P105,000 of which 30%…
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Swifty Corporation has income from continuing operations of $319,000 for the year ended December 31, 2022. It also has the following items (before considering income taxes). 1. An unrealized loss of $58,800 on available-for-sale securities. 2. A gain of $25,300 on the discontinuance of a division (comprised of a $8,200 loss from operations and a $33,500 gain on disposal). Assume all items are subject to income taxes at a 20% tax rate.Prepare a partial income statement, beginning with income from continuing operations, and a statement of comprehensive income. SWIFTY CORPORATIONPartial Income Statementchoose the accounting period select an income statement item $enter a dollar amount select an income statement item select an income statement item…
On January 2, 2019, U Co. purchased 75% of the outstanding shares of N Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of N Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, U and N reported net income of P350,000 and P200,000 each respectively. U’s beginning inventory included merchandise purchased from N Company amounting to P39,000 which was sold to them by N at a 30% markup, 80% of these goods were sold during the year. N, on the other hand, included inventory items which they purchased from U Co. amounting to 18,000. These goods were sold by U at a 25% markup. 90% of these goods were sold by N for the year. Determine the consolidated net income for 2020. compute for the total realized gross profit (from upstream and downstream sales)
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Matrix, Inc., acquired 25% of Neo Enterprises for $2,000,000 on January 1,2021. The fair value and book value of 25% of Neo's identifiable net assets was$2,000,000 and $1,600,000 on that date, and the difference was attributable toassets that would be depreciated over 10 years. During 2021 Neo recognized netincome of $500,000 and paid dividends of $400,000. Neo had a total fair value of$10,000,000 as of December 31, 2021.Required:Prepare the journal entries necessary to account for the Neo investment, assuming thatMatrix accounts for that investment as an equity method investment.2. Prepare the journal entries necessary to account for the Neo investment, assuming thatMatrix elects the fair-value option.

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