None 101.5/3points awardedScoredBuyCo, Incorporated, holds 25 percent of the outstanding shares of Marqueen Company and appropriately applies the equity methodof accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $10,100 per year. For 2023,Marqueen reported earnings of $105,000 and declares cash dividends of $32,000. During that year, Marqueen acquired inventory for$56,000, which it then sold to BuyCo for $70,000. At the end of 2023, BuyCo continued to hold merchandise with a transfer price of$28,000.a. What Equity in Investee Income should BuyCo report for 2023?b. How will the intra-entity transfer affect BuyCo's reporting in 2024?c. If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change?eBooka. Equity in investee income$16,150Printb. Equity accrual for 2024 will beincreasedby$5,600 xc. If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change?No

Based on the information provided in the image:Problem Breakdown:BuyCo, Inc. holds 25% of Marqueen…

Answered: 10 1.5/3 points awarded Scored BuyCo,…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shares with a market price of P45 per share. The book value of Luna Corp.’s identifiable net assets approximate its fair value, except for the following: • Merchandise inventory’s fair value is lower than the book balance by 150,000. • Equipment-A, with 2 years remaining useful life, costing P300,000 is understated by P50,000. • Land with a fair value of P500,000 is recognized in the books amounting to P350,000. The following events happened to Luna Corp. • Equipment-A was sold in June 30, 2023 for P320,000. • 60% of merchandise inventory were sold in 2022. • There is no movement as to the ordinary shares of Luna Corp during the year. The unadjusted trial balance as of December 31, 2022 were as follows: Lucas Company Luna Corp Cash 2,240,000 1,800,000 Trade Receivables 1,000,000 960,000 Merchandise Inventory…
On January 1, 2022, Lucas Company acquired 85% of outstanding shares of Luna Corp. The consideration transferred includes cash payment of P2,000,000 and issuance of 50,000 shares with a market price of P45 per share. The book value of Luna Corp.’s identifiable net assets approximate its fair value, except for the following: Merchandise inventory’s fair value is lower than the book balance by 150,000. Equipment-A, with 2 years remaining useful life, costing P300,000 is understated by P50,000. Land with a fair value of P500,000 is recognized in the books amounting to P350,000. The following events happened to Luna Corp. Equipment-A was sold in June 30, 2023 for P320,000. 60% of merchandise inventory were sold in There is no movement as to the ordinary shares of Luna Corp during the The unadjusted trial balance as of December 31, 2022 were as follows: Lucas Company Luna Corp Cash 2,240,000 1,800,000 Trade Receivables 1,000,000 960,000 Merchandise…
domestic
BuyCo, Incorporated, holds 21 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,100 per year. For 2023, Marqueen reported earnings of $111,000 and declares cash dividends of $29,000. During that year, Marqueen acquired inventory for $43,000, which it then sold to BuyCo for $86,000. At the end of 2023, BuyCo continued to hold merchandise with a transfer price of $29,000. What Equity in Investee Income should BuyCo report for 2023? How will the intra-entity transfer affect BuyCo’s reporting in 2024? If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change?
On January 2, 2022, S Company acquired 80% of the stocks of L Company for P2,000,000. On this date, L Company had P1,000.000 of Share Capital and P800,000 of Retained Earnings. The carrying values of the identifiable assets and liabilities of L are equal to their fair values. During the year. L ships merchandise to S costing P800.000 at 25% above cost. At the end of the year, records show the following: S Company L Company 120,000 Inv. beg 350,000 Inv. end 400,000 200,000 Sales 5,500,000 2,500,000 3,250,000 1,680,000 650,000 Purchases Operating Exp. Dividends paid 300,000 500,000 350,000 The ending inventory of S includes merchandise from L amounting to P50,000. The reported impairment of goodwill in 2022 is P20,000. The parent opted to measure NCI at fair value. How much is the Consolidated Inventory on December 31, 2022? a.590,000 b.560,000 c.587,500 d.600,000
On January 2, 2022, S Company acquired 80% of the stocks of L Company for P2,000,000. On this date, L Company had P1,000.000 of Share Capital and P800,000 of Retained Earnings. The carrying values of the identifiable assets and liabilities of L are equal to their fair values. During the year. L ships merchandise to S costing P800.000 at 25% above cost. At the end of the year, records show the following: S Company L Company Inv. beg 350,000 120,000 Inv. end 400,000 5,500,000 2,500,000 3,250,000 1,680,000 200,000 Sales Purchases Operating Exp. Dividends paid 650,000 300,000 500,000 350,000 The ending inventory of S includes merchandise from L amounting to P50,000. The reported impairment of goodwill in 2022 is P20,000. The parent opted to measure NCI at fair value. In 2021, S Company sold inventory costing P50,000 to $ Company (90%- owned) for P100,000. By the end of the year, L sold 80% of the inventory. The elimination entries in 2022 would include: a. Credit to Cost of Sales, P100,000…
BuyCo, Inc., holds 21 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,100 per year. For 2020, Marqueen reported earnings of $111,000 and declares cash dividends of $29,000. During that year, Marqueen acquired inventory for $43,000, which it then sold to BuyCo for $86,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $29,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed?
BuyCo, Inc., holds 26 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,600 per year. For 2020, Marqueen reported earnings of $108,000 and declares cash dividends of $25,000. During that year, Marqueen acquired inventory for $56,000, which it then sold to BuyCo for $80,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $37,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo's reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed? (For all requirements, do not round intermediate calculations.) Equity in investee income b. Equity accrual for 2021 will be C. If BuyCo had sold the inventory to Marqueen, would your answers above change? a.
BuyCo, Incorporated, holds 21 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $10,000 per year. For 2023, Marqueen reported earnings of $108,000 and declares cash dividends of $32,000. During that year, Marqueen acquired inventory for $49,000, which it then sold to BuyCo for $70,000. At the end of 2023, BuyCo continued to hold merchandise with a transfer price of $27,000. a. What Equity in Investee Income should BuyCo report for 2023? b. How will the intra-entity transfer affect BuyCo's reporting in 2024? c. If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change? a. Equity in investee income $ 15,050 b. Equity accrual for 2024 will be increased by $ 25,050 c. If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change? No
On 1 July 2019, Brad Ltd acquired all assets and liabilities of Pitt Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $5.20 per share. Costs of issuing these shares amounted to $1,000. Legal cost associated with the acquisition of Pitt Ltd amounted to $1,200.The assets and liabilities of Pitt Ltd at 1 July 2019 were as follows:Carrying Amount ($) Fair Value ($)AssetsCash 2,000 2,000Accounts receivable 10,000 10,000Inventory 64,000 68,000Equipment 320,000 232,000Accumulated depn - Equipment (96,000) -Patents 280,000 280,000LiabilitiesAccounts payable (16,000) (16,000)Debentures (64,000) (64,000)Required:a) Prepare the acquisition analysis at 1 July 2019 for the acquisition of Pitt Ltd by Brad Ltd.b) Prepare the journal entries in the records of Brad Ltd at 1 July 2019.
What amount should be recognized in 2019 Other Comprehensive Income?
BuyCo, Inc., holds 28 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $12,000 per year. For 2020, Marqueen reported earnings of $119,000 and declares cash dividends of $34,000. During that year, Marqueen acquired inventory for $60,000, which it then sold to BuyCo for $75,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $27,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed? Equity in investee income $19,052selected answer incorrect b. Equity accrual for 2021 will be increasedselected answer correct by $2,117selected answer incorrect c. If BuyCo had sold the inventory to Marqueen, would your answers above…

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