(a) Assuming Oriole is using the equity method under ASPE, did the initial investment include a payment for goodwill? Payment for goodwill $
(a) Assuming Oriole is using the equity method under ASPE, did the initial investment include a payment for goodwill? Payment for goodwill $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![On January 1, 2022, Oriole Corp. bought 28,000 shares of the available 100,000 common shares of Iceberg Inc., a publicly traded firm.
This acquisition provided Oriole with significant influence. Oriole paid $722,000 cash for the investment. At the time of the
acquisition, Iceberg reported assets of $2,493,000 and liabilities of $1,192,000. Asset values reflected fair market value, except for
capital assets that had a net book value of $505,000 and a fair market value of $753,000. These assets had a remaining useful life of
five years. For 2022 Iceberg reported net income of $390,000 and paid total cash dividends of $100,000.
On May 16, 2023, Oriole sold 14,000 of its shares in Iceberg for $425,000. Oriole has no immediate plans to sell its remaining
investment in Iceberg.
Iceberg is actively traded, and stock price information follows:
January 1, 2022
$29
December 31, 2022
$31
January 1, 2023
$32
(a)
Assuming Oriole is using the equity method under ASPE. did the initial investment include a payment for goodwill?
Payment for goodwill
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7aeec8f0-a67c-4bba-b961-0592d67d40a1%2Faf893cf0-be14-4aa4-9fd5-999bcac147e7%2Fwep7eoh_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2022, Oriole Corp. bought 28,000 shares of the available 100,000 common shares of Iceberg Inc., a publicly traded firm.
This acquisition provided Oriole with significant influence. Oriole paid $722,000 cash for the investment. At the time of the
acquisition, Iceberg reported assets of $2,493,000 and liabilities of $1,192,000. Asset values reflected fair market value, except for
capital assets that had a net book value of $505,000 and a fair market value of $753,000. These assets had a remaining useful life of
five years. For 2022 Iceberg reported net income of $390,000 and paid total cash dividends of $100,000.
On May 16, 2023, Oriole sold 14,000 of its shares in Iceberg for $425,000. Oriole has no immediate plans to sell its remaining
investment in Iceberg.
Iceberg is actively traded, and stock price information follows:
January 1, 2022
$29
December 31, 2022
$31
January 1, 2023
$32
(a)
Assuming Oriole is using the equity method under ASPE. did the initial investment include a payment for goodwill?
Payment for goodwill
$
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