Accounting Quake Corporation paid $1,680,000 for a 30% interest in Tremor Corporation's outstanding voting stock on January 1, 2011. The book values and fair values of Tremor's assets and liabilities on January 1, along with additional information, are as follows (in thousands): Book Value Fair Value Cash $ 400 $ 400 Accounts receivable-net 700 700 Inventories (sold in 2011) 1,000 1,200 Other current assets 200 200 Land 900 1,700 Building-net (10-years remaining life) 1,500 2,000 Equipment-net (7-years remaining life) 1,200 500 Total Assets $5,900 $6700 Accounts Payable $ 800 $ 800 Other current liabilities 200 200 Long term notes payable (due January 1, 2016) 1,000 1,100 Capital stock, $10 par 3,000 Retained earnings 900 Total $5,900 Tremor Corporation reported net income of $1,200,000 for 2011 and paid cash dividend of $600,000. Required: 3. Determine the balance of Quake's Investment in Tremor account at December 31, 2011. 4. Reconcile the investment balance (answer to question 3) to the invest net assets and unamortized excess as of December 31,2011

Accounting Quake Corporation paid $1,680,000 for a 30% interest in Tremor Corporation's outstanding voting stock on January 1, 2011. The book values and fair values of Tremor's assets and liabilities on January 1, along with additional information, are as follows (in thousands): Book Value Fair Value Cash $ 400 $ 400 Accounts receivable-net 700 700 Inventories (sold in 2011) 1,000 1,200 Other current assets 200 200 Land 900 1,700 Building-net (10-years remaining life) 1,500 2,000 Equipment-net (7-years remaining life) 1,200 500 Total Assets $5,900 $6700 Accounts Payable $ 800 $ 800 Other current liabilities 200 200 Long term notes payable (due January 1, 2016) 1,000 1,100 Capital stock, $10 par 3,000 Retained earnings 900 Total $5,900 Tremor Corporation reported net income of $1,200,000 for 2011 and paid cash dividend of $600,000. Required: 3. Determine the balance of Quake's Investment in Tremor account at December 31, 2011. 4. Reconcile the investment balance (answer to question 3) to the invest net assets and unamortized excess as of December 31,2011

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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