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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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)
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3a4ddae5-baca-4b71-8862-232bf1c53e30%2F07d9fbaf-ba31-42f1-932b-02cfa59ad233%2Fl8gt4cj_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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)
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
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