At the beginning of the current year, Big Company purchased 25% of the outstanding ordinary shares of Small company paying P5,000,000. On this date, the carrying amount of the net assets of Small equaled to P16,000,000. The difference was attributed to an excess of fair value over carrying amount of an equipment amounting to P3,000,000. The equipment has a remaining useful life of five years. In addition, Small's inventory had a carrying amount of P3,400,000 but was determined to have a fair value of P4,400,000. 75% of the inventory was sold during the year. At the end of the current year, Small company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What is the carrying amount of the investment at the end of the year?

At the beginning of the current year, Big Company purchased 25% of the outstanding ordinary shares of Small company paying P5,000,000. On this date, the carrying amount of the net assets of Small equaled to P16,000,000. The difference was attributed to an excess of fair value over carrying amount of an equipment amounting to P3,000,000. The equipment has a remaining useful life of five years. In addition, Small's inventory had a carrying amount of P3,400,000 but was determined to have a fair value of P4,400,000. 75% of the inventory was sold during the year. At the end of the current year, Small company, reported net income of P1,600,000 and paid cash dividends of P1,000,000. What is the carrying amount of the investment at the end of the year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Prime Corp acquired 90% of the outstanding ordinary share of Bee Company. On March 31, 2030, Prime sold equipment to Bee Company costing P150,000, with accumulated depreciation of P30,000 for P100,000. The remaining useful life of the equipment is four years. On September 30, 2030, Bee sold machinery with carrying amount of P200,000 for P240,000. The remaining useful life of the machine is five years. On December 31, 2030, Prime and Bee reported net income from their own operation amounting to P1,000,000 and P600,000, respectively. Bee also paid dividend of P200,000. What is the amount of non-controlling interest in net income for 2030? What is the amount of consolidated net income attributable to parent for 2030? What is the amount of Investment income under equity method for 2030?
Jacob Corporation paid $536,200 for a 30% share of Gardner Enterprises on January 1 of the current year. Gardner reported net assets at a book value of $1,414,000 on the date of acquisition. On the date of acquisition, it was determined that Gardner’s plant assets were undervalued by $118,000. Gardner’s plant assets have a 10-year remaining life and are depreciated by the straight-line method with no residual value. Gardner reported net income of $224,000 and declared and paid cash dividends of $182,000 during the current year. Finally, Gardner’s common shares are valued at $1,737,667 at the end of the current year.
On 3 January 20X4, Windsor Company purchased 10% of the shares of Brampton for $608,000 cash. Windsor will use the equity method. On this date, Brampton has $1,980,000 of assets, $1,584,000 of liabilities, and $396,000 of equity. Book values reflect fair values except for $895,000 of equipment, which has a five-year life and a fair value of $1,118,750. In 20X4, Brampton pays $35,400 of total dividends and reports earnings of $118,000. Required: 1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value. 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3. At the end of 20X4, what is the balance in the investment account?
Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the excess of Jared's cost over its proportionate share of Shaun's book value was assigned to goodwill. REQUIRED: 5. How much is the net investment income each year? 6. On December 31, 20x2, what is the investment in Shaun Company balance (equity method) in Jared's financial records? Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the…
On 1/1/19, Major Company purchased 10% of Minor Company's common stock for $100,000. Minor's book value of equity at that date consisted of $200,000 common stock and $450,000 retained earnings. On 1/1/19, the difference between the fair value and book value of equity of Minor's stock is attributable to land for $100,000 and the remaining difference is attributable to equipment. The equipment has a 10 year remaining life at 1/1/19. During 2019, Minor reported income of $150,000 and paid dividends of $50,000. The fair value of Major’s investment in Minor stock on 12/31/19 is $125,000. Assuming that Major is investing in Minor because it has excess cash and thinks Minor stock price prospects are good, answer the following questions (use the $XXX,XXX) format. The investment will be sold within a month after year-end. Round to the nearest dollar. The total asset amount related to the Investment in Minor on Major’s 12/31/2019 balance sheet is ________ The Minor investment increased…
On 3 January 20X4, Windsor Company purchased 20% of the shares of Brampton for $572,000 cash. Windsor will use the equity method. On this date, Brampton has $1,870,000 of assets, $1,496,000 of liabilities, and $374,000 of equity. Book values reflect fair values except for $840,000 of equipment, which has a five-year life and a fair value of $1,050,000. In 20X4, Brampton pays $28,200 of total dividends and reports earnings of $94,000. Required: 1. Calculate goodwill on acquisition, and the annual extra depreciation on investee equipment at fair value. Goodwill Additional depreciation 2. Prepare 20X4 journal entries for Windsor Company. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 $ 497,200 $ 42,000 2 Record the investment made in Brampton Corp. Transaction Note: Enter debits before credits. General Journal Debit Credit >
As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Incorporated's 430,000 shares for $510,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal. During the year, AMC earned net income of $280,000 and distributed cash dividends of 15 cents per share. At year-end, the fair value of the shares is $538,000. Required: 1. Assume no significant influence was acquired. Prepare the appropriate journal entries from the purchase through the end of the year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 2 3 4 Record the purchase of AMC Supplies shares for $510,000 as a long-term investment. Note: Enter debits before credits. Transactions General Journal Debit Credit
On January 1, 20X9, Ute Company acquired 70 percent of Cougar Company's common shares at the underlying book value. Ute paid $70,000 for the 70% ownership. Ute uses the equity method in accounting for its ownership of Standard. During the year, Ute sold $200K inventory to Cougar. Ute’s original price on the inventory was $150K. At the end of the year Cougar had $30K in ending inventory. Prepare all the equity and eliminating entries needed as of December 31, 20X9, and complete the attached consolidated worksheet (Please fill out the cells with bolded question marks within the consolidated worksheet as well, if you can not find some of the values to replace the question marks, that is ok, but indicate which specific cell you are answering for the ones you do know, thank you).
Ryan Ltd holds a 75% interest in Tully Ltd. On 30 June 2021 Tully Ltd transferred a depreciable non-current asset to Ryan Ltd at a profit of $15 000. Ryan Ltd determined that the remaining useful life of the asset at the date of transfer to Ryan Ltd was 5 years and the tax rate is 30%. The impact of the above transaction on the NCI share of profit at 30 June 2021 is: a. a decrease of $2 625 b. an increase of $3 750 c. an increase of $2 100 d. a decrease of $3 225 e. None of the above Please dont provide answer in image format thannk you
Pit Coporation owns 75% of Stop Company's outstanding common stock. On 01/01/21, Pit sold sold a used piece of equipment to Stop in exchange for $236,000 cash. Pit's original cost of the equipment was $728,000 and accumulated depreciaiton of 01/01/21 was $447,000. The remaining useful life of the equipment is 10 years, and Stop will use that same usefull life. Both companies use the straight line method of depreciation. Pit's Journal Entries would include:
On January 1, Year 1, Big Corporation acquired 40% interest in Small Company for $300,000. At the date of acquisition, Small Company's equity (net assets) had a book value of $550,000 and a fair value of $600,000. The difference between the book value and the fair value relates to equipment being depreciated over the remaining useful life of 10 years. During Year 1, Small Company had net income of $900,000 and paid a $40,000 dividend. Required: 3. Record the journal entry to depreciate the fair value difference 4. Determine the investment-related amounts to be reported at year-end on Big Corporation's balance sheet
Acker Company bought 100% of Howell Company on 1/1/X1 for $1,440,000 and began applying the equity method. The book value of Howell's equity on that date was $1,440,000. In year X1, Howell reported net income of $100,000 and paid $40,000 in dividends. During year X1, Howell sold 1,000 units of inventory to Acker for $20,000 that had cost $10,000. On 12/31/X1, 400 of the units remained in Acker's inventory. How much investment income should Acker report in year X1