ave & ExitSubmitCheck my work7SkippedMcGuire Company acquired 90 percent of Hogan Company on January 1, 2022, for $234,000 cash. This amount is reflective ofHogan's total acquisition-date fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retainedearnings of $80,000. An analysis of Hogan's net assets revealed the following:eBookMcGrawBuildings (10-year life).Equipment (4-year life)Book Value$ 10,000Fair Value14,0005,000$ 8,00018,00012,000LandAny excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.In consolidation at December 31, 2022, what adjustment is necessary for Hogan's Buildings account?Multiple Choice$1,620 increase

Book Value vs. Fair Value: The consolidation process considers the fair value of the subsidiary's…

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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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Premier Inc. acquired a 42% interest in Jungle Vine Inc. (JV) for $86,000 cash on January 1, 2017 when JV had retained earnings of $100,000. On purchase of shares of JV, the acquisition differential schedule relating to Premier's share of JV was: Equipment $10,000 Goodwill $35,000 $45,000 Equipment was expected to last five more years from date of acquisition and is still owned at year end. Goodwill was written down by $5,000 in 2018. In 2019, Premier sold JV land, reporting a gain of $20,000. JV still has the land. In 2019, JV sold Premier inventory for $30,000 reporting a profit of $6,000. $15,000 of the inventory was still held by Premier at the end of 2019 and sold early in 2020. In 2020, JV reported net income of $35,000 and declared and paid total dividends of $15,000. At December 31, 2020, JV had retained earnings of $160,000. Calculate the equity method income related to Jv for 2020 reported by Premier.
Giant Ltd acquired 80 percent share capital of Expert Ltd. On 1 July 2018 for a cost of $1,600,000. Asat the date of acquisition, all assets and liabilities of Expert Ltd were fairly valued except land thathas a carrying value of $150,000 less than the fair value. The recorded balance of equity of Expert Ltd asat 1 July 2018 were as:Share capital $800,000Retained earnings $200,000General Reserve $400,000Total $1,400,000Additional information: The management of Giant Ltd values non-controlling interest at the proportionate share of ExpertLtd identifiable net assets. Expert Ltd has a profit after tax of $200,000 for the year ended 30 June 2019. During the financial year to 30 June 2019, Expert Ltd sold inventory to Giant Ltd for a price of$120,000. The inventory costs Expert Ltd $60,000 to produce. 25 percent of the inventory is stillon the hand of Giant Ltd as of 30 June 2019. During the year Expert Ltd paid $60,000 in consultancy fees to Giant Ltd. On 1 July 2018, Expert Ltd sold…
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View previous attempt On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $295,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $26,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $11,500 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Items Presidio Company $ 63,000 Mason Company $ 29,200 Receivables Inventory Land Buildings (net) 306,000 189,000 426,000 168,000 207,000 213,000 484,000 237,000 Equipment (net) $167,000 73,800 Accounts payable Long-term liabilities Common stock-$1 par value (221,000) (62,700) (444,000) (295,000) (110,000) 0 Common stock-$20 par value 0 (120,000) Additional paid-in capital Retained earnings, 1/1/24 (360,000) (518,000)…

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