Bassett Inc. acquired all of the outstanding common stock of Brinkman Corp. on January 1, 2019, for $422,000. Equipment with a ten-year life was undervalued on Brinkman's financial records by $48,000. Brinkman also owned an unrecorded customer list with an assessed fair value of $71,000 and an estimated remaining life of five years. Brinkman earned reported net income of $185,000 in 2019 and $226,000 in 2020. Dividends of $75,000 were paid in each of these two years. Selected account balances as of December 31, 2021, for the two companies follow. Revenues Expenses Investment income Retained earnings, 1/1/21 Dividends paid Bassett Brinkman Multiple Choice $806,000. $863,000. $920,000. $811,000. $1,036,000. $ 1,120,000 $ 860,000 600,000 500,000 Not given 850,000 132,000 0 650,000 80,000 If the equity method had been applied, what would be the Investment in Brinkman Corp. account balance within the records of Bassett at the end of 2021?

Bassett Inc. acquired all of the outstanding common stock of Brinkman Corp. on January 1, 2019, for $422,000. Equipment with a ten-year life was undervalued on Brinkman's financial records by $48,000. Brinkman also owned an unrecorded customer list with an assessed fair value of $71,000 and an estimated remaining life of five years. Brinkman earned reported net income of $185,000 in 2019 and $226,000 in 2020. Dividends of $75,000 were paid in each of these two years. Selected account balances as of December 31, 2021, for the two companies follow. Revenues Expenses Investment income Retained earnings, 1/1/21 Dividends paid Bassett Brinkman Multiple Choice $806,000. $863,000. $920,000. $811,000. $1,036,000. $ 1,120,000 $ 860,000 600,000 500,000 Not given 850,000 132,000 0 650,000 80,000 If the equity method had been applied, what would be the Investment in Brinkman Corp. account balance within the records of Bassett at the end of 2021?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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Bassett Inc. acquired all of the outstanding common stock of Brinkman Corp. on January 1, 2019, for $422,000. Equipment with a ten-year life was undervalued on Brinkman's financial records by $48,000. Brinkman also owned an unrecorded customer list with an assessed fair value of $71,000 and an estimated remaining life of five years. Brinkman earned reported net income of $185,000 in 2019 and $226,000 in 2020. Dividends of $75,000 were paid in each of these two years. Selected account balances as of December 31, 2021, for the two companies follow. Revenues Expenses Investment income Retained earnings, 1/1/21 Dividends paid Multiple Choice $806,000. $811,000. If the equity method had been applied, what would be the Investment in Brinkman Corp. account balance within the records of Bassett at the end of 2021? $863,000. $920,000. Bassett $1,120,000 $1,036,000. 500,000 Not given 850,000 132,000 Brinkman $860,000 600,000 Ø 650,000 80,000
Foxx Corporation acquired all of Greenburg Company’s outstanding stock on January 1, 2019, for $662,000 cash. Greenburg’s accounting records showed net assets on that date of $490,000, although equipment with a 10-year remaining life was undervalued on the records by $99,500. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2019 of $106,000 and $133,000 in 2020. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Foxx Greenburg Revenues $ (912,000 ) $ (764,000 ) Cost of goods sold 114,000 191,000 Depreciation expense 370,000 406,000 Investment income (20,000 ) 0 Net income $ (448,000 ) $ (167,000 ) Retained earnings, 1/1/21 $ (1,204,000 ) $ (389,000 ) Net income (448,000 ) (167,000 ) Dividends declared 120,000 20,000 Retained…
Foxx Corporation acquired all of Greenburg Company’s outstanding stock on January 1, 2019, for $858,000 cash. Greenburg’s accounting records showed net assets on that date of $717,000, although equipment with a 10-year remaining life was undervalued on the records by $60,000. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2019 of $113,000 and $148,500 in 2020. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Foxx Greenburg Revenues $ (828,000 ) $ (968,000 ) Cost of goods sold 103,500 242,000 Depreciation expense 424,000 358,000 Investment income (20,000 ) 0 Net income $ (320,500 ) $ (368,000 ) Retained earnings, 1/1/21 $ (1,234,000 ) $ (638,500 ) Net income (320,500 ) (368,000 ) Dividends declared 120,000 20,000 Retained…
Foxx Corporation acquired all of Greenburg Company’s outstanding stock on January 1, 2019, for $640,000 cash. Greenburg’s accounting records showed net assets on that date of $465,000, although equipment with a 10-year remaining life was undervalued on the records by $86,500. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2019 of $130,500 and $126,000 in 2020. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Foxx Greenburg Revenues $ (948,000 ) $ (764,000 ) Cost of goods sold 118,500 191,000 Depreciation expense 312,000 443,000 Investment income (20,000 ) 0 Net income $ (537,500 ) $ (130,000 ) Retained earnings, 1/1/21 $ (1,198,000 ) $ (381,500 ) Net income (537,500 ) (130,000 ) Dividends declared 120,000 20,000 Retained…
Foxx Corporation acquired all of Greenburg Company's outstanding stock on January 1, 2019, for $743,000 cash. Greenburg's accounting records showed net assets on that date of $609,000, although equipment with a 10-year remaining life was undervalued on the records by $59,500. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2019 of $125,000 and $127,500 in 2020. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Greenburg $ (920,000) 230,000 425,000 Foxx $(1,184,000) 148, 000 392,000 (20,000) $ (664,000) $(1,140,000) (664,000) Revenues Cost of goods sold Depreciation expense Investment income Net income $ (265,000) Retained earnings, 1/1/21 Net income (521,500) (265,000) 20,000 Dividends declared 120,000 Retained earnings, 12/31/21 $(1,684,000) $ (766, 500) 328,000 743,000 1,022,000 844,000 652,000 $…
Foxx Corporation acquired all of Greenburg Company's outstanding stock on January 1, 2019. for $586,000 cash. Greenburg's accounting records showed net assets on that date of $440,000, although equipment with a 10-year remaining life was undervalued on the records by $56,500. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2019 of $105,000 and $137,500 in 2020. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Revenues Cost of goods sold Depreciation expense Investment income Foxx $(1,164, 000) 145, 500 358, e00 (20,000) $ (680, 500) Greenburg $ (620, 000) 155, e00 440, 000 Net income (25, 000) Retained earnings, 1/1/21 Net income $(1,160, 000) (689, 500) 120, e00 $ (342, 500) (25, 000) 20,000 $ (347, 500) Dividends declared Retained earnings, 12/31/21 $(1,720,500) Current assets 373, e00 586, 000 1,882,…
Parent Company acquired all of Sub Company’s outstanding stock on January 1, 2019 for $600,000 cash. Sub’s accounting records showed net assets on that date of $470,000 although equipment with a 10-year remaining life was undervalued on the records by $90,000. Any recognized goodwill is considered to have an indefinite life. Sub reports net income in 2019 of $90,000 and $100,000 in 2020 and declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021 follow. Credit balances are indicated by parentheses. Parent Sub Revenues (800,000) (600,000) Cost of Goods Sold 100,000 150,000 Depreciation Expense…
On January 1, 2019, Platini Company acquired 80% of the common stock of Squillaci Company for $560,000. On this date, Squillaci had total owners' equity of $540,000, including retained earnings of $240,000. During 2019, Squillaci had a net income of $60,000 and paid no dividends. Any excess of cost over book value is attributable to land, undervalued $10,000, and to goodwill. On January 1, 2020, Platini held merchandise acquired from Squillaci for $10,000. During 2020, Squillaci sold merchandise to Platini for $100,000, of which $20,000 is held by Platini on December 31, 2020. Squillaci’s usual gross profit on affiliated sales is 40%. On December 31, 2020, Platini still owes Squillaci $20,000 for merchandise acquired in December. On January 1, 2020, Platini sold to Squillaci some equipment with a cost of $50,000 and a book value of $20,000. The sales price was $40,000. Squillaci is depreciating the equipment over a five-year life, assuming no salvage value and using the straight-line…
Tyler Company acquired all of Jasmine Company's outstanding stock on January 1, 2019, for $286,400 in cash. Jasmine had a book value of only $220,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $60,000 on Jasmine's financial records. A building with a 20-year remaining life was overvalued by $15,700. Subsequent to the acquisition, Jasmine reported the following: 2019 2020 2021 In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2021, follow: Revenues-operating Net Income $ 74,400 62,500 47,800 Expenses Equipment (net) Buildings (net) Common stock Retained earnings, 12/31/21 a. b. C. d. Dividends Declared $10,000 40,000 20,000 e. f. Determine the following account balances as of December 31, 2021: (Input all amounts as positive values.) Investment in Jasmine Company Equity in Subsidiary Earnings Consolidated Net Income Consolidated…
On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year.What is the Noncontrolling interest's share in the Net income of the subsidiary?
On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year.Compute for the total realized gross profit (from upstream and downstream sales)
On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year.Compute for the equity shareholder's net income.