CASE 1 (QS 10-14): On January 1, 2012, Cop Corp. paid $1,020,000 to acquire Kermit Co. Kermit maintained separa incorporation. Cop used the equity method to account for the investment. The following information is available for Kermit's assets, liabilities, and stockholders' equity accounts on January 1, 2012: What is the balance in Cop's investment in subsidiary account at the end of 2012? A) $1,099,000. Book Value Fair Value Current assets $ 120,000 $120,000 Land 72,000 192,000 Building (twenty year life) 240,000 268,000 Equipment (ten year life) 540,000 516,000 Current liabilities 24,000 24,000 Long-term liabilities 120,000 120,000 Common stock 228,000 Additional paid-in capital 384,000 Retained earnings 216,000 B) $1,020,000. C) $1,096,200. D) $1,098,000. E) $1,144,400. Kermit earned net income for 2012 of $126,000 and paid dividends of $48,000 during the year. Question 10 The 2012 total amortization of allocations is calculated to be A) $ 4,000. B) $ 6,400. At the end of 2012, the consolidation entry to eliminate Cop's accrual of Kermit's earnings would include a credit to Investment in Kermit Co. for A) $124,400. B) $126,000. C) $127,000. D) $ 76,400. E) $0. C) $(2,400). D) $(1,000). E) $ 3,800. In Cop's accounting records, what amount would appear on December 31, 2012 for equity in subsidiary earnings? If Cop Corp. had net income of $444,000 in 2012, exclusive of the investment, what is the amount of consolidated net income? A) $569,000. B) $570,000. C) $571,000. D) $566,400. E) $444,000. A) $ 77,000. B) $ 79,000. C) $125,000. D) $127,000. E) $ 81,800.
CASE 1 (QS 10-14): On January 1, 2012, Cop Corp. paid $1,020,000 to acquire Kermit Co. Kermit maintained separa incorporation. Cop used the equity method to account for the investment. The following information is available for Kermit's assets, liabilities, and stockholders' equity accounts on January 1, 2012: What is the balance in Cop's investment in subsidiary account at the end of 2012? A) $1,099,000. Book Value Fair Value Current assets $ 120,000 $120,000 Land 72,000 192,000 Building (twenty year life) 240,000 268,000 Equipment (ten year life) 540,000 516,000 Current liabilities 24,000 24,000 Long-term liabilities 120,000 120,000 Common stock 228,000 Additional paid-in capital 384,000 Retained earnings 216,000 B) $1,020,000. C) $1,096,200. D) $1,098,000. E) $1,144,400. Kermit earned net income for 2012 of $126,000 and paid dividends of $48,000 during the year. Question 10 The 2012 total amortization of allocations is calculated to be A) $ 4,000. B) $ 6,400. At the end of 2012, the consolidation entry to eliminate Cop's accrual of Kermit's earnings would include a credit to Investment in Kermit Co. for A) $124,400. B) $126,000. C) $127,000. D) $ 76,400. E) $0. C) $(2,400). D) $(1,000). E) $ 3,800. In Cop's accounting records, what amount would appear on December 31, 2012 for equity in subsidiary earnings? If Cop Corp. had net income of $444,000 in 2012, exclusive of the investment, what is the amount of consolidated net income? A) $569,000. B) $570,000. C) $571,000. D) $566,400. E) $444,000. A) $ 77,000. B) $ 79,000. C) $125,000. D) $127,000. E) $ 81,800.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:CASE 1 (QS 10-14):
On January 1, 2012, Cop Corp. paid $1,020,000 to acquire Kermit Co. Kermit maintained
separa incorporation. Cop used the equity method to account for the investment. The
following information is available for Kermit's assets, liabilities, and stockholders' equity
accounts on January 1, 2012:
What is the balance in Cop's investment in subsidiary account at the end of 2012?
A) $1,099,000.
Book
Value
Fair
Value
Current assets
$ 120,000
$120,000
Land
72,000
192,000
Building (twenty year life)
240,000
268,000
Equipment (ten year life)
540,000
516,000
Current liabilities
24,000
24,000
Long-term liabilities
120,000
120,000
Common stock
228,000
Additional paid-in capital
384,000
Retained earnings
216,000
B) $1,020,000.
C) $1,096,200.
D) $1,098,000.
E) $1,144,400.
Kermit earned net income for 2012 of $126,000 and paid dividends of $48,000 during the
year.
Question 10
The 2012 total amortization of allocations is calculated to be
A) $ 4,000.
B) $ 6,400.
At the end of 2012, the consolidation entry to eliminate Cop's accrual of Kermit's earnings
would include a credit to Investment in Kermit Co. for
A) $124,400.
B) $126,000.
C) $127,000.
D) $ 76,400.
E) $0.
C) $(2,400).
D) $(1,000).
E) $ 3,800.
In Cop's accounting records, what amount would appear on December 31, 2012 for equity in
subsidiary earnings?
If Cop Corp. had net income of $444,000 in 2012, exclusive of the investment, what is the
amount of consolidated net income?
A) $569,000.
B) $570,000.
C) $571,000.
D) $566,400.
E) $444,000.
A) $ 77,000.
B) $ 79,000.
C) $125,000.
D) $127,000.
E) $ 81,800.
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