Cost method consolidation entries (controlling investment in affiliate, fair value differs from book value) Assume on January 1, 2020, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values, except for tangible fixed assets, which had fair value that was $72,000 higher than the investee's recorded book value. The tangible fixed assets had a remaining useful life of 6 years. In addition, the acquisition resulted in goodwill in the amount of $140,000 recognized in the consolidated financial statements of the investor company. Assume that, during the current year, the subsidiary reported net income of $60,800 and paid dividends of $25,600. Assuming that the investor company uses the cost method to account for its investment in the investee, what is the amount of the debit in the [C] entry necessary to prepare the consolidated financial statements for the year ended December 31, 2022? Select one: a. $25,600 b. $35,200 c. $60,800 d. $48,800

Cost method consolidation entries (controlling investment in affiliate, fair value differs from book value) Assume on January 1, 2020, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values, except for tangible fixed assets, which had fair value that was $72,000 higher than the investee's recorded book value. The tangible fixed assets had a remaining useful life of 6 years. In addition, the acquisition resulted in goodwill in the amount of $140,000 recognized in the consolidated financial statements of the investor company. Assume that, during the current year, the subsidiary reported net income of $60,800 and paid dividends of $25,600. Assuming that the investor company uses the cost method to account for its investment in the investee, what is the amount of the debit in the [C] entry necessary to prepare the consolidated financial statements for the year ended December 31, 2022? Select one: a. $25,600 b. $35,200 c. $60,800 d. $48,800

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

When and how can you determine whether or not a report is effective?
What is the relationship between Evidence and Detection Risk?
The quality of the environment in which internal control operates has a pervasive effect on many assertions. TRUE OR FALSE? WHY?
Are you able to differentiate between risks that are inherent and those that can be controlled?
. Differentiate between systematic and unsystematic risks.
What is Audit Client Acceptance Procedures?
What are the advantages and disadvantages of adverse audit Opinion
Define risk of material misstatement.
What is an audit program? Give its advantages and disadvantages?
What controls should be employed to avoid breaches into an accountijg information system.
It says they answers are wrong from your example.