Provide answer this financial accounting question not use chatgpt Falcon Enterprises acquired all of Skyline Digital's stock on January 1, 2015, for$2,100,000, which was $1,200,000 in excess of book value. At that time:•••Inventory (LIFO) was overvalued by $300,000Plant assets (10-year life) were overvalued by $600,000The remaining excess was attributed to undervalued intangible assetsamortized over 25 yearsStraight-line depreciation and amortization methods are usedDuring the next three years, Skyline Digital reported a total net income of $520,000and paid out 50% as dividends.Skyline Digital's net income for 2017 was $120,000. Falcon Enterprises carries itsinvestment using the complete equity method.Compute Falcon Enterprises' equity in the net income of Skyline Digital for 2017.

Step 1: Definition of Equity in Net Income (Complete Equity Method)The equity method is used by a…

Answered: Falcon Enterprises acquired all of…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PB: On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received...

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Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,234,440 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 962,320 $962,320 Plant and equipment 1,186,440 1,337,450 Total $2,148,760 $2,299,770 Liabilities $191,390 $214,050 Common stock 471,160 Other contributed capital 584,100 Retained earnings 902,110 Total $2,148,760 As part of the negotiations, Pritano agreed to pay the stockholders of Succo $385,210 cash if the post-combination earnings of Pritano averaged $2,234,440 or more per year over the next two years. The estimated fair value of the contingent consideration was $148,740 on the date of the acquisition. (a) Prepare the journal entry on the books of Pritano to record the acquisition on December 31, 2013. (If no entry is required, select…
Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,145,600 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 995,110 $995,110 Plant and equipment 979,390 1,375,740 Total $1,974,500 $2,370,850 Liabilities $187,040 $235,560 Common stock 524,720 Other contributed capital 588,400 Retained earnings 674,340 Total $1,974,500 As part of the negotiations, Pritano Company agreed to issue 9,230 additional shares of its $10 par value common stock to the stockholders of Succo if the average postcombination earnings over the next three years equaled or exceeded $2,481,300. The fair value of the contingent consideration on the date of acquisition was estimated to be $219,700. The contingent consideration (earnout) was classified as equity rather than as a liability.…
Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,185,400 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 871,440 $871,440 Plant and equipment 1,025,090 1,437,590 Total $1,896,530 $2,309,030 Liabilities $194,060 $207,670 Common stock 484,800 Other contributed capital 632,900 Retained earnings 584,770 Total $1,896,530 As part of the negotiations, Pritano agreed to pay the stockholders of Succo $356,690 cash if the post-combination earnings of Pritano averaged $2,185,400 or more per year over the next two years. The estimated fair value of the contingent consideration was $143,480 on the date of the acquisition. (a) Prepare the journal entry on the books of Pritano to record the acquisition on December 31, 2013. (If no entry is required, select…
On January 1, 2017, Peach, Inc. purchased 40% of the common stock of Apple Company for $61,000. At the date of acquisition, the following information for Apple Company was available: Fair Market Book Value Value Depreciable assets (remaining life, 10 years) $100,000 $105,000 Land 50,000 60,000 Total $150,000 $165,000 Liabilities $ 25,000 $ 25,000 Common stock 75,000 Retained earnings 50,000 Total $150,000 All of Apple Company's other assets had book values equal to their fair values. In 2017, Apple earned $18,000 of net income and distributed $12,500 of dividends. How much investment income would Peach record in 2017? $7,400 $7,000 $6,700 $7,200
On January 1, 2014, Portland Company acquired all of Salem Company's voting stock for $18,000,000 in cash. Some of Salem's assets and liabilities at the date of purchase had fair values that differed from reported values, as follows: Book value Fair value $12,000,000 $ Buildings and equipment, net (20 years, straight-line) 3,000,000 Identifiable intangibles (5 years, straight-line) 12,500,000 Salem's total shareholders' equity at January 1, 2014, was $5,000,000. It is now December 31, 2017 (four years later). Salem's retained earnings reflect the accumulation of net income less dividends; there have been no other changes in its retained earnings. Salem does not report any other comprehensive income. Cumulative goodwill impairment to the beginning of 2017 is $1,500,000. Goodwill impairment for 2017 is $500,000. Portland uses the complete equity method to account for its investment. The December 31, 2017, trial balance for Salem appears below. Salem Dr (Cr) $3,500,000 27,000,000 Current…
On January 1, 2022, Matsui Co. purchased 42% of the outstanding voting common stock of Yankee, Inc. for $300,500. The book value of the acquired shares was $275,500. The excess of cost over book value is attributable to an intangible asset on Yankee's books that was undervalued and had a remaining useful life of five years. For the year ended December 31, 2022, Yankee reported net income of $125,750 and paid cash dividends of $25,700. What is the carrying value of Matsui's investment in Yankee at December 31, 2022? Multiple Choice $342,521. $337,521. $289,706. $300,500.
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3. P company paid $3,600,000 in cash, to acquire 90%of S company on January 1, 2014. The total stockholder's equity of S company at that time was $5,000,000. Below are the assets and liabilities of S company book value that differ with the fair value on 1/1.2014: - inventory (sold in the current year) was overvalued by $200,000. - lands was overvalued by $500,000. -equipment remaining life of 4 years was undervalued by $400,000 - building (remaining life of 5 years) was overvalued by $750,000. - notes receivable (due in 4 years) was undervalued by $200,000. S company declared a dividend of $150,000, for March and June 2014 each. S company net income for the year was $1,000,000. Required: 1- calculate Goodwill that should be reported in the consolidated balance sheet. 2- calculate income from S company for 2014. * A
At the beginning of 2016, Metatec Inc. acquired Ellison Technology Corporation for $600 million. In addition tocash, receivables, and inventory, the following assets and their fair values were also acquired:Plant and equipment (depreciable assets) $150 millionPatent 40 millionGoodwill 100 millionThe plant and equipment are depreciated over a 10-year useful life on a straight-line basis. There is no estimated residual value. The patent is estimated to have a 5-year useful life, no residual value, and is amortizedusing the straight-line method.At the end of 2018, a change in business climate indicated to management that the assets of Ellison might beimpaired. The following amounts have been determined:Plant and equipment:Undiscounted sum of future cash flows $ 80 millionFair value 60 millionPatent:Undiscounted sum of future cash flows $ 20 millionFair value 13 millionGoodwill:Fair value of Ellison Technology Corporation $450 millionFair value of Ellison’s net assets (excluding goodwill)…
On March 31, 2016, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney's assets and liabilities were as follows: Fair Value Book Value $ 6,000,000 $ 7,500,000 Current assets Property, plant, and equipment Other assets Current liabilities 11,000,000 1,000,000 4,000,000 6,000,000 14,000,000 1,500,000 4,000,000 5,500,000 Long-term liabilities Required: Calculate the amount paid for goodwill.

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