Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1, 2021. To obtain these shares, Flynn pays $400 cash (in thousands) and issues 10,00o0 shares of $20 par value common stock on this date. Flynn's stock had a fair value of $36 per share on that date. Flynn also pays $15 (in thousands) to a local investment firm for arranging the acquisition. An additional $10 (in thousands) was paid by Flynn in stock issuance costs. The book values for both Flynn and Macek immediately preceding the acquisition follow. The fair value of each of Flynn and Macek accounts is also included. In addition, Macek holds a fully amortized trademark that still retains a $40 (in thousands) value. The figures below are in thousands. Any related question also is in thousands. Macek Company Book Fair Flynn, Inc Value Value $ 900 480 $ 80 180 $ 80 Cash Receivables Inventory 160 260 120 300 130 280 660 300 Land 1,200 360 220 100 60 Buildings (net) Equipment Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings 75 480 60 340 80 300 1,140 1,000 200 1,080 480

Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1, 2021. To obtain these shares, Flynn pays $400 cash (in thousands) and issues 10,00o0 shares of $20 par value common stock on this date. Flynn's stock had a fair value of $36 per share on that date. Flynn also pays $15 (in thousands) to a local investment firm for arranging the acquisition. An additional $10 (in thousands) was paid by Flynn in stock issuance costs. The book values for both Flynn and Macek immediately preceding the acquisition follow. The fair value of each of Flynn and Macek accounts is also included. In addition, Macek holds a fully amortized trademark that still retains a $40 (in thousands) value. The figures below are in thousands. Any related question also is in thousands. Macek Company Book Fair Flynn, Inc Value Value $ 900 480 $ 80 180 $ 80 Cash Receivables Inventory 160 260 120 300 130 280 660 300 Land 1,200 360 220 100 60 Buildings (net) Equipment Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings 75 480 60 340 80 300 1,140 1,000 200 1,080 480

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

Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $406,000. Amortization of excess fair value associated with the 30% ownership is $13,800 per year. In 2021, Lindman earns an income of $298,000 and declares cash dividends of $74,500. Previously, in 2020, Lindman had sold inventory costing $38, 400 to Matthew for $ 48,000. Matthew consumed all but 25 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $45, 600 to Matthew for $60,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? What is the equity method balance in the Investment in Lindman account at the end of 2021?
Mahan purchases 1,000 shares of Bluebird Corporation stock on October 3, 2022, for $280,000. On December 12, 2022, Mahan purchases an additional 750 shares of Bluebird stock for $196,000. According to market quotations, Bluebird stock is selling for $280 per share on 12/31/22. Mahan sells 500 shares of Bluebird stock on March 1, 2023, for $156,800. a. What is the adjusted basis of Mahan's Bluebird stock on December 31, 2022? Feedback Check My Work b. What is Mahan's recognized gain or loss from the sale of Bluebird stock on March 1, 2023, assuming the shares sold are from the shares purchased on December 12, 2022? In your computations, round the per share amount to the nearest whole dollar and use the rounded amount in subsequent computations. Mahan's recognized gain ✓is $ Feedback Check My Work Partially correct c. What is Mahan's recognized gain or loss from the sale of Bluebird stock on March 1, 2023, assuming Mahan cannot adequately identify the shares sold? Mahan has a recognized…
Matthew, Incorporated, owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2024, the balance in the Investment in Lindman account is $365,000. Amortization associated with this acquisition is $12,600 per year. In 2024, Lindman earns an income of $132,000 and declares cash dividends of $33,000. Previously, in 2023, Lindman had sold inventory costing $33,600 to Matthew for $56,000. Matthew consumed all but 20 percent of this merchandise during 2023 and used the rest during 2024. Lindman sold additional inventory costing $44,800 to Matthew for $80,000 in 2024. Matthew did not consume 40 percent of these 2024 purchases from Lindman until 2025. Required: a. What amount of equity method income would Matthew recognize in 2024 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2024? a. Equity income b.…
Mahan purchases 1,000 shares of Bluebird Corporation stock on October 3,2021 for $300,000. On December 12,2021, Mahan purchases an additional 750 shares of Bluebird stock for $210,000. According to market quotations, Bluebird stock is selling for $285 per share on December 31, 2021. Mahan sells 500 shares of Bluebird stock on March 1, 2022 for $162,500. What is the adjusted basis of Mahan’s Bluebird stock on December 31, 2021? What is Mahan’s recognized gain or loss from the sale of Bluebird stock on March 1, 2022, assuming that the shares sold are from the shares purchased on December 12, 2021? What is Mahan’s recognized gain or loss from the sale of Bluebird stock on March 1, 2022, assuming that Mahan cannot adequately identify the shares sold?
On December 12, 2020, Jack contributed a painting to Kyle, LLC that was valued at $100,000 (basis of $5,000) in exchange for a 50% capital and profits interest in the LLC. Josh contributed $100,000 in cash and received a 50% interest in the LLC. On December31, Jack withdrew $50,000 in cash from the LLC and then on January 17, 2021, Josh purchased Jack's entire interest in the LLC for $50,000 and the partnership distributed the painting to Josh on February 15, 2021. What adjustments if any might the IRS make? Explain the consequences of such an adjustment to Josh & Jack and how this could have been prevented.
Beauty Company purchased 10,000 shares of Taylor company's ordinary shares at P80 per share in 2021. Beauty designated the equity investment as at FVPL. Fair value at Dec. 31, 2021 was P100/ share. In 2022, Taylor issued rights to its shareholders to purchase one ordinary share for every five rights plus P75. In 2022,Beyonce sold 2,000 stock rights at P10 and exercise the remaining rights by purchasing additional shares. At this date Taylor's ordinary shares are selling at P105 per share. At December 31, 2022, the FV of equity securities is P110/share.At what amount should this equity investment-FVOCI be reported by Beauty at December 31 2022?
Please help solve
Matthew, Inc., owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee's operations and decision making. On January 1, 2021, the balance in the Investment in Lindman account is $365,000. Amortization of excess fair value associated with the 30% ownership is $12,600 per year. In 2021, Lindman earns an income of $132,000 and declares cash dividends of $33,000. Previously, in 2020, Lindman had sold inventory costing $33,600 to Matthew for $56,000. Matthew consumed all but 20 percent of this merchandise during 2020 and used the rest during 2021. Lindman sold additional inventory costing $44,800 to Matthew for $80,000 in 2021. Matthew did not consume 40 percent of these 2021 purchases from Lindman until 2022. a. What amount of equity method income would Matthew recognize in 2021 from its ownership interest in Lindman? b. What is the equity method balance in the Investment in Lindman account at the end of 2021? a. b. Equity…
On July 1, 2020, Bar Inc. purchased 50,000 of Tell Inc.’s preference shares in exchange of a tract of Bar’ land which was carried in the books at P1,200,000. The shares were classified as financial assets at fair value through profit or loss. The land had a fair value of P1,500,000. Meanwhile, Tell's shares had a fair value of P29 per share. How much is the gain to be recognized from the exchange of the land?
Sandhill Inc. owns shares of Teal Corporation stock. At December 31, 2020, the securities were carried in Sandhill's accounting records at their cost of $916,000, which equals their fair value. On September 21, 2021, when the fair value of the securities was $974,000, Sandhill declared a property dividend whereby the Teal securities are to be distributed on October 23, 2021, to stockholders of record on October 8, 2021. Prepare all journal entries necessary on those three dates. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date + ♦ Account Titles and Explanation (To record gain or loss) (To record property dividend) Debit Credit
On January 1, 2020 Thomas acquires 40,000 shares representing 30% ownership of Wolf for $600,000 cash. Thomas will use the equity method. At acquisition date, Wolf had a book value of assets of $700,000 and a book value of liabilities of $200,000. In addition, Wolf has a Building (remaining useful life of 15 years) with a book value of $500,000 and a fair value of $900,000 at January 1, 2020. All remaining assets and liabilities of Wolf had book value equal to fair value at date of acquisition. What is the amount of Goodwill included with Thomas Investment account
Sagar