Franklin purchases 40 percent of Johnson Company on January 1 for $576,700. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $1,484,000 with liabilities of $544,000. One building with a seven-year remaining life is undervalued on Johnson's books by $229,250. Also, Johnson's book value for its trademark (10-year remaining life) is undervalued by $272,500. During the year, Johnson reports net income of $137,000 while declaring dividends of $80,000. What is the Investment in Johnson Company balance (equity method) in Franklin's financial records as of December 31? Multiple Choice $575,500. $588,600. $599,500. $630,300. < Prev 5 of 25 Next >

Franklin purchases 40 percent of Johnson Company on January 1 for $576,700. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson's operating and financing policies. Johnson reports assets on that date of $1,484,000 with liabilities of $544,000. One building with a seven-year remaining life is undervalued on Johnson's books by $229,250. Also, Johnson's book value for its trademark (10-year remaining life) is undervalued by $272,500. During the year, Johnson reports net income of $137,000 while declaring dividends of $80,000. What is the Investment in Johnson Company balance (equity method) in Franklin's financial records as of December 31? Multiple Choice $575,500. $588,600. $599,500. $630,300. < Prev 5 of 25 Next >

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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Franklin purchases 40 percent of Johnson Company on January 1 for $604,600. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson’s operating and financing policies. Johnson reports assets on that date of $1,518,000 with liabilities of $598,000. One building with a seven-year remaining life is undervalued on Johnson’s books by $311,500. Also, Johnson’s book value for its trademark (10-year remaining life) is undervalued by $280,000. During the year, Johnson reports net income of $112,000 while declaring dividends of $50,000. What is the Investment in Johnson Company balance (equity method) in Franklin’s financial records as of December 31?
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Brown purchases 30% of Orange Company on Jan. 1, 2016 for $300,000. This acquisition gave Brown the ability to exercise signiticant influence over Oranges operating and financing policies. Orange reports assets on that date of $800,000 with liabilities of $250,000. One building with a 10-year remaining life is undervalued on Orange's books by $70,000 while the book value for its trademark (7-year remaining life) is undervalued by $105,000. During the year, Orange reports net income of $45,000 while declaring dividends of $15,000. Requirement: Prepare 2016 journal entries.
Wilson Company acquired 40 percent of Andrews Company at a bargain price because of losses expected to result from Andrews’s failure in marketing several new products. Wilson paid only $100,000, although Andrews’s corresponding book value was much higher. In the first year after acquisition, Andrews lost $300,000. In applying the equity method, how should Wilson account for this loss?
Baxter, Inc., owns 90 percent of Wisconsin, Inc., and 20 percent of Cleveland Company. Wisconsin, in turn, holds 60 percent of Cleveland's outstanding stock. No excess amortization resulted from these acquisitions. During the current year, Cleveland sold a variety of inventory items to Wisconsin for $40,000 although the original cost was $30,000. Of this total, Wisconsin still held $12,000 in inventory (at transfer price) at year-end. During this same period, Wisconsin sold merchandise to Baxter for $100,000 although the original cost was only $70,000. At year-end, $40,000 of these goods (at the transfer price) was still on hand. The initial value method was used to record each of these investments. None of the companies holds any other investments. Using the following separate income statements, determine the figures that would appear on a consolidated income statement: Baxter Wisconsin Cleveland Sales $ (1,000,000 ) $ (450,000 ) $ (280,000 ) Cost of goods sold…
Baxter, Inc., owns 90 percent of Wisconsin, Inc., and 20 percent of Cleveland Company. Wisconsin, in turn, holds 60 percent of Cleveland’s outstanding stock. No excess amortization resulted from these acquisitions. During the current year, Cleveland sold a variety of inventory items to Wisconsin for $40,000 although the original cost was $30,000. Of this total, Wisconsin still held $12,000 in inventory (at transfer price) at year-end.During this same period, Wisconsin sold merchandise to Baxter for $100,000 although the original cost was only $70,000. At year-end, $40,000 of these goods (at the transfer price) was still on hand.The initial value method was used to record each of these investments. None of the companies holds any other investments.Using the following separate income statements, determine the figures that would appear on a consolidated income statement:
Wang Acquires 100% of Chen on January 1,2010 and will operate Chen as a separate subsidairy. In the first year of operation, Chen has a net income of 70,000 and pays dividends of 50,000 and that there is $3000 of excess annual amortization associated with Chens equipment. C. Assume Wang uses the partial equity method to account for its investment. What entries will Wang record on its books on December 31, 2010 for Chen's income, dividends and excess amortization. D. Same as C, what consolidation worksheet entries will Wang record for Chen's income, dividends and excess amortization. E. Assume Wang uses the cost method to account for its investment. What entries will Wang record on its books on December 31, 2010 for Chen's income, dividends and excess amortization. F. Same as E, what consolidation worksheet entries will Wang record for Chen's income, dividends and excess amortization. Please answer all parts
Parker, Inc., acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer’s outstanding shares continue to trade at a collective value of $174,000. On the acquisition date, Sawyer has the following accounts:The buildings have a 10-year remaining life. In addition, Sawyer holds a patent worth $140,000 that has a five-year remaining life but is not recorded on its financial records. At the end of the year, the two companies report the following balances:a. Assume that the acquisition took place on January 1. What figures would appear in a consolidated income statement for this year?b. Assume that the acquisition took place on April 1. Sawyer’s revenues and expenses occurred uniformly throughout the year. What amounts would appear in a consolidated income statement for this year?
KA. Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2019 when Park's book value was $560,000. The Royce stock was not actively traded. On the date of acquisition, Park had equipment (with a ten-year life) that was undervalued in the financial records by $140,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid. Current assets Equipment Buildings Liabilities Revenues Expenses Investment Royce Co. Book Value $868,000 364.000 574.000 (546,000) (1,260,000) 700.000 Not Given Park Co Book Value § 420.000 280.000 210.000 (168,000) (560,000) 420.000 Fair Value $448,000 400.000 210,000 (168,000) What is the consolidated balance of the Equipment account at December 31, 2022? O a.$644,400. • b.$784,000. O c.$719,600. O d.$770,000. Oe.$775,600
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses. Adams Clay Current assets $ 382,000 $ 272,000 Investment in Clay 713,300 0 Equipment 837,000 584,000 Liabilities (202,000 ) (224,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,380,300 ) (482,000 ) In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (544,000 ) $ (286,000 ) Expenses 394,400 214,500 Investment…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses. Adams Clay Current assets $ 382,000 $ 272,000 Investment in Clay 713,300 0 Equipment 837,000 584,000 Liabilities (202,000 ) (224,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,380,300 ) (482,000 ) In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (544,000 ) $ (286,000 ) Expenses 394,400 214,500 Investment…
Please what is correct option with explanation please without plagiarism please