Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $193,000 and appropriately accounted for the investmentusing the fair-value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $603,000 which resulted insignificant influence over Seida. On that date, the fair value of Seida's common stock was $2,010,000 in total. Seida's January 1, 2021,book value equaled $1,860,000, although land was undervalued by $138,000. Any additional excess fair value over Seida's book valuewas attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $262,000 and declared andpaid dividends of $118,000.Prepare the 2021 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select"No journal entry required" in the first account field.)View transaction listX:>1Record acquisition of Seida stock.Record the 40% income earned during period by Seida.3Record 2021 amortization for trademark excess fairvalue.4Record dividend declaration from Seida.CreditRecord collection of dividend from investee.Note := journal entry has been enteredRecord entryClear entryView general journal

SOLUTION- JOURNAL ENTRIES IS A RECORD OF BUSINESS TRANSACTIONS IN THE ACCOUNTING BOOKS OF A…

Answered: Milani, Inc., acquired 10 percent of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $187,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $618,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,060,000 in total. Seida’s January 1, 2021, book value equaled $1,910,000, although land was undervalued by $132,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $258,000 and declared and paid dividends of $101,000. Prepare the 2021 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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…
Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $190,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $600,000 which resulted in significant influence over Seida. On that date, the fair value of Seida’s common stock was $2,000,000 in total. Seida’s January 1, 2018, book value equaled $1,850,000, although land was undervalued by $120,000. Any additional excess fair value over Seida’s book value was attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $300,000 and declared and paid dividends of $110,000. Prepare the 2018 journal entries for Milani related to its investment in Seida.
Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $193,000 and appropriately accounted for the investment using the fair-value method ... On January 1, 2018, Milani purchased an additional 30 percent of Seida for $675,000 which resulted in significant influence over Seida. ... On that date, the fair value of Seida’s common stock was $2,010,000 in total. Seida’s January 1, 2018, book value equaled $1,860,000, although land was undervalued by $138,000. Any additional excess fair value over Seida’s book value was attributable to a trademark with an 8-year remaining life. During 2018,Seida reported income of $262,000 and declared and paid dividends of $118,000. Prepare the 2018 journal entries for Milani related to its investments in Seida. Record acquisition of Seida stock. Record income for the year: 40% of the $262,000 reported income. Record 2018 amortization for trademark excess fair value. Record dividend declaration from Seida. Record collection…
Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a net book value of $470,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $370,000. Scenic reported net income of $180,000. Placid Lake declared $170,000 in dividends during this period; Scenic paid $47,000. At the end of 2021, selected figures from the two companies' balance sheets were as follows: Placid Lake Scenic Inventory $ 210,000 $ 97,000 Land 670,000 270,000 Equipment (net) 470,000 370,000 During 2020, intra-entity sales of $110,000 (original cost of $56,000) were made. Only 10 percent of this inventory was still held within the consolidated entity at the end of 2020. In 2021, $160,000 in intra-entity sales were made…
Simmons Corporation owns stock of Armstrong, Inc. Prior to 2020, the investment was accounted for using the equity method. In early 2020, Simmons sold part of its investment in Armstrong, and began using the fair value method. In 2020, Armstrong earned net income of $80,000 and paid dividends of $95,000. Prepare Simmons's entries related to Armstrong's net income and dividends, assuming Simmons now owns 10% of Armstrong's stock.
Milani, Incorporated, acquired 10 percent of Seida Corporation on January 1, 2023, for $192,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2024, Milani purchased an additional 30 percent of Seida for $591,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $1,970,000 in total. Seida's January 1, 2024, book value equaled $1,820,000, although land was undervalued by $139,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2024, Seida reported income of $319,000 and declared and paid dividends of $100,000. Required: Prepare the 2024 journal entries for Milani related to its investment in Seida. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 2 3 5 Record investee dividend…
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Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield, Incorporated, on January 1, 2023, for $306,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $784,000 at January 1, 2023. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values, except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2023. No goodwill resulted from Belden's share purchase. Sheffield reported net Income of $182,000 in 2023 and $244,000 of net Income during 2024. Dividends of $64,000 and $90,000 are declared and paid in 2023 and 2024, respectively. Belden uses the equity method. Required: a. On its 2024 comparative Income statements, how much Income would Belden report for 2023 and 2024 in connection with the company's Investment in Sheffield? b. If Belden sells its…
Belden, Inc., acquires 30 percent of the outstanding voting shares of Sheffield, Inc., on January 1, 2020, for $316,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $796,000 at January 1, 2020. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values, except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2020. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $192,000 in 2020 and $232,000 of net income during 2021. Dividends of $64,000 and $96,000 are declared and paid in 2020 and 2021, respectively. Belden uses the equity method. a. On its 2021 comparative income statements, how much income would Belden report for 2020 and 2021 in connection with the company's investment in Sheffield? b. If Belden sells its entire investment in…
Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield, Incorporated, on January 1, 2023, for $306,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $824,000 at January 1, 2023. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values, except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2023. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $200,000 in 2023 and $256,000 of net income during 2024. Dividends of $90,000 and $60,000 are declared and paid in 2023 and 2024, respectively. Belden uses the equity method. Required: a. On its 2024 comparative income statements, how much income would Belden report for 2023 and 2024 in connection with the company's investment in Sheffield? b. If Belden sells its…
Belden, Inc., acquires 30 percent of the outstanding voting shares of Sheffield, Inc., on January 1, 2020, for $304,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $820,000 at January 1, 2020. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values, except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2020. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $198,000 in 2020 and $252,000 of net income during 2021. Dividends of $74,000 and $90,000 are declared and paid in 2020 and 2021, respectively. Belden uses the equity method. a. On its 2021 comparative income statements, how much income would Belden report for 2020 and 2021 in connection with the company's investment in Sheffield? b. If Belden sells its entire investment in…

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