On January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $800,000 and Retained Earnings of $40,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $90,000. QuickPort attributed the $60,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following: Dividends Net Income Declared $ 8,000 8,000 2020 $80,000 115,000 2021 On July 1, 2020, QuickPort sold communication equipment to NetSpeed for $42,000. The equipment originally cost $48,000 and had accumulated depreciation of $9,000 and an estimated remaining life of three years at the date of the intra-entity transfer.

On January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $800,000 and Retained Earnings of $40,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $90,000. QuickPort attributed the $60,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following: Dividends Net Income Declared $ 8,000 8,000 2020 $80,000 115,000 2021 On July 1, 2020, QuickPort sold communication equipment to NetSpeed for $42,000. The equipment originally cost $48,000 and had accumulated depreciation of $9,000 and an estimated remaining life of three years at the date of the intra-entity transfer.

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

On January 1, 2019, GRANGER Co. acquired 80% interest in HISTORIA, Inc. by issuing 5,000 shares with fair value of P30 per share and par value of P20 per share. The financial statements of GRANGER Co. and HISTORIA, Inc. immediately after the acquisition are shown in the image. On January 1, 2019, the fair value of the assets and liabilities of HISTORIA, Inc. were determined by appraisal, show in the image. The equipment has a remaining useful life as of 4 years from January 1, 2019. Prepare the consolidated statement of financial position as at January 1, 2019. GRANGER Co. elects to measure non-controlling interest as its proportionate share in HISTORIA’s net identifiable assets.
On January 31, 2021, Parent Inc. purchased 90% of Sub Inc., issuing common shares of Parent with a market value of $400,000. Costs were $10,000 to issue the shares and $16,000 of other legal costs. Parent and Sub Inc had the following balance sheets on January 30, 2021 immediately prior to the acquisition: Parent Inc. Sub Inc. Sub Inc. (carrying value) (carrying value) (fair value) Cash $1,200,000 $300,000 $300,000 Accounts Receivable $ 400,000 $ 64,000 $ 64,000 Inventory $ 240,000 $ 80,000 $ 60,000 Plant and Equipment (net) $ 960,000 $350,000 $300,000 Accumulated depreciation ($100,000) ($94,000) Trademark $ 20,000 $ 36,000 Total Assets $2,700,000 $720,000 $760,000 Accounts Payable $1,500,000 $300,000 $300,000 Bonds Payable $ 600,000 $240,000 $210,000 $510,000 Common Shares $ 500,000 $ 60,000 Retained Earnings $ 100,000…
On January 1, 2022, Aronsen Company acquired 90 percent of Sledel Company's outstanding shares. Sledel had a net book value on that date of $450,000: common stock ($12 par value) of $240,000 and retained earnings of $210,000. Aronsen paid $691,200 for this Investment. The acquisition-date fair value of the 10 percent noncontrolling Interest was $76,800. The excess fair value over book value associated with the acquisition was used to increase land by $222,000 and to recognize copyrights (12-year remaining life) at $96,000. Subsequent to the acquisition, Aronsen applied the Initial value method to its Investment account. In the 2022-2023 period, the subsidiary's retained earnings Increased by $230,000. During 2024, Siedel earned Income of $94,000 while declaring $34,000 in dividends. Also, at the beginning of 2024, Siedel Issued 4,000 new shares of common stock for $52 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and…
On January 1, 2024, Nichols Company acquired 80% of Smith Company's common stock and 40% of its non-voting, cumulative preferred stock. The consideration transferred by Nichols was $1,200,000 for the common and $124,000 for the preferred. There was no premium in the value of consideration transferred. Any excess acquisition-date fair value over book value is considered goodwill. The capital structure of Smith immediately prior to the acquisition is: Common stock, $10 par value (50,000 shares outstanding) Preferred stock, 6% cumulative, $100 par value, 3,000 shares outstanding Additional paid in capital Retained earnings Total stockholders' equity The consolidation entry at date of acquisition will include (referring to Smith): Multiple Choice Saved M 14 Sep 16 Sub 4:57 C
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $2,054,400 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $513,600. Seidel's acquisition-date total book value was $2,040,000. The fair value of Seidel's recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $294,000 and several customer relationships estimated to be worth $216,000 with four-year remaining lives. Any remaining acquisition-date fair value in the Seidel acquisition was considered goodwill. During 2021, Seidel reported $206,400 net income and declared and paid dividends totaling $60,000. Also in 2021, Ackerman reported $420,000 net income, but neither declared nor paid dividends. a. What amount should Ackerman assign to the 20 percent noncontrolling interest of Seidel at the acquisition date? b. How much of…
The Holtz Corporation acquired 80 percent of the 100,000 outstanding voting shares of Devine, Inc., for $6.45 per share on January 1, 2020. The remaining 20 percent of Devine’s shares also traded actively at $6.45 per share before and after Holtz’s acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Devine’s underlying accounts except that a building with a 5-year future life was undervalued by $65,500 and a fully amortized trademark with an estimated 10-year remaining life had a $85,000 fair value. At the acquisition date, Devine reported common stock of $100,000 and a retained earnings balance of $224,500. Following are the separate financial statements for the year ending December 31, 2021: HoltzCorporation Devine,Inc. Sales $ (747,000 ) $ (432,750 ) Cost of goods sold 207,000 135,000 Operating expenses 338,000 126,750 Dividend income (16,000 ) 0 Net income $…
On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $280,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $31,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $16,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Items Presidio Company Mason Company Cash $ 79,200 $ 28,000 Receivables 338,000 119,000 Inventory 370,000 193,000 Land 279,000 221,000 Buildings (net) 483,000 245,000 Equipment (net) 203,000 69,900 Accounts payable (182,000) (49,500) Long-term liabilities (464,000) (280,000) Common stock—$1 par value (110,000) 0 Common stock—$20 par value 0 (120,000) Additional paid-in capital (360,000) 0 Retained earnings, 1/1/24 (636,200) (426,400) Note:…
Ocean, Inc. acquired 15% of River Co. on January 1, 2022 for $94,500 and appropriately accounted for the investment using the fair-value method. On January 1, 2023, Ocean purchased an additional 20% of River for $180,000, achieving the ability to exert significant influence over River. On that date, the fair value of River's common stock was $900,000 in total. River's January 1, 2023, book value equaled $680,000, although land was undervalued by $40,000. Any additional excess cost over fair value was attributable to an undervalued patent with a 6-year remaining life. During 2023, River reported net income of $168,000 and paid dividends of $40,000. Based on the above information, use the prospective approach to account for the change to the equity method and determine the following numbers. (a) The amount of annual excess amortization for 2023. Answer: (b) The amount of equity income that Ocean should report for 2023. Answer: (c) Compute the balance of Investment in River account at the…
On January 1, 2019, Aronsen Company acquired 90 percent of Sledel Company's outstanding shares. Sledel had a net book value on that date of $504,300: common stock ($10 par value) of $207,500 and retained earnings of $296,800. Aronsen paid $600,300 for this Investment. The acquisition-date fair value of the 10 percent noncontrolling Interest was $66,700. The excess fair value over book value associated with the acquisition was used to increase land by $82,220 and to recognize copyrights (16-year remaining life) at $80,480. Subsequent to the acquisition, Aronsen applied the Initial value method to its Investment account In the 2019-2020 period, the subsidiary's retained earnings Increased by $100,600. During 2021, Siedel earned Income of $81,500 while declaring $20,300 in dividends. Also, at the beginning of 2021, Siedel Issued 4,150 new shares of common stock for $38 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and…
Bulalo Corporation acquired 30% of Tawilis Inc.’s common stock for P300,000 book value on January 1, 2020 when Tawilis equity consisted of P500,000 capital stock and P500,000 retained earnings. On October 1, 2020 Bulalo bought an additional 30% interest in Tawilis for P354,000. In both cases, Tawilis book value equaled the fair value. Tawilis had income of P240,000 earned evenly through 2020 and paid no dividends. The consolidated income statement of Bulalo Corporation and Subsidiary for the year 2020 should show controlling income of: 90,000 144,000 96,000
On January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,125,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,170,000 and Retained Earnings of $58,500. The acquisition-date fair value of the 10 percent noncontrolling interest was $125,000. QuickPort attributed the $21,500 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following: Net Income Dividends Declared 2020 $ 30,100 $ 4,300 2021 43,000 4,300 On July 1, 2020, QuickPort sold communication equipment to NetSpeed for $27,500. The equipment originally cost $30,500 and had accumulated depreciation of $5,400 and an estimated remaining life of three years at the date of the intra-entity transfer. Compute the equity method balance in QuickPort's Investment in NetSpeed, Inc., account as of December 31, 2021.…
What amount is reported for trademarks in the 2021 consolidated balance sheet? Multiple Choice O $576,000. $568,000. $560,000. $552,000.