Do not use ai On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $300,000in cash. The equipment had originally cost $270,000 but had a book value of only $165,000 whentransferred. On that date, the equipment had a five-year remaining life. Depreciation expense iscomputed using the straight-line method.Ackerman reported $400,000 in net income in 2021 (not including any investment income) whileBrannigan reported $131,000. Ackerman attributed any excess acquisition-date fair value to Brannigan'sunpatented technology, which was amortized at a rate of $5,000 per year.1. What is consolidated net income for 2021?2. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent ofBrannigan?3. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent ofBrannigan and the equipment transfer was upstream?4. What is the consolidated net income for 2022 if Ackerman reports $420,000 (does not includeinvestment income) and Brannigan $142,000 in income? Assume that Brannigan is a wholly ownedsubsidiary and the equipment transfer was downstream.

1. Consolidated Net Income for 2021Ackerman's Net Income: $400,000Brannigan's Net Income: $131,000As…

Answered: On January 1, 2021, Ackerman sold…

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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On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?
Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in cash. The equipment had originally cost $180,000 but had a book value of only $110,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight - line method. Ackerman reported $300,000 in net income in 2021 (not including any investment income) while Brannigan reported $98, 000. Ackerman attributed any excess acquisition - date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,000 per year. What is consolidated net income for 2021? What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan? What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? What is the consolidated net income for 2022 if Ackerman reports $320,000 (does not include…
On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $110,000 in cash. The equipment had originally cost $99,000 but had a book value of only $60,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $550,000 in net income in 2021 (not including any investment income) while Brannigan reported $180,500. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $6,500 per year. What is consolidated net income for 2021? What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan? What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? What is the consolidated net income for 2022 if Ackerman reports $570,000 (does not include…
On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $240,000 in cash. The equipment had originally cost $216,000 but had a book value of only $132,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $340,000 in net income in 2021 (not including any investment income) while Brannigan reported $111,200. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,400 per year. kipped a. What is consolidated net income for 2021? b. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90-percent of Brannigan and the equipment transfer was upstream? d. What is the consolidated net income for 2022 if Ackerman reports $360,000 (does…
On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $310,000 in cash. The equipment had originally cost $279,000 but had a book value of only $170,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $410,000 in net income in 2021 (not including any investment income) while Brannigan reported $134,300. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $5,100 per year. a. What is consolidated net income for 2021? b. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? d. What is the consolidated net income for 2022 if Ackerman reports $430,000 (does not…
On January 1. 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $180,000 in cash. The equipment had originally cost $162.000 but had a book value of only $99.000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $480,000 in net income in 2021 (not including any investment income) while Brannigan reported $157.400. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $5,800 per year a. What is consolidated net income for 2021? What is the parent's share of consolidated net income for 2021 If Ackerman owns only 90 percent of Brannigan? c. yhat is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? What is the consolidated net income for 2022 f Ackerman reports $500.000 (does not Include…
On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $120,000 in cash. The equipment had originally cost $108,000 but had a book value of only $66,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $540,000 in net income in 2018 (not including any investment income) while Brannigan reported $177,200. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $6,400 per year. What is consolidated net income for 2018? What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan? What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? What is the consolidated net income for 2019 if Ackerman reports $560,000 (does not include…
On January 1, 2018, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $150,000 in cash. The equipment had originally cost $135,000 but had a book value of only $82,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $510,000 in net income in 2018 (not including any investment income) while Brannigan reported $167,300. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $6,100 per year. a. What is consolidated net income for 2018? b. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net income for 2018 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? d. What is the consolidated net income for 2019 if Ackerman reports $530,000 (does not…
On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in cash. The equipment had originally cost $180,000 but had a book value of only $110,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman's equipment of book value $200,000 and Brannigan's equipment of book value $150,000. Ackerman reported $300,000 in net income in 2021 (not including any investment income) while Brannigan reported $98,000. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,000 per year. A) What is consolidated equipment balance?

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