On January 1, 2022, Halstead, Incorporated, purchased 71,000 shares of Sedgwick Company common stock for $1,554,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Year 2022 2023 2024 Net Income $ 375,000 442,000 619,000 Annual Cash Dividends (paid quarterly) $ 112,000 154,000 173,000 On July 1, 2024, Halstead sells 11,360 shares of this investment for $27 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Required: Determine the amounts that would appear on Halstead's 2024 Income statement relating to its ownership and partial sale of its Investment in Sedgwick's common stock. Total income accrual (no unearned gains) on sale of shares

On January 1, 2022, Halstead, Incorporated, purchased 71,000 shares of Sedgwick Company common stock for $1,554,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Year 2022 2023 2024 Net Income $ 375,000 442,000 619,000 Annual Cash Dividends (paid quarterly) $ 112,000 154,000 173,000 On July 1, 2024, Halstead sells 11,360 shares of this investment for $27 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Required: Determine the amounts that would appear on Halstead's 2024 Income statement relating to its ownership and partial sale of its Investment in Sedgwick's common stock. Total income accrual (no unearned gains) on sale of shares

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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On January 1, Year 4, Goodkey Co. acquired all of the common shares of Jingya. The condensed income statements for the two companies for January, Year 5, were as follows: Sales Gain on sale of equipment Other income Depreciation expense Other expenses Income tax expense Net income Goodkey $10,100,000 810,000 10,910,000 460,000 6,610,000 1,983,000 Jingya $ 6,010,000 242,000 51,000 6,303,000 181,000 4,310,000 543,600 9,053,000 5,034,600 $ 1,857,000 $ 1,268,400 The following transactions occurred in January, Year 5, and are properly reflected in the income statements above: • On January 1, Year 5, Jingya sold equipment to Goodkey for $1,010,000 and reported a gain of $242,000. On this date, the equipment had a remaining useful life of four years. • On January 31, Year 5, Jingya paid a dividend of $610,000. Goodkey uses the cost method to account for its investment in Jingya. Both companies pay income tax at the rate of 40%.
Spartan Corporation redeemed 25 percent of its shares for $2.700 on July 1 of this year, in a transaction that qualified as an exchange under IRC $302(a). Spartan's accumulated E&P at the beginning of the year was $2,700. Its current E&P is $19,900. Spartan made dividend distributions of $2,400 on June 1 and $6,600 on August 31. Determine the beginning balance in Spartan's accumulated E&P at the beginning of the next year. See Revenue Rules 74-338 and 74-339 for help in making this calculation. (Round your intermediate calculations to the nearest whole dollar amount.) Accumulated E&P at the beginning of the next year
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Please include each step of calculations for my reference. Thanks!
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Lake acquired a controlling interest in Boxwood several years ago. During the current fiscal period,the two companies individually reported the following income (exclusive of any investmentincome): Lake $ 390,000 Boxwood $ 100,000 Lake paid a $55,000 cash dividend during the current year, and Boxwood distributed $5,000.Boxwood sells inventory to Lake each period. Intra-entity gross profits of $24,100 were present inLake's beginning inventory for the current year, and its ending inventory carried $38,100 in intraentity gross profits.View each of the following questions as an independent situation. The effective tax rate for bothcompanies is 21 percent.a. If Lake owns a 60 percent interest in Boxwood, what total income tax expense must be reportedon a consolidated income statement for this period? (Round the intermediate calculationsand final answers to the nearest dollar amount.)b. If Lake owns a 60 percent interest in Boxwood, what total amount of income taxes must be paidby…
On January 1, 2016, Halstead, Inc., purchased 75,000 shares of Sedgwick Company common stock for $1,480,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill.Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period.On July 1, 2018, Halstead sells 12,000 shares of this investment for $25 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence.Determine the amounts that would appear on Halstead’s 2018 income statement relating to its ownership and partial sale of its investment in Sedgwick’s common stock.