On January 1, 2023, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Incorporated, 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: Items 2023 2024 Net Income $30,100 43,000 Dividends Declared $ 4,300 4,300 On July 1, 2023, 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. Required: a. Compute the equity method balance in QuickPort's Investment in NetSpeed, Incorporated, account as of December 31, 2024. b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of QuickPort and NetSpeed.
On January 1, 2023, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Incorporated, 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: Items 2023 2024 Net Income $30,100 43,000 Dividends Declared $ 4,300 4,300 On July 1, 2023, 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. Required: a. Compute the equity method balance in QuickPort's Investment in NetSpeed, Incorporated, account as of December 31, 2024. b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of QuickPort and NetSpeed.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2023, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Incorporated, 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:
Items
2023
2024
Net Income
$30,100
43,000
Dividends
Declared
$ 4,300
4,300
On July 1, 2023, 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.
Required:
a. Compute the equity method balance in QuickPort's Investment in NetSpeed, Incorporated, account as of December 31, 2024.
b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of QuickPort and NetSpeed.
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