On January 1, year 1, firm ABC bought 35% of the common stock of FXC for $304,000 cash. At the date of acquisition, FXC's net assets had a fair value of $920,000. Their book value was $820,000. The difference was attributable equally to the buildings and its land. FXC's net income for year 1, was $152,000. During year 1, FXC paid dividend of $130,000. The buildings have a remaining life of 10 years. Required: What does ABC record as investment revenue from FXC in year 1?

On January 1, year 1, firm ABC bought 35% of the common stock of FXC for $304,000 cash. At the date of acquisition, FXC's net assets had a fair value of $920,000. Their book value was $820,000. The difference was attributable equally to the buildings and its land. FXC's net income for year 1, was $152,000. During year 1, FXC paid dividend of $130,000. The buildings have a remaining life of 10 years. Required: What does ABC record as investment revenue from FXC in year 1?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

See similar textbooks

Similar questions

At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $45 million. At the time of purchase, the carrying value of Sky Tech's net assets was $75 million. The fair value of Sky Tech's depreciable assets was $15 million in excess of their book value. For this year, Sky Tech reported a net income of $75 million and declared and paid $15 million in dividends.The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets is:
Please give me answer Accounting
On 30 June 20X7, Edison Ltd acquired all the assets and liabilities of Oliver Ltd, with Oliver Ltd going into liquidation. In exchange for these assets and liabilities, Edison Ltd issued 60,000 shares, and the fair value of each share at the acquisition date is $4. Costs of issuing these shares amounted to $2,000. Legal costs associated with the acquisition of Oliver Ltd amounted to $1,500. The assets and liabilities of Oliver Ltd at 30 June 20X7 were as follows: Carrying amount Fair value Cash 12 000 12 000 Accounts receivable (Cost: $45 000, Estimated uncollectable debts: $5000) 40 000 36 000 Inventory 60 000 76 000 Plant (Cost: $200 000, Accumulated 120 000 145 000 depreciation: $80 000) Accounts payable 40 000 40 000 Additional information: • Oliver Ltd had not recorded an internally developed patent. Edison Ltd valued this at $26,000. Oliver Ltd had not recorded a legal claim as a liability due to the uncertainty of an outcome. Edison Ltd estimated the fair value of this…
On January 1, Year 1, RAK, Inc acquired a 25% interest in Tech Corp. for $375,000. At the date of acquisition, the net assets had a fair value in excess of shareholders' equity of $200,000. The fair value in excess of book value is the result of equipment with a remaining useful life of four years. For the year ended December 31, Year 1. Tech had net income of $60,000 and RAK received a dividend of $10,000 from Tech. At December 31, Year 1. Tech had shareholders' equity of $820,000. What is the amount of goodwill associated with RAK's purchase of Tech? O $175,000 O $170,000 O $125,000 O $93,750
On December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows: Cash Accounts Receivable Inventory Fixed Assets (net) Investment in Sentence Co. Total Debits Accounts Payable Notes Payable Common Stock Retained Earnings Total Credits Assets Paragraph Corporation $ 74,000 120,000 180,000 Total Assets Liabilities and Stockholders' Equity 350,000 136,000 $860,000 Total Liabilities and Stockholders' Equity $ 65,000 350,000 150,000 295,000 $860,000 PARAGRAPH CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8. Sentence Company $ 20,000…
On January 1, 2023, Holland Corporation paid $7 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $14,700 Liabilities 288,708 Common stock 199,100 Retained earnings $422,500 $222,500 100,000 100,000 $ 422,500 On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $62,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $226,900. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's…
On January 1, 2023, Holland Corporation paid $7 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $43,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $246,400. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's acquisition-date fair value over its book value was attributed to goodwill. The companies' financial statements for the…
On January 1, 2023, Holland Corporation paid $7 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $5.00 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 15,000 Liabilities 209,000 Common stock 203,808 Retained earnings $427,000 $ 227,000 100,000 100,000 $ 427,000 On January 1, 2023, Holland assessed the carrying amount of Zeeland's equipment (5-year remaining life) to be undervalued by $65,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $226,600. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's…
On January 1, 2023, Holland Corporation paid $8 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland's outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $6.50 per share both before and after the acquisition by Holland. Zeeland's acquisition date balance sheet follows: Current assets Property and equipment (net) Patents $ 14,000 Liabilities 268,000 Common stock. 190,000 Retained earnings $ 212,000 100,000 160,000 $ 472,000 $ 472,000 es On January 1, 2023, Holland assessed the carrying amount of Zeetand's equipment (5-year remaining life) to be undervalued by $55,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $285,000. Zeeland's acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland's…
On July 1, 2022, Burrough Company acquired 102,000 of the outstanding shares of Carter Company for $16 per share. This acquisition gave Burrough a 40 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $4 million and liabilities of $830,750. At the time, Carter held equipment appraised at $148,750 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $580,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $559,000…
On July 1, 2022, Burrough Company acquired 136,000 of the outstanding shares of Carter Company for $15 per share. This acquisition gave Burrough a 25 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $7 million and liabilities of $456,800. At the time, Carter held equipment appraised at $319,200 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $980,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $579,000…
On July 1, 2022, Burrough Company acquired 136,000 of the outstanding shares of Carter Company for $15 per share. This acquisition gave Burrough a 25 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $7 million and liabilities of $456,800. At the time, Carter held equipment appraised at $319,200 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $980,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $579,000…