What is the on January 3 2008 Austin corp. these accounting question? On January 3, 2008, Austin Corp. purchased 25% of the voting common stock of GainesvilleCo., paying $2,500,000. Austin decided to use the equity method to account for thisinvestment. At the time of the investment, Gainesville's total stockholders' equity was$8,000,000. Austin gathered the following information about Gainesville's assets andliabilities.Book Value Fair ValueBuildings (10 year life)$400,000$500,000Equipment (5 year life) $1,000,000 $1,300,000Franchises (8 year life)$0Calculate the goodwill?$400,000

Step 1: Define GoodwillGoodwill is a type of intangible asset that refers to the excess amount of…

Answered: On January 3, 2008, Austin Corp.…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 11MCQ

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On January 2, 2021, Marzelle Corp. purchased 30% of the voting common stock of Hoffman Co., paying $3,000,000. Marzelle decided to use the equity method to account for this investment. At the time of the investment, Hoffman's total stockholders’ equity was $8,000,000. Marzelle gathered the following information about Hoffman's assets and liabilities: Book Value Fair Value Buildings (10-year life) $ 400,000 $ 600,000 Equipment (5-year life) 1,200,000 1,400,000 Franchises (8-year life) $ 0 $ 480,000 For all other assets and liabilities, book value and fair value were equal. Any excess of cost over fair value was attributed to goodwill, which has not been impaired. For 2021, what is the total amount of excess amortization for Marzelle’s 30% investment in Hoffman? Group of answer choices 1-$20,000. 2-$120,000. 3-$60,000. 4-$36,000. 5-$40,000.
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As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 25% of Nursery Supplies Incorporated's 8 million shares of capital stock for $40 million. The fair value and book value of the shares were the same at that time. The company realizes that this investment typically would be accounted for under the equity method, but instead chooses to measure the investment at fair value. During the year, Nursery Supplies reported net income of $20 million and distributed cash dividends of $ 1.00 per share. At the end of the year, the fair value of the shares is $36 million. Required: How would this investment be classified on Florists' balance sheet? Prepare all appropriate journal entries related to the investment during 2024, under the fair value option, and in a manner similar to what Florists would use for investments in equity securities for which it does not have significant influence. Indicate the effect of this investment on 2024 income before…
On January 4 2011, Bailey corp purchased 40% of the voting common stock.. Accounting
On January 2, 2025, Cullumber Company purchased 20% of the outstanding common stock of Blossom, Inc. and subsequently used the equity method to account for the investment. During 2025, Blossom reported net income of $1380000 and distributed dividends of $600000. The ending balance in the Investment in Cullumber account at December 31, 2025 was $1020000 after applying the equity method during 2025. What purchase price did Cullumber pay for its investment in Blossom, Inc.? O $1176000 O $624000 O $1416000 O $864000
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On December 30, Year 3, Varsity Corporation sold its investment in marketable equity securities costing $800,000 for $860,000 cash. The securities were purchased on January 2, Year 1, and the market value of the securities was $820,000 and $780,000 on December 31, Year 1 and Year 2, respectively. How much gain or loss will Varsity report in its income statement for the year ending December 31, Year 3? Multiple Choice A $40,000 gain. An $80,000 gain. A $20,000 loss. A $60,000 gain..
On January 1, 2024, Cat Company purchased the following investments: 1) 20,000 shares (representing 35%) of AA Company stock for $23 per share. 2) 8,000 shares (representing 14%) of ZZ Company stock for $15 per share.. Cat Company recorded the sale of some of its investments during 2025 as follows: 1) On December 31, 2025, Cat Company sold 6,000 shares of the AA Company stock for $30 per share. 2) On September 1, 2025, Cat Company sold 4,000 shares of the ZZ Company stock for $21 per share. During 2024 and 2025, AA Company and ZZ Company reported the following information: AA Company: Net income. Total dividends paid Market value at Dec 31 ZZ Company: Net income Total dividends paid Market value at Dec 31 2024 $200,000 $105,000 $27 per share 2024 $260,000 $125,000 $26 per share 2025 $160,000 $ 35,000 $24 per share 2025 $225,000 $100,000 $29 per share Calculate the balance in the Investment in AA Company account reported on Cat Company's December 31, 2024 balance sheet.
On January 1, 2020 Rosen Company purchased 35,000 which is 15% of the total common stock owned by Polo Corporation for 770,000. During 2020 Polo Corporation reported a net profit of 400,000 and declared a dividend of 100,000. Requested: (a) If Rosen Company records its investment using the cost method (there is no significant effect), prepare the journal entry that Rosen Company should record in relation to the investment made. (b) Suppose that Rosen Company has significant influence in Polo Corporation so that Rosen Company must record its investment using the equity method, prepare the journal entry that Rosen company must present in relation to the value of its investment, and present the calculation of the investment balance as of December 31, 2020
Easter Company manufactures Easter chocolates and has been in operation for the pst 5 years. During the 2023 fiscal year, Easter Company purchased the following assets using a variety of financing alternatives. Easter Company follows FRS and has a December 319 year - end. Asset 1Easter Company obtained a new photocopier worth $215,000 in exchange for 9,000 common shares. At that time, the common shares of Easter Company were trading on the stock market for $25 each. Asset 2On September 1, 2023 Easter Company purchased new equipment for $500,000. The company plans on using the equipment for 10 years. During that time, it is expected the equipment will be used for a total of 30,000 machi hours. At the end of 10 years, it is estimated that the equipment will be sold for 550,000. During 2023, the equipment was used for a totall of 4, 500 machine hours. Assets 3 & 4and building were acquired for a lump sum price of $1,500,000 which was paid in cash. At the time of the land was appraised at…
Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2020. As of that date, Jackson had the following trial balance: Debit Credit Accounts payable $ 60,000 Accounts receivable $ 50,000 Additional paid-in capital 60,000 Buildings (net) (20-year life) 140,000 Cash and short-term investments 70,000 Common stock 300,000 Equipment (net) (8-year life) Intangible assets (indefinite life) 240,000 110,000 Land 90,000 Long-term liabilities (mature 12/31/22) Retained earnings, 1/1/20 Supplies 180,000 120,000 20,000 Totals $ 720,000 $ 720,000 During 2020, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2021, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2020, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of…

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