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

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ISBN:9781337690881

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Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

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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 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
On January 1, 2023, Barber Corporation paid $1,160,000 to acquire Thompson Company. Thompson maintained separate incorporation. Barber used the equity method to account for the investment. The following information is available for Thompson’s assets, liabilities, and stockholders' equity accounts on January 1, 2023: Book Value Fair Value Current assets $ 130,000 $ 130,000 Land 75,000 193,000 Building (twenty-year life) 250,000 276,000 Equipment (ten-year life) 540,000 518,000 Current liabilities 26,000 26,000 Long-term liabilities 124,000 124,000 Common stock 233,000 Additional paid-in capital 389,000 Retained earnings 223,000 Thompson earned net income for 2023 of $134,000 and paid dividends of $51,000 during the year. If Barber Corporation had net income of $468,000 in 2023, exclusive of the investment, what is the amount of consolidated net income?
Parker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet: (attached)The excess of the price paid over book value is attributable to the fixed assets, which have a fair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parker Company uses the simple equity method to record its investment in Sargent Company. The following trial balances of the two companies are prepared on December 31, 2015: Parker Sargent Current Assets . . . . . . . . . . . . . . . . . . . . . . . . 10,000 130,000 Depreciable Fixed A . . . . . . . . . . . . . . . . . . 400,000 200,000 Accumulated Depreciation . . . .. . . . . . . (106,000) (20,000) Investment in Sargent . .. .. . . . . . . . . . . . . 316,000 Current Liabilities. . . . . . . . . . . . . . . . . . . . . (60,000)…
Fredo, Incorporated, purchased 10% of Sonny Enterprises for $1,000,000 on January 1, 2024. Sonny recognized a total of $310,000 net income during 2024, paid $21,000 of dividends to Fredo during 2024, and at December 31,2024, the market value of the Sonny investment increased to $1,031,000. Required: Prepare the journal entries necessary to account for the Sonny investment, assuming that Fredo (1) does not have significant influence or (2) does have significant influence over the operating and financial policies of the investee. Complete this question by entering your answers in the tabs below. Prepare the journal entries necessary to account for the Sonny investment, assuming that Fredo lacks significant influence.
On January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $293,600. Excess patent cost amortization of $12,000 is still being recognized each year. During 2018, Seacrest reports net income of $342,000 and a $120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 8,000 shares of Seacrest on August 1, 2018, for $93,000 in cash. However, Pine retains the ability to significantly influence the investee.During the last quarter of 2017, Pine sold $50,000 in inventory (which it had originally purchased for only $30,000) to Seacrest. At the end of that fiscal year, Seacrest’s inventory retained $10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of…
On January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2018, is $293,600. Excess patent cost amortization of $12,000 is still being recognized each year. During 2018, Seacrest reports net income of $342,000 and a $120,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 8,000 shares of Seacrest on August 1, 2018, for $93,000 in cash. However, Pine retains the ability to significantly influence the investee. During the last quarter of 2017, Pine sold $50,000 in inventory (which it had originally purchased for only $30,000) to Seacrest. At the end of that fiscal year, Seacrest’s inventory retained $10,000 (at sales price) of this merchandise, which was subsequently sold in the first quarter of…
On January 1, 2024, Coronado Company purchased 8,208 shares of Whispering Company's common stock for $124,000. Immediately after the stock acquisition, the statements of financial position of Coronado and Whispering appeared as follows: Assets Cash Accounts receivable Inventory Investment in Whispering Company Plant assets Accumulated depreciation-plant assets Total Liabilities and Owners' Equity Current liabilities Mortgage notes payable Common stock, $10 par value Other contributed capital Retained earnings Total (a2) Coronado $38,250 57,310 42,270 124,000 144,750 (56,310) $350,270 : Whispering $17,170 28,620 25,000 107,510 (19,510) $158,790 $17,080 40,190 111,980 $ 126,260 54,760 $350,270 Prepare a schedule to compute the difference between book value of equity and the value implied by the purchase price. Any difference between the book value of equity and the value implied by the purchase price relates to subsidiary plant assets. Parent Share $ $26,620 $ 102,600 16,790 12,780…
At a total cost of $6,700,000, Herrera Corporation acquired 238,000 shares of Tran Corp. common stock as a long-term investment. Herrera Corporation uses the equity method of accounting for this investment. Tran Corp. has 700,000 shares of common stock outstanding, including the shares acquired by Herrera Corporation. Required: . 1. Tran Corp. reports net income of $967,000 for the current period. 2. A cash dividend of $0.29 per common share is paid by Tran Corp. during the current period. 1. Why is the equity method appropriate for the Tran Corp. investment? Herrera’s investment in Tran Corp. represents_______ of the outstanding shares of Tran Corp. An investment amount between______ and _________of the outstanding common stock of the investee is presumed to represent significant influence. The equity method isappropriate when the investor can exercise significant influence over the investee.
On July 1, 2023, Jerry Corporation acquired 25% of the shares of Von, Inc. for P1,000,000. At that date, the equity of Von was P4,000,000, with all the identifiable assets and liabilities being measured at amounts equal to fair value. The table below shows the profits and losses made by Von during 2003 to 2007: Year Profit (Loss)2023 P200,0002024 (2,000,000)2025 (2,500,000)2026 160,0002027 300,000 1. The carrying amount of the investment in Von, Inc. as of December 31,2024 is2. The amount to be recognized in 2025 profit or loss related to the investment in Von, Inc. is3. The amount to be recognized in 2026 profit or loss related to the investment in Von, Inc. is4. The amount to be recognized in 2027 profit or loss related to the investment in Von, Inc. is5. The amount of the investment in Von, Inc. as of December 31,2027 is6. Prepare all journal entries from 2023 to 2027

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