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

Author:Jay Rich, Jeff Jones

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…
Answer? ? Financial accounting question
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…
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)…
Porter Corporation purchased 80% of the common stock of Salem Company for $850,000 on January 1, 2013. During the next three years, Salem had the following income and Dividends paid: Year Income Dividends 2013 $100,000 $25,000 2014 $110,000 $35,000 2015 $170,000 $60,000 Prepare the journal entries made under both methods and then compute the ending balance in the "investment" account under both methods.
On January 1, 2017, Server Company purchased a machine with an expected economic life of five years. On January 1, 2019, Server sold the machine to Patron Corporation and recorded the following entry: Cash 45,000 Accumulated Depreciation 28,000, Machine 70,000, Gain on Sale of Equipment 3,000. Patron Corporation holds 75 percent of server's voring shares.Server reported a net income of $50,000, and Patron reported income from its own operations of 100,000 for 2019/. There is no change in the economic life of the equipement as a result of the intercorporate tranfer. Based on the preceding information, in the preparation of the 2019 consolidated balance sheet, the machine will be : Debited for 25,000, Credited for 45,000, debited for 1,000, debited for 15,000
As a long-term investment at the beginning of the 2024 fiscal year, Florists International purchased 25% of Nursery Supplies Incorporated's 16 million shares for $59 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $36 million and distributed cash dividends of $2.25 per share. At the end of the year, the fair value of the shares is $55 million. Required: Prepare the appropriate journal entries from the purchase through the end of the year.
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…

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