On March 1, 2023, Horizon Inc. purchased 30% of the voting common stock of Coastal Company for $2,400,000. Horizon properly accounts for this investment using the equity method. At the time of the investment, Coastal's total stockholders' equity was $6,000,000. Horizon gathered the following information about Coastal's assets and liabilities whose book values and fair values differed: Asset/Liability Land Book Value Fair Value $800,000 $1,200,000 Building (25-year life) $2,500,000 $3,100,000 Patent (8-year life) $300,000 $700,000 Any excess of cost over fair value was attributed to goodwill, which has not been impaired. Coastal reported net income of $500,000 for 2023 and paid dividends of $250,000 during that year. What is the amount of the excess of the purchase price over book value?

On March 1, 2023, Horizon Inc. purchased 30% of the voting common stock of Coastal Company for $2,400,000. Horizon properly accounts for this investment using the equity method. At the time of the investment, Coastal's total stockholders' equity was $6,000,000. Horizon gathered the following information about Coastal's assets and liabilities whose book values and fair values differed: Asset/Liability Land Book Value Fair Value $800,000 $1,200,000 Building (25-year life) $2,500,000 $3,100,000 Patent (8-year life) $300,000 $700,000 Any excess of cost over fair value was attributed to goodwill, which has not been impaired. Coastal reported net income of $500,000 for 2023 and paid dividends of $250,000 during that year. What is the amount of the excess of the purchase price over book value?

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 2MC: During 2021, Anthony Company purchased debt securities as a long-term investment and classified them...

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