Parkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 10,200 shares of$10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of$106,150. However, its equipment (with a 5-year remaining life) was undervalued by $9,050 in the company's accounting records. Also,Salerno had developed computer software with an assessed value of $37,800, although no value had been recorded on Salerno'sbooks. The computer software had an estimated remaining useful life of 10 years.The following balances come from the individual accounting records of these two companies as of December 31, 2023:ItemsRevenuesExpensesInvestment income.Dividends declaredItemsParkovash$ (718,000)461,000Not given130,000The following balances come from the individual accounting records of these two companies as of December 31, 2024:RevenuesExpensesInvestment income.Dividends declaredEquipmentSalerno$ (332,000)142,000090,000Parkovash$ (895,000)482,200Not given150,000554,000Salerno$(387,000)181,700080,000351,000Required:a. What balance does Parkovash's Investment in Salerno account show on December 31, 2024, when the equity method is applied?

Investment means an asset purchased in expectation of earning a return on such investment in future…

Parkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 10,200 shares of $10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of $106,150. However, its equipment (with a 5-year remaining life) was undervalued by $9,050 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $37,800, although no value had been recorded on Salerno's books. The computer software had an estimated remaining useful life of 10 years.

Parkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 10,200 shares of $10 par value common stock. Parkovash's shares had a $15 per share fair value. On that date, Salerno reported a net book value of $106,150. However, its equipment (with a 5-year remaining life) was undervalued by $9,050 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $37,800, although no value had been recorded on Salerno's books. The computer software had an estimated remaining useful life of 10 years.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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