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

See similar textbooks

Similar questions

Ivanhoe Corporation owned 20000 shares of Flint Corporation's $5 par value common stock. These shares were purchased in 2022 for $223000. On September 15, 2026, Ivanhoe declared a property dividend of one share of Flint for every ten shares of Ivanhoe held by a stockholder. On that date, when the market price of Flint was $30 per share, there were 180000 shares of Ivanhoe outstanding. What NET reduction in retained earnings would result from this property dividend? O $200700 O $540000 O $211850 O $339300
Haynes, Inc., obtained 100 percent of Turner Company’s common stock on January 1, 2020, by issuing 11,700 shares of $10 par value common stock. Haynes’s shares had a $15 per share fair value. On that date, Turner reported a net book value of $134,050. However, its equipment (with a five-year remaining life) was undervalued by $7,550 in the company’s accounting records. Also, Turner had developed a customer list with an assessed value of $33,900, although no value had been recorded on Turner’s books. The customer list 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, 2020: Haynes Turner Revenues $ (730,000 ) $ (240,000 ) Expenses 493,000 125,000 Investment income Not given 0 Dividends declared 120,000 50,000 The following balances come from the individual accounting records of these two companies as of December 31, 2021:…
On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $20 per share. Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Marshall Company Book Value Tucker Company Book Value Cash $ 60,000 $ 20,000 Receivables 270,000 90,000 Inventory 360,000 140,000 Land…
On August 1, 2023, Sheffield Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation for $1,230,000. At the time of purchase, WLT's net assets were undervalued by $72,200 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $32000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,353,000. On January 10, 2024, WLT paid a cash dividend. Sheffield's ownership entitles it to $18,000 of the dividend. Prepare the journal entries on the books of Sheffield Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Sheffield elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the…
On January 1, 2022, Nichols Enterprises paid $100,000 for 6,200 shares of Elliott Electronics common stock. The ownership in Elliott Electronics is 10%. Nichols Enterprises does not have significant influence over Elliott Electronics. Elliott reported net income of $61,000 for the year ended December 31, 2022. The fair value of the Elliott stock December 31,2022 was $55 per share. What amount will be reported in the balance sheet of Nichols Enterprises for the investment in Elliott at December 31, 2022? Multiple Choice $341,000. $296,000. $281,000. $266,000.
4. On January 1, 2021, Evan Co. purchased all of the common stock of Kristopher Corp. by issuing 15,000 shares of $1 par value common stock. Evan’s shares had a $30 per share fair value. On that date, Kristopher reported a net book value of $275,000. However, its equipment (with a five-year remaining life) was undervalued by $60,000 in the company’s accounting records. Any excess of consideration transferred over fair value of assets and liabilities is assigned to an unrecorded patent to be amortized over ten years. During 2021, Kristopher earned net income of $155,000 and paid dividends of $40,000. Kristopher’s net income and dividends for 2022 were $178,000 and $65,000, respectively. Required: Calculate the balance in the investment account on the books of Evan Co. at the end of 2022 under each of the following methods: a. equity method b. partial equity method c. initial value method. .
Terry’s Concrete acquired 20% of the outstanding common stock of Blakeley, Inc. on January 1, 2010, by paying $1,100,000 for 40,000 shares. Blakeley declared and paid a $0.50 per share cash dividend on June 30 and again on December 31, 2010. Blakeley reported net income of $600,000 for the year. At December 31, 2010, the market price of Blakeley’s common stock was $40 per share. Instructions (a) Prepare the journal entries for Terry’s Concrete for 2010 assuming Terry’s cannot exercise significant influence over Blakeley
On May 31,2018, Fedex Company acquired Aramex Company's outstanding stock by paying $400,000 cash and issuing 10,000 shares of its own $30 par value common stock, when the market price was $32 per share. Fedex paid legal and accounting fees amounting to S35,000 in addition to stock issuance costs of $8,000. Aramex is dissolved on the date of the acquisition. Balance sheet information for Fedex and Aramex immediately preceding the acquisition is shown below, including fair values for Aramex's assets and liabilities. Fedex Aramex Aramex Book Value Book Value Fair Value Cash 490,000 $140,000 $140,000 Accounts Receivable 560,000 280,000 280,000 Inventory 520,000 200,000 260,000 Land 460,000 150,000 140,000 Plant Assets - Net 980,000 325,000 355,000 Construction Permits 380,000 170,000 190,000 Accounts Payable Other accrued expenses Notes Payable Common Stock ($30 par) Common Stock ($20 par) (460,000) (160,000) (800,000) (960,000) (140,000) (140,000) (45,000) (45,000) (460,000) (460,000)…
On August 1, 2020, Oriole Corporation purchased 20% of the outstanding voting shares in WLT Corporation for $1,230,000. At the time of purchase, WLT’s net assets were undervalued by $72,200 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2020, WLT reported a net income of $329,000. Also, on December 31, 2020, the fair value of the investment in WLT shares was $1,353,000. On January 10, 2021, WLT paid a cash dividend. Oriole’s ownership entitles it to $18,000 of the dividend.Prepare the journal entries on the books of Oriole Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Oriole elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If…