Parkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 11,700 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$134,050. However, its equipment (with a 5-year remaining life) was undervalued by $7,550 in the company's accounting records. Also,Salerno had developed computer software with an assessed value of $33,900, although no value had been recorded on Salerno'sbooks. The computer software had an estimated remaining useful life of 10 years.The following balances come from the individual accounting records of these two companies as of December 31, 2023:Salerno$ (240,000)125,000050,000ItemsRevenuesExpensesInvestment incomeDividends declaredThe following balances come from the individual accounting records of these two companies as of December 31, 2024:Salerno$(310,000)162, 1000ItemsParkovash$ (730,000)493,000Not given120,000RevenuesExpensesInvestment incomeDividends declaredEquipmentParkovash$ (913,000)519,300Not given140,000572,00030,000383,000Required:a. What balance does Parkovash's Investment in Salerno account show on December 31, 2024, when the equity method is applied?b. What is the consolidated net income for the year ending December 31, 2024?c-1. What is the consolidated equipment balance as of December 31, 2024?c-2. Would this answer be affected by the investment method applied by the parent?d. Prepare entry *C for the beginning of the Retained Earnings account on a December 31, 2024 by using initial value, partial equityand equity method.

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Parkovash, Incorporated, obtained 100 percent of Salerno Company's common stock on January 1, 2023, by issuing 11,700 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 $134,050. However, its equipment (with a 5-year remaining life) was undervalued by $7,550 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $33,900, 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 11,700 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 $134,050. However, its equipment (with a 5-year remaining life) was undervalued by $7,550 in the company's accounting records. Also, Salerno had developed computer software with an assessed value of $33,900, 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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