Problem 5-13 (Algo) (LO 5-3, 5-4, 5-5) On January 1, 2023, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,435,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $920,000, retained earnings of $470,000, and a noncontrolling interest fair value of $615,000. Corgan attributed the excess of fair value over Smashing's book valu to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Items 2023 2024 Net Income $ 370,000 350,000 Dividends Declared $ 57,000 67,000 Inventory Purchases from Corgan $ 320,000 340,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 30 percent of the current yea purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024. b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of Corgan and Smashing.

Problem 5-13 (Algo) (LO 5-3, 5-4, 5-5) On January 1, 2023, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,435,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $920,000, retained earnings of $470,000, and a noncontrolling interest fair value of $615,000. Corgan attributed the excess of fair value over Smashing's book valu to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Items 2023 2024 Net Income $ 370,000 350,000 Dividends Declared $ 57,000 67,000 Inventory Purchases from Corgan $ 320,000 340,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 30 percent of the current yea purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024. b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of Corgan and Smashing.

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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On January 1, 2022, Aronsen Company acquired 90 percent of Sledel Company's outstanding shares. Sledel had a net book value on that date of $450,000: common stock ($12 par value) of $240,000 and retained earnings of $210,000. Aronsen paid $691,200 for this Investment. The acquisition-date fair value of the 10 percent noncontrolling Interest was $76,800. The excess fair value over book value associated with the acquisition was used to increase land by $222,000 and to recognize copyrights (12-year remaining life) at $96,000. Subsequent to the acquisition, Aronsen applied the Initial value method to its Investment account. In the 2022-2023 period, the subsidiary's retained earnings Increased by $230,000. During 2024, Siedel earned Income of $94,000 while declaring $34,000 in dividends. Also, at the beginning of 2024, Siedel Issued 4,000 new shares of common stock for $52 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and…
A5
ces On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $980,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $700,000, retained earnings of $250,000, and a noncontrolling interest fair value of $245,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Items 2023 2024 Net Income $ 150,000 130,000 Dividends Declared $ 35,000 45,000 Inventory Purchases from Corgan $ 100,000 120,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the current year purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December…
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2. Cinema Company acquired 75 percent of Movie Corporation's shares on December 31, 2015, at underlying book value of $98,000. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Movie Corporation. Movie's balance sheet on January 1, 2018, contained the following balances: Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets $50,000 Accounts Payable 35,000 Bonds Payable 40,000 Common Stock 300,000 Additional Paid-In Capital (100,000) Retained Earnings $325,000 Total Liabilities and Equities $40,000 100,000 50,000 Prepare the entries recorded on the books of each company. 75,000 60,000 $325,000 On January 1, 2018, Movie acquired 3,500 of its own $2 par value comm on shares from Nonaffiliated Corporation for $6 per share.
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Problem 1-13 (Algo) (LO 1-4, 1-5) On January 3, 2021, Matteson Corporation acquired 30 percent of the outstanding common stock of O'Toole Company for $1,335,000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $873,000. Any excess cost over the underlying book value was assigned to a copyright that was undervalued on its balance sheet. This copyright has a remaining useful life of 10 years. For the year ended December 31, 2021, O'Toole reported net income of $324,000 and declared cash dividends of $35,000. On December 31, 2021, what should Matteson report as its investment in O'Toole under the equity method? Investment
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HI Ltd. Forfeited 10 shares of Rs 10 each (Rs.6 called up) issued at a discount of 10% to Mr. Y on which he had paid an application money of Rs. 2 per share. Out of these, 8 shares werereissued to Z as Rs.8 called up for Rs.9 per share. Journalize.
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