Required: On January 3, 2024, Matteson Corporation acquired 40 percent of the outstanding common stock of O'Toole Company for $1,379,000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $863,000. 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, 2024, O'Toole reported net income of $353,000 and declared cash dividends of $35,000. On December 31, 2024, what should Matteson report as its investment in O'Toole under the equity method? Investment

Required: On January 3, 2024, Matteson Corporation acquired 40 percent of the outstanding common stock of O'Toole Company for $1,379,000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $863,000. 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, 2024, O'Toole reported net income of $353,000 and declared cash dividends of $35,000. On December 31, 2024, what should Matteson report as its investment in O'Toole under the equity method? Investment

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

s
Denger
On January 1, 2024, Brooks Corporation exchanged $1,194,000 fair-value consideration for all of the outstanding voting stock of Chandler, Incorporated. At the acquisition date, Chandler had a book value equal to $1,150,000. Chandler’s individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $216,000 with an estimated remaining life of six years. The Chandler acquisition was Brooks’s only business combination for the year. In case expected synergies did not materialize, Brooks Corporation wished to prepare for a potential future spin-off of Chandler, Incorporated. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2024, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Accounts Brooks Corporation…
On 1 July 2022, Birds Ltd acquired all the issued shares of Tokyo Ltd for $174 800. At this date the equity of Tokyo Ltd consisted of share capital of $80 000 and retained earnings of $68 800. All the identifiable assets and liabilities of Tokyo Ltd were recorded at amounts equal to fair value except for the following. Carrying amount Fair value Patent $60 000 $72 000 Plant (cost $80 000) 40 000 48 000 Inventories 21 600 28 000 The patent was considered to have an indefinite life. It was estimated that the plant had a further life of 10 years, and was depreciated on a straight-line basis. All the inventories were sold by 30 June 2023. In May 2023, Tokyo Ltd transferred $20 000 from the retained earnings on hand at 1 July 2022 to a general reserve. In June 2023, Tokyo Ltd conducted an impairment test on the patent and on the goodwill acquired. As a result, the goodwill was considered to be impaired by $1200. The tax rate is 30%. 1.Required Prepare the acquisition analysis at 1 July…
Parson Company acquired an 80 percent interest in Syber Company on January 1, 2020. Any portion of Syber's business fair value in excess of its corresponding book value was assigned to trademarks. This intangible asset has subsequently undergone annual amortization based on a 15-year life. Over the past two years, regular intra-entity inventory sales transpired between the two companies. No payment has yet been made on the latest transfer. All dividends are paid in the same period as declared. The individual financial statements for the two companies as well as consolidated totals for 2021 follow (credit balances indicated by parentheses): ParsonCompany SyberCompany ConsolidatedTotals Sales $ (744,000 ) $ (654,000 ) $ (1,223,000 ) Cost of goods sold 450,000 412,000 691,000 Operating expenses 104,000 107,000 213,300 Income of Syber (102,960 ) 0 0 Separate company net income $ (292,960 ) $ (135,000 )…
11. On December 1, 2021, ABC Company acquired all the assets and liabilities of XYZ Inc. issuing 100,000 shares. The fair value of XYZ's assets and liabilities at this date are presented below (see image) The financial year for ABC Company is January to December. The fair value of each ABC share at acquisition date is P1.90. At the acquisition date, the acquirer could only determine a provisional fair value for the Plant. On March 9, 2022, ABC received the final value from the independent appraisal, the fair value of the Plant at acquisition date is P131,000 with a 5 year remaining useful life from date of acquisition. Determine a) Fair value of the net assets acquired b) amount of goodwill or gain from acquisition
Dengar
On January 3, 2021, Matteson Corporation acquired 30 percent of the outstanding common stock of O'Toole Company for $1,462, 000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $859, 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 $350, 000 and declared cash dividends of $45, 000. On December 31, 2021, what should Matteson report as its investment in O'Toole under the equity method?
No. 32
Following are selected account balances from Peregrine Company and Sprano Corporation as of December 31, 2021: On January 1, 2021, Peregrine acquired all of Sprano’s outstanding stock for $680,000 fair value in cash and common stock. At the date of acquisition, copyrights (with a 6-year remaining life) were undervalued by $120,000 (i.e., market value was higher than book value). Peregrine applies the equity method to maintain the Investment in Sprano account. For the year ending December 31, 2021 determined the total Equity Income in Sprano reported in Peregrine’s book.
On 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information. All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.…
In January 1, 2011, Cullmon Company acquired an 80% interest in Toner Company for a purchase price that was $550,000 over the book value of Toner’s Stockholders’ Equity on the acquisition date. The Cullmon allocated the excess to the following [A] assets: [A] Asset Initial Fair Value Useful Life (years) Patent 300,000 10 Goodwill 250,000 Indefinite $550,000 Toner sells inventory to the Cullmon (upstream) which includes that inventory in products that it (Cullmon), ultimately, sells to customers outside of the controlled group. You have compiled the following data as of 2016 and 2017: 2016 2017 Transfer price for inventory sale $ 671,000 $ 733,000 Cost of goods sold (615,000) (653,000) Gross profit $ 56,000 $ 80,000 % inventory remaining 25% 35% Gross profit deferred $ 14,000 $ 28,000 EOY Receivable/Payable $ 90,000 $ 100,000 The inventory not…