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Stattgrue Ltd obtains control of Naonite Ltd through two cash acquisitions. At July 1, 2018 purchased 25% for $205,000 when the 100% fair value of Naonite Ltd was $820,000 book value $600,000 a July 1, 2020 purchased 50% for $525,000, 100% fair value $1,050,000 and book value $750,000. A customer base with a 20-year life represented the initial excess payment.

Stattgrue Ltd obtains control of Naonite Ltd through two cash acquisitions. At July 1, 2018 purchased 25% for $205,000 when the 100% fair value of Naonite Ltd was $820,000 book value $600,000 a July 1, 2020 purchased 50% for $525,000, 100% fair value $1,050,000 and book value $750,000. A customer base with a 20-year life represented the initial excess payment.

FINANCIAL ACCOUNTING
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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Stattgrue Ltd obtains control of Naonite Ltd through two cash acquisitions. At July 1, 2018 purchased 25% for $205,000 when the 100% fair value of Naonite Ltd was $820,000 book value $600,000 a July 1, 2020 purchased 50% for $525,000, 100% fair value $1,050,000 and book value $750,000. A customer base with a 20-year life represented the initial excess payment. Naonite Ltd Income and Dividends for 2019-2021: Income Dividend June 30, 2019 90,000 30,000 June 30, 2020 120,000 30,000 June 30, 2021 150,000 60,000 Calculate the Investment in Naonite Ltd at July 1, 2020 (before the purchase of the additional 50%) and June 30, 2021 (before consolidation)
Transcribed Image Text:Stattgrue Ltd obtains control of Naonite Ltd through two cash acquisitions. At July 1, 2018 purchased 25% for $205,000 when the 100% fair value of Naonite Ltd was $820,000 book value $600,000 a July 1, 2020 purchased 50% for $525,000, 100% fair value $1,050,000 and book value $750,000. A customer base with a 20-year life represented the initial excess payment. Naonite Ltd Income and Dividends for 2019-2021: Income Dividend June 30, 2019 90,000 30,000 June 30, 2020 120,000 30,000 June 30, 2021 150,000 60,000 Calculate the Investment in Naonite Ltd at July 1, 2020 (before the purchase of the additional 50%) and June 30, 2021 (before consolidation)
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The investment represents the funds deployed in an area from which a return has to be earned.

 

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