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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F29bbcd6d-8e57-45a3-b480-9e6c745b2b16%2F7da2f688-79e0-4d23-b1c6-91563e1161f2%2Frrdezwo_processed.png&w=3840&q=75)
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)
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
The investment represents the funds deployed in an area from which a return has to be earned.
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