Under the net asset value method, the practitioner determined the Widget Company's assets had a value of $850,000 and liabilities had a value of $300,000, including notes payable of $100,000. Determine the fair market value of a 75 percent equity interest in the Widget Company.
Q: In its first year, Firm KZ recognized $457,500 ordinary business income and a $13,250 loss on the…
A: Book income is the income shown in the financial statements of the business.Taxable income is the…
Q: Flounder Corporation purchased for $325,000 a 25% interest in Murphy, Inc. This investment enables…
A: Percentage of investment in Murphy Inc=25%Net income of Murphy Inc=$183000Dividend paid by Murphy…
Q: a. Compute Lynn’s gain recognized on the sale of the warehouse. b. What is the character of this…
A: The two forms of income that may be produced through investments or the sale of assets are ordinary…
Q: Amount Bills Term Discount Rate Date of Bills (OMR) (months) (% p.a.) January 17 275,000 4 12 If the…
A: Rebate on bill discounted is the that amount of discount which is received, but not earned. This is…
Q: Carla Vista Company's balance sheet at December 31, 2026 reports assets of $994000 and liabilities…
A: Answer For goodwill calculation Formula = Purchase consideration - total net of…
Q: EE Inc. purchased an equipment on March 31, 2019. The selling price of the asset is equal to its…
A: The measurement of asset value in case such asset is acquired through issue of securities is made…
Q: f a company exchanges an asset with a book value of $260,000, an original cost of $500,000, and a…
A: Answer : gain recognized on exchange of asset = $ 40,000
Q: This period, Amadeus Co. purchased its only available-forsale investment in the notes of Bach Co.…
A: Investments are classified as Available for sale when such investments held by the company with a…
Q: On November 1, 2018, Berry Corporation declared equipment as property dividend payable on February…
A: Before distribution of dividend in non cash form , asset should be brought to fair value through…
Q: A Ltd owns an owner-occupied asset that is measured using the revaluation model. The asset’s…
A: As per revaluation model, The asset is carried at a revalued amount, being its fair value at the…
Q: An entity is planning to sell the business to new interests. The cumulative net earnings for the…
A: At the time of purchase or acquisition of any business or empire, sometimes amount paid for…
Q: Crane Company reported net income of $470000 for the year ended 12/31/21. Included in the…
A: The cash flow statement is the one prepared by the company as a part of the financial statement to…
Q: You are auditing the financial statements of DISUKO Corporation and obtained the following…
A: Accounting models Accounting models are the methods used for accounting for investments like…
Q: Shak Company acquired a financial instrument for P4,000.000 on March 31, 2020. The financial…
A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…
Q: Minear Company reported net income of $480,000 for the year ended 12/31/21. Included in the…
A: Non-cash expenses are added to the net income and non-cash revenues are deducted from the net…
Q: The accountant preparing the financial statements has asked you to provide the fair value as of the…
A: The question is based on the concept of business accounting.
Q: Oriole Company's balance sheet at December 31, 2026 reports assets of $1054000 and liabilities of…
A: In case one company overtake the assets and liabilities of another company, then accounting for…
Q: Swifty Corporation purchased a 20% interest in Moss Inc. for $280. This investment gave Swifty…
A: Accounting journal entries are used to document accounting transactions in a company's accounting…
Q: Arizona Corp. acquired the business Data Systems for $320,000 cash and assumed all liabilities at…
A: a. Calculate the goodwill for Arizona Corporation.
Q: Oz Corporation has the following assets at year-end: Patents (net), $26,000; Land, $40,000;…
A: Preparation of partial balance sheet ( property , plant and equipment section) of OZ corporation are…
Q: PEARS Company owned three investment properties. Details of the properties are as follows:…
A: In the model of fair value, the investment property is the one which is measured at the end of the…
Q: Determine the estimated value of Entity E assuming goodwill is computed through capitalization of…
A: Answered:
Q: Concord Corporation purchased for $285,000 a 25% interest in Murphy, Inc. This investment enables…
A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…
Q: Kisses Company had the following property acquisitions of machineries during the current year: (a)…
A: Assets can be either current or non-current based on their term of life. Assets that lasts for more…
Q: The Q3 Company purchases P2,000,000 of bonds. The asset has been designated as one at fair value…
A: This question deals with the IAS 39 " Financial instruments" As per para 27 of the standard, When…
Q: Cheyenne Corporation purchased for $327 erest in Murphy, Inc. This investment enables Cheyenne to…
A: ANSWER Percentage of investment in Murphy Inc=25% Net income of Murphy Inc=$185000 Dividend paid by…
Q: Robinson Company purchased Franklin Company at a price of $2,500,000. The fair market value of…
A: Goodwill: It can be defined as an intangible asset that is measured when an existing company is…
Q: Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables…
A: Step 1: To record the investment the account of "Investment in Murphy Inc" should be debited by the…
Q: Crane Company reported net income of $487000 for the year ended 12/31/21. Included in the…
A: Cash flows from operating activities: It is a section of Statement of cash flow that explains the…
Q: Lefty's Piranha Farm generates sales revenue of $260,000 and incurs operating expenses of $140,000.…
A: Financial Management: In layman’s words, financial management is the management of the finance or…
Q: Ayayai Corporation purchased a 20% interest in Moss Inc. for $300. This investment gave Ayayai…
A: Equity method is the method which is defined as the procedure of treating the investments in linked…
Q: Lefty's Piranha Farm generates sales revenue of $260,000 and incurs operating expenses of $140,000.…
A: Financial Management: In layman’s words, financial management is the management of the finance or…
Q: Swifty Company reported net income of $481000 for the year ended 12/31/25. Included in the…
A: operating operations or activities are the main commercial endeavors of a corporation that provide…
Q: The Vary Company has total assets with a book value of $3,000,000 and a fair value of $4,000,000. A…
A: This is a structure of variable interest entity wherein the primary company does not has the voting…
Q: Lei Company acquired a financial asset at its market value of P4,800,000. Broker fees of P300,000…
A: 1. The fair value of financial asset would be recognized for $4,800,000.
Q: The Carrefour Group reported the following description of its available-for-sale investments. Assets…
A: Available-for-sale (AFS) securities are equity and debt not categorized as held-to maturity or…
Under the net asset value method, the practitioner determined the Widget Company's assets had a value of $850,000 and liabilities had a value of $300,000, including notes payable of $100,000. Determine the fair market value of a 75 percent equity interest in the Widget Company.
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
- Swifty Corporation purchased a 20% interest in Moss Inc. for $280. This investment gave Swifty significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss's net carrying amount when it was acquired. Prepare Swifty's journal entries related to this investment using the equity method. Swifty applies IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation (To record investment purchase) (To record investment income) (To record collection of dividend) Debit CreditOn January 1, Year 1, East Company purchased West Company. East Company paid $670,000 cash and assumed all of West Company's liabilities. West's books showed tangible assets of $578,000, liabilities of $54,000, and equity of $632,000. An appraiser assessed the fair market value of the tangible assets at $622,000 at the date of acquisition. On December 31, Year 4 East determines that the goodwill suffered a $32,000 permanent impairment. However, on December 31, Year 6 East estimated that it had recovered $12,000 of the impairment that had previously been considered to be permanent impairment. Based on this information, the book value of the goodwill shown on the December 31, Year 6 balance sheet is: Multiple Choice O O O $102,000. $134,000. $54,000. $70,000.Your client, Lewison International, has informed you that it has reached an agreement with Herro Company to acquire all of Herro’s assets. This transaction will be accomplished through the issue of Lewison’s common stock. After your examination of the financial statements and the acquisition agreement, you have discovered the following important facts. The Lewison common stock issued has a fair value of $800,000. The fair value of Herro’s assets, net of all liabilities, is $700,000. All asset book values equal their fair values except for one machine valued at $200,000. This machine was originally purchased two years ago by Herro for $180,000. This machine has been depreciated using the straight-line method with an assumed useful life of 10 years and no salvage value. The acquisition is to be considered a taxfree exchange for tax purposes. Assuming a 30% tax rate, what amounts will be recorded for the machine, deferred tax liability, and goodwill?
- Ayayai Corporation purchased a 20% interest in Moss Inc. for $300. This investment gave Ayayai significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss’s net carrying amount when it was acquired.Prepare Ayayai’s journal entries related to this investment using the equity method. Ayayai applies IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record investment purchase enter a debit amount enter a credit amount enter an account title to record investment purchase enter a debit amount enter a credit amount (To record investment purchase) enter an account title to record investment income enter a debit amount enter a credit…Arizona Corporation acquired the business Data Systems for $310,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $320,000, liabilities of $17,000, and stockholders' equity of $303,000. An appraiser assessed the fair market value of the tangible assets at $300,000 and liabilities at $17,000 at the date of acquisition. Arizona Corporation's financial condition just prior to the acquisition is shown in the following statements model. Balance Income Sheet Statement Assets Cash = + Liabilities + Tangible Assets ΝΑ + Stockholders Equity Goodwill Revenue Expenses = + ΝΑ = ΝΑ + Net Income 520,000 + Required 1.Compute the amount of goodwill acquired. 2.Record the acquisition in a financial statements model. Arizona Corporation's financial condition just prior to the acquisition is shown in the financial statements model. 3.Record the acquisition in general journal format. 520,000 NA Statement of Cash Flows ΝΑ = ΝΑ ΝΑEleven years ago, Lynn, Incorporated purchased a warehouse for $315,000. This year,the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption ofa $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-linedepreciation on the warehouse.Required:a. Compute Lynn’s gain recognized on the sale of the warehouse.b. What is the character of this gain?c. How would your answers change if Lynn was a noncorporate business?
- Lefty's Piranha Farm generates sales revenue of $260,000 and incurs operating expenses of $140,000. The company incurs a gain of $13,000 from selling securities classified as availablefor- sale and records an unrealized holding loss of $17,000 from adjusting securities available-forsale to fair value at the end of the year. Prepare a statement of comprehensive income for Lefty's Piranha Farm.On November 1, 2018, Berry Corporation declared equipment as property dividend payable on February 15, 2019. The carrying amount of the equipment is P700,000. Data relating to the fair values of the equipment are as follows: Date Fair value November 1, 2018 600,000 December 31, 2018 800,000 February 15, 2019 760,000 **(assume that the cost to distribute are immaterial) How much is the gain on distribution of property dividends on February 15, 2019 when the dividends were finally distributed?Concord Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000. Prepare Concord's journal entries related to this investment. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the net income.) (To record the dividend.)
- At the beginning of the current year, Jason Company acquired non-trading equity instrument for P4,000,000. The equity instrument is irrevocably designated as financial asset at fair value through other comprehensive income. The transaction cost incurred amounted to P700,000. The fair value of the instrument was P5,500,000 at year-end and the transaction cost that would be incurred on the sale of the investment is estimated at P600,000. What amount of gain should be recognized in other comprehensive income for the current year? (A P900,000 B) PO c) P200,000 D P800,000Concord Corporation purchased for $285,000 a 25% interest in Murphy, Inc. This investment enables Concord to exert significant influence over Murphy. During the year, Murphy earned net income of $185,000 and paid dividends of $54,000.Prepare Concord’s journal entries related to this investment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record the purchase enter a debit amount enter a credit amount enter an account title to record the purchase enter a debit amount enter a credit amount (To record the purchase.) enter an account title to record the net income enter a debit amount enter a credit amount enter an account title to record the net income enter a debit amount enter a credit amount (To record the net income.)…Phoenix Corporation acquired the business Sun Systems for $315,000 cash and assumed all liabilities at the date of purchase. Sun’s books showed tangible assets of $330,000, liabilities of $18,000, and stockholders’ equity of $312,000. An appraiser assessed the fair market value of the tangible assets at $305,000 and liabilities at $18,000 at the date of acquisition. Phoenix Corporation’s financial condition just prior to the acquisition is shown in the following statements model. Required 1 Compute the amount of goodwill acquired. 2 Record the acquisition in general journal format.