Chapter 1, Problem 27P

Vishnu

Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield, Incorporated, on January 1, 2023, for $316,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $796,000 at January 1, 2023. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values, except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2023. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $192,000 in 2023 and $232,000 of net income during 2024. Dividends of $64,000 and $96,000 are declared and paid in 2023 and 2024, respectively. Belden uses the equity method. Required: a. On its 2024 comparative income statements, how much income would Belden report for 2023 and 2024 in connection with the company's investment in Sheffield? b. If Belden sells its…

Belden, Incorporated, acquires 30 percent of the outstanding voting shares of Sheffield, Incorporated, on January 1, 2023, for $306,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $792,000 at January 1, 2023. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values, except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2023. No goodwill resulted from Belden's share purchase. Sheffield reported net income of $160,000 in 2023 and $230,000 of net income during 2024. Dividends of $100,000 and $98,000 are declared and paid in 2023 and 2024, respectively. Belden uses the equity method. Required: a. On its 2024 comparative income statements, how much income would Belden report for 2023 and 2024 in connection with the company's investment in Sheffield? b. If Belden sells its…

Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $316,000, which gives Belden the ability to significantly influence Sheffield. Sheffield has a net book value of $796,000 at January 1, 2017. Sheffield's asset and liability accounts showed carrying amounts considered equal to fair values except for a copyright whose value accounted for Belden's excess cost over book value in its 30 percent purchase. The copyright had a remaining life of 16 years at January 1, 2017. No goodwill resulted from Belden's share purchase.   Sheffield reported net income of $192,000 in 2017 and $232,000 of net income during 2018. Dividends of $64,000 and $96,000 are declared and paid in 2017 and 2018, respectively. Belden uses the equity method.   On its 2018 comparative income statements, how much income would Belden report for 2017 and 2018 in connection with the company's investment in Sheffield? If Belden sells its entire investment in…

On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $300,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $200,000, and Rockne's assets and liabilities had a collective net fair value of $500,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $160,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $250,00O in 2020 and $300,000 in 2021. Approximately 30 percent of the inventory purchased during any one year is not used until the following year. a. What is the noncontrolling interest's share of Rockne's 2021 income? b. Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.

On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $300,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $200,000, and Rockne's assets and liabilities had a collective net fair value of $500,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $160,000 in 2021. Since being acquired, Rockne has regularly supplied inventory to Doone at 25 percent more than cost. Sales to Doone amounted to $250,000 in 2020 and $300,000 in 2021. Approximately 30 percent of the inventory purchased during any one year is not used until the following year. a) What is the non controlling interest's share of Rockne's 2021 income? b) Prepare Doone's 2021 consolidation entries required by the intra-entity inventory transfers.

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $195,000 and appropriately accounted for the investment using the fair - value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $624,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $ 2,080,000 in total. Seida's January 1, 2021, book value equaled $1,930,000, although land was undervalued by $130,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $342,000 and declared and paid dividends of $100,000. Prepare the 2021 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Record acquisition of Seida stock. Record the 40% income earned during period by Seida. Record 2021…

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $195,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $624,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,080,000 in total. Seida’s January 1, 2021, book value equaled $1,930,000, although land was undervalued by $130,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $342,000 and declared and paid dividends of $100,000.   Prepare the 2021 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)   Record acquisition of Seida stock. Record the 40% income earned during period by Seida. Record 2021…

Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $183,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2021, Milani purchased an additional 30 percent of Seida for $606,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,020,000 in total. Seida’s January 1, 2021, book value equaled $1,870,000, although land was undervalued by $136,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an eight-year remaining life. During 2021, Seida reported income of $315,000 and declared and paid dividends of $106,000.   Prepare the 2021 journal entries for Milani related to its investment in Seida. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2020, for $183,000 and appropriately…