Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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On January 1, 2021, Morey, Inc., exchanged $167,900 for 25 percent of Amsterdam Corporation. Morey appropriately applied the
equity method to this investment. At January 1, the book values of Amsterdam's assets and liabilities approximated their fair values.
On June 30, 2021, Morey paid $602,000 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95
percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam's total fair value. At June 30, the carrying
amounts of Amsterdam's assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to
goodwill.
Amsterdam reports the following amounts at December 31, 2021 (credit balances shown in parentheses):
Revenues
Expenses
Retained earnings, January 1
Dividends declared, October 1
Common stock
Amsterdam's revenue and expenses were distributed evenly throughout the year, and no changes in Amsterdam's stock have
occurred.
a. Using the acquisition…
On January 1, 2021, Morey, Inc., exchanged $176,425 for 25 percent of Amsterdam Corporation. Morey appropriately applied the
equity method to this investment. At January 1, the book values of Amsterdam's assets and liabilities approximated their fair values
On June 30, 2021, Morey paid $626,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95
percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam's total fair value. At June 30, the carrying
amounts of Amsterdam's assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to
goodwill
Amsterdam reports the following amounts at December 31, 2021 (credit balances shown in parentheses);
Revenues
Expenses
Retained earnings, January 11
Dividends declared, October 1
Common stock
Amsterdam's revenue and expenses were distributed evenly throughout the year, and no changes in Amsterdam's stock have
occurred
a. Using the acquisition…
On January 1, 2024, Morey, Incorporated, exchanged $180,575 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values.
On June 30, 2024, Morey paid $605,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill.
Amsterdam reports the following amounts at December 31, 2024 (credit balances shown in parentheses):
Revenues
$ (291,000)
Expenses
186,000
Retained earnings, January 1
(237,300)
Dividends declared, October 1
10,000
Common stock
(500,000)
Amsterdam’s revenue and expenses were distributed evenly throughout the year, and no…
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- On January 1, 2018, Morey, Inc., exchanged $178,000 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values.On June 30, 2018, Morey paid $560,000 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill.Amsterdam reports the following amounts at December 31, 2018 (credit balances shown in parentheses):Amsterdam’s revenue and expenses were distributed evenly throughout the year and no changes in Amsterdam’s stock have occurred.Using the acquisition method, compute the following:a. The acquisition-date fair value of Amsterdam to be included in…arrow_forwardOn January 1, 2018, Morey, Inc., exchanged $167,900 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values. On June 30, 2018, Morey paid $602,000 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill. Amsterdam reports the following amounts at December 31, 2018 (credit balances shown in parentheses): Revenues $ (381,000 ) Expenses 221,000 Retained earnings, January 1 (212,400 ) Dividends declared, October 1 20,000 Common stock (500,000 ) Amsterdam’s revenue and expenses were distributed evenly…arrow_forwardVikram bhaiarrow_forward
- On May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021. Jazzie’s year ends on December 31st. The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%. Suppose that the Mister Division's assets had not been sold by December 31, 2021, but were considered held for sale. Assume that the fair value of these assets at December 31 was $40 million. In their 2021 income statement, Jazzie Co. would report for discontinued operations: Group of answer choices a $6 million after tax loss. a $10 million after tax loss. a $10.8 million after tax loss. an $18 million after tax loss.arrow_forwardOn May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021. Jazzie’s year ends on December 31st. The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%. Suppose that the Mister Division's assets had not been sold by December 31, 2021, but were considered held for sale. Assume that the fair value of these assets at December 31 was $80 million. In their 2021 income statement, Jazzie Co. would report for discontinued operations: Group of answer choices a $6 million after tax loss. a $10 million after tax loss after tax income of $13.2 million. after tax income of $22 million.arrow_forwardUse the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021. Jazzie’s year ends on December 31st. The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%. In the 2021 income statement for Jazzie Co., they would report after tax income from discontinued operations of: Group of answer choices $9.2 million. $13.2 million. $22 million. $26 million.arrow_forward
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