ACCOUNTING (LOOSELEAF)-W/STD.GDE+ACCESS
ACCOUNTING (LOOSELEAF)-W/STD.GDE+ACCESS
27th Edition
ISBN: 9781337692298
Author: WARREN
Publisher: CENGAGE L
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Chapter 8, Problem 8.9CP

(a)

To determine

Cash and cash equivalents: Cash is the money readily available in the form of currency. Cash equivalents are the near-cash items, which are readily convertible into cash.  Cash equivalents have a maturity period of three months, or less than 3 months.

To compute: Monthly cash expenses for Year 3, Year 2 and Year 1.

(b)

To determine

To compute: the ratio of cash to monthly cash expenses.

(c)

To determine

To comment: Ratio of cash to monthly operating expenses for Year 3, Year 2, and Year.

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Consolidation after Several Years  On January 1, 2016, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams’ shares used in the exchange was $37,500,000. At the time of acquisition, the book value of Baker’s shareholders’ equity was $5,000,000, and the book value of Baker’s building (25-year life) exceeded its fair value by $1,000,000. From the date of acquisition to December 31, 2021, Baker had cumulative net income of $1,300,000. For 2022, Baker reported net income of $300,000. Adams uses the complete equity method to account for its investment in Baker. There is no goodwill impairment loss for the period 2016 through 2021, but there is impairment loss of $100,000 in 2022. Baker declared no dividends during the period 2016–2022.  Required  Prepare the working paper eliminating entries necessary to consolidate the financial statements of Adams and Baker at December 31, 2022. Enter numerical answers using all zeros (do not abbreviate in thousands or in…

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ACCOUNTING (LOOSELEAF)-W/STD.GDE+ACCESS

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