Chapter 9, Problem 9SE

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On January 1, 2023, Smeder Company, an 80% owned subsidiary of Collins, Incorporated, transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash. At the date of transfer, Smeder’s records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used. Smeder reported net income of $28,000 and $32,000 for 2023 and 2024, respectively. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes. Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, what amount of this gain should be recognized for consolidation purposes for 2023?   Multiple Choice   $1,200   $12,000   $9,600   $8,400   $2,000

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what is the equity at the end of the year?

Webb Company purchased 90% of Jones Company for $990,000 when the book value of Jones was $1,000,000. Jones currently has 100,000 shares outstanding and a book value of $1,200,000. Jones sells 20,000 shares of previously unissued shares of its common stock to outside parties for $10 per share. What is the new percent ownership of Webb in Jones after the stock issuance?   Multiple Choice   60%   75%   90%   80%   64%

A parent company owns a 70% interest in a subsidiary whose stock has a valuation basis of $27 per share. On the last day of the year, the subsidiary issues new shares for $27 per share, and the parent buys its 70% interest in the new shares. Which of the following statements is true?   Multiple Choice   Since the sale was made at the end of the year, the parent’s investment account is not affected.   Since the shares were sold for the same per share amount as the adjusted subsidiary value per share, and the parent bought 70% of the shares, the parent’s investment account is not affected except for the total acquisition amount for the new shares.   Since the shares were sold for the same per share amount as the adjusted subsidiary value per share, the parent’s investment account must be decreased.   None of these answer choices are correct.   Since the shares were sold for the same per share amount as the adjusted subsidiary value per share, the parent’s investment…

Compute Ovitz Corporation's dividend yield during 2023 of this financial accounting question

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