On January 1, Year 1, Jacklin Corporation (JC) acquired
60 percent (60,000 shares of $2 par...
On January 1, Year 1, Jacklin Corporation (JC) acquired
60 percent (60,000 shares of $2 par common stock) of Mantz
Corporation (MC) for $2,500,000 in cash. The acquisition date fair
value of the noncontrolling interest’s shares (40 percent) was $40
per share. JC uses the Initial Value Method for its internal
accounting.
At the time of the acquisition MC has the following
asset and liability accounts:
Book Value Fair Value Difference
Current Assets $ 500,000 $ 500,000 $ 0
PPE...
On January 1, Year 1, Jacklin Corporation (JC) acquired
60 percent (60,000 shares of $2 par...
On January 1, Year 1, Jacklin Corporation (JC) acquired
60 percent (60,000 shares of $2 par common stock) of Mantz
Corporation (MC) for $2,500,000 in cash. The acquisition date fair
value of the noncontrolling interest’s shares (40 percent) was $40
per share. JC uses the Initial Value Method for its internal
accounting.
At the time of the acquisition MC has the following
asset and liability accounts:
Book Value Fair Value Difference
Current Assets $ 500,000 $ 500,000 $ 0
PPE...
The Chan Corporation purchased the net assets (existing
liabilities were assumed) of the Tonta Company for...
The Chan Corporation purchased the net assets (existing
liabilities were assumed) of the Tonta Company for $900,000 cash.
The balance sheet for the Tonta Company on the date of acquisition
showed the following:
Assets
Current assets
$100,000
Equipment
300,000
Accumulated depreciation
(100,000)
Plant
600,000
Accumulated depreciation
(250,000)
Total
$650,000
Liabilities and Equity
Bonds payable, 8%
$200,000
Common stock, $1 par
100,000
Paid-in capital in excess of par
200,000
Retained earnings
150,000
Total
$650,000
Required:
The equipment has a fair value...
CCC - Balance sheets 31 December 2018, 2017 assets 2018 2017
Fixed assets, net 600,000 500,000...
CCC - Balance sheets 31 December 2018, 2017 assets 2018 2017
Fixed assets, net 600,000 500,000 Inventory 70,000 50,000 Accounts
receivable, net 100,000 150,000 Cash 30,000 50,000 Total current
assets € 200,000 € 250,000 Total assets € 800,000 € 750,000 Equity
and liabilities 2018 2017 Share capital 300,000 200,000 Retained
earnings 80,000 100,000 Total equity € 380,000 € 300,000 Payable
bonds 200,000 250,000 Accounts payable 150,000 120,000 Income taxes
payable 70,000 80,000 Total current liabilities € 220,000 € 200,000
Total...
Assessment 1:
Accounting for Equity Investments
Exercise 3 Worksheet:
Consolidated Balances
On January 1, 2015, Pueblo...
Assessment 1:
Accounting for Equity Investments
Exercise 3 Worksheet:
Consolidated Balances
On January 1, 2015, Pueblo Corporation purchased all of Spartan
Company’s outstanding stock for $1,200,000 cash. On that date,
Spartan’s accounting records showed net assets of $940,000, even
though equipment, with a life of 10 years, was undervalued on the
books by $180,000. The life of recognized goodwill is considered to
be indefinite. Spartan reported $180,000 net income in 2015 and
$200,000 in 2016. The subsidiary paid dividends of...
On January 1, 2018, Morey, Inc., exchanged $182,250 for 25
percent of Amsterdam Corporation. Morey appropriately...
On January 1, 2018, Morey, Inc., exchanged $182,250 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 $563,500 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...
On January 1, 2014, Pirate Company acquired an 80% interest in
Sun Company for $425,000. On...
On January 1, 2014, Pirate Company acquired an 80% interest in
Sun Company for $425,000. On that date, Sun reported stockholder’s
equity of $400,000: $100,000 in common stock and $300,000 in
retained earnings. In setting the acquisition price, Pirate
appraised three accounts at values different from the balances
reported within Sun’s financial records: Buildings (8-year
remaining life): Undervalued by $32,500 Land: Undervalued by
$50,000 Royalty agreement (20-year remaining life): Not previously
recorded; Valued at $30,000 At December 31, 2018, the...
Following are preacquisition financial balances for Padre
Company and Sol Company as of December 31. Also...
Following are preacquisition financial balances for Padre
Company and Sol Company as of December 31. Also included are fair
values for Sol Company accounts.
Padre
Company
Sol Company
Book Values
Book Values
Fair Values
12/31
12/31
12/31
Cash
$
400,000
$
120,000
$
120,000
Receivables
220,000
300,000
300,000
Inventory
410,000
210,000
260,000
Land
600,000
130,000
110,000
Building and equipment (net)
600,000
270,000
330,000
Franchise agreements
220,000
190,000
220,000
Accounts payable
(300,000)
(120,000)
(120,000)
Accrued expenses
(90,000)
(30,000)
(30,000)
Longterm liabilities...
On January 1, 2013, Starbucks acquired
100% of Dunkin. On this date:
Starbucks acquired 100% of...
On January 1, 2013, Starbucks acquired
100% of Dunkin. On this date:
Starbucks acquired 100% of Dunkin’s outstanding common stock for
$842,000 in cash.
Dunkin’s Buildings had a FV in excess of BV of $72,000 and
remaining Useful Life was 12 years.
Dunkin’s Equipment had a FV in excess of BV of $10,000 and
remaining Useful Life was 10 years.
Dunkin had an unrecorded Patent with a FMV $20,000 and remaining
Useful Life was 20 years.
Dunkin’s Stockholder’s Equity total...
On January 1, 2018, Walker Corporation had the following account
balances:
Common stock, $1 par, 250,000...
On January 1, 2018, Walker Corporation had the following account
balances:
Common stock, $1 par, 250,000 shares issues 250,000
Paid-in-capital - excess of par, common 500,000
Preferred stock, $100 par, 10,000 shares outstanding
1,000,000
Paid-in-capital - excess of par, preferred 100,000
Retained Earnings 2,000,000
Treasury stock, at cost, 5,000 shares 25,000
During 2018, the following transactions occurred relating to
common stock:
1/15/18 - Declared a property dividend of 100,000 shares of
Wagner Company (book value $10 per share; fair value...