Question

On January 3, 2018, Matteson Corporation acquired 40 percent of the outstanding common stock of O’Toole...

On January 3, 2018, Matteson Corporation acquired 40 percent of the outstanding common stock of O’Toole Company for $1,304,000. This acquisition gave Matteson the ability to exercise significant influence over the investee. The book value of the acquired shares was $917,000. Any excess cost over the underlying book value was assigned to a copyright that was undervalued on its balance sheet. This copyright has a remaining useful life of 10 years. For the year ended December 31, 2018, O’Toole reported net income of $344,000 and declared cash dividends of $30,000. At December 31, 2018, what should Matteson report as its investment in O’Toole under the equity method?

Investment: ?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Calculation of investment balance at the year end
Particulars Amount Amount
Purchase price $ 13,04,000.00
basic 2018 equity accrual (344000*40%) $    1,37,600.00
less: amortization of copyright
excess payment to copyright allocated over 10 yr remain life
(1304000-917000)/10yr $ 38,700.00
Dividends (30000*40%) $ 12,000.00 $       50,700.00
investment balance at the year end $ 13,90,900.00
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ON JANUARY 2, 2020, RAMS CORP. ACQUIRED 30% OF THE OUTSTANDING COMMON STOCK OF COLTS CO....
ON JANUARY 2, 2020, RAMS CORP. ACQUIRED 30% OF THE OUTSTANDING COMMON STOCK OF COLTS CO. FOR $2,000,000. THIS ACQUISITION GAVE THE RAMS THE ABILITY TO EXERCISE SIGNIFICANT INFLUENCE OVER THE INVESTEE. THE 100% BOOK VALUE OF THE ACQUIRED SHARES WAS $4,500,000. ANY EXCESS COST OVER THE UNDERLYING BOOK VALUE WAS ASSIGNED TO A PATENT THAT WAS UNDERVALUED ON THE COLT'S BALANCE SHEET. THIS PATENT HAS A REMAINING USEFUL LIFE OF TEN YEARS. FOR THE YEAR ENDED DECEMBER 31, 2020,...
In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc.,...
In January 2020, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $877,000. This investment gave Domingo the ability to exercise significant influence over Martes, whose balance sheet on that date showed total assets of $4,594,000 with liabilities of $984,000. Any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. In 2020, Martes reported net income of $235,000. In 2021, Martes reported...
An investor company owns 30% of the common stock of an investee company. The investor has...
An investor company owns 30% of the common stock of an investee company. The investor has significant influence over the investee, and acquired its equity interest in the investee on January 1, 2018 for $525,000. On the date of acquisition, the investee’s stockholders equity was $1,500,000, and the fair values of the investee’s individual net assets were equal to their reported book values. During the year ended December 31, 2018, the investee reported net income of $50,000 and dividends of...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $64,500 of the fair-value price was attributed to undervalued land while $72,000 was assigned to undervalued equipment having a 10-year remaining life. The $63,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant...
On July 1, 2016, Killearn Company acquired 130,000 of the outstanding shares of Shaun Company for...
On July 1, 2016, Killearn Company acquired 130,000 of the outstanding shares of Shaun Company for $21 per share. This acquisition gave Killearn a 40 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions. As of July 1, 2016, the investee had assets with a book value of $6 million and liabilities of $232,250. At the time, Shaun held equipment appraised at $183,750 above book value; it was considered to have a seven-year remaining life with...
On January 1, 2018, Alamar Corporation acquired a 43 percent interest in Burks, Inc., for $192,000....
On January 1, 2018, Alamar Corporation acquired a 43 percent interest in Burks, Inc., for $192,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $327,000. During 2018, Burks reported net income of $83,000 and declared and paid cash dividends of $25,000. Alamar sold inventory costing $22,000 to Burks during 2018 for $39,000. Burks used all of this merchandise in its operations during 2018. Prepare all of Alamar's 2018 journal entries to...
Q3. During January 2019, Mindy, Inc. acquired 30% of the outstanding common stock of Milton Co....
Q3. During January 2019, Mindy, Inc. acquired 30% of the outstanding common stock of Milton Co. for $1,500,000. This investment gave Mindy the ability to exercise significant influence over Milton. Milton’s assets on that date were recorded at $6,400,000 with liabilities of $3,000,000. Any excess of cost over book value of Mindy’ investment was attributed to unrecorded patents having a remaining useful life of ten years. In 2019, Milton reported net income of $600,000. For 2020, Milton reported net income...
On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company...
On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,649,200 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,100,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $246,000. On January 1, 2018, Palka acquired an additional...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed,...
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,089,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,140,000 and Retained Earnings of $57,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $121,000. QuickPort attributed the $13,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following:...
On July 1, 2016, Killearn Company acquired 148,000 of the outstanding shares of Shaun Company for...
On July 1, 2016, Killearn Company acquired 148,000 of the outstanding shares of Shaun Company for $21 per share. This acquisition gave Killearn a 40 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions. As of July 1, 2016, the investee had assets with a book value of $8 million and liabilities of $1,207,750. At the time, Shaun held equipment appraised at $166,250 above book value; it was considered to have a seven-year remaining life with...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT