Question

On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation....

On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation. Barber used the equity method to account for the investment. The following information is available for Thompson’s assets, liabilities, and stockholders' equity accounts on January 1, 2020:

Book
Value
Fair
Value
Current assets $ 130,000 $ 130,000
Land 75,000 193,000
Building (twenty year life) 250,000 276,000
Equipment (ten year life) 540,000 518,000
Current liabilities 26,000 26,000
Long-term liabilities 124,000 124,000
Common stock 233,000
Additional paid-in capital 389,000
Retained earnings 223,000

Thompson earned net income for 2020 of $134,000 and paid dividends of $51,000 during the year.

What is the balance in Barber’s investment in subsidiary account at the end of 2020?

Multiple Choice

  • $1,243,900.

  • $1,294,000.

  • $1,242,100.

  • $1,243,000.

Homework Answers

Answer #1
Solution:
CALCULATION OF VALUE OF INVESTMENT IN SUBSIDIARY ACCOUNT
AT THE END OF 2020
Purchase value of investment as on Jan.01 2020 $              1,160,000
Add: Net income of the Year 2020 $                  134,000
Less: Dividend Paid during the year $                  (51,000)
Balance of investment at the end of 2020 $              1,243,000
Answer = Option 4 = $ 1,243,000
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation....
On January 1, 2020, Barber Corp. paid $1,160,000 to acquire Thompson Co. Thompson maintained separate incorporation. Barber used the equity method to account for the investment. The following information is available for Thompson’s assets, liabilities, and stockholders' equity accounts on January 1, 2020: Book Value Fair Value Current assets $ 130,000 $ 130,000 Land 75,000 193,000 Building (twenty year life) 250,000 276,000 Equipment (ten year life) 540,000 518,000 Current liabilities 26,000 26,000 Long-term liabilities 124,000 124,000 Common stock 233,000 Additional...
C1.       On January 1, 2020, Skyline Co. paid $200,000 for a 40% interest in Allen Industries....
C1.       On January 1, 2020, Skyline Co. paid $200,000 for a 40% interest in Allen Industries. Allen Industries’ stockholders’ equity amounted to $300,000 on that date. The excess of purchase price over book values was due to an unrecorded patent valued at $200,000 with a 5-year life. During 2020, Allen Industries reported income of $80,000 and paid dividends of $18,000. During 2021, it reported income of $90,000 and dividends of $48,000. Assume that Skyline Co. has significant influence over the...
On January 1, 2020, Alison, Inc., paid $73,500 for a 40 percent interest in Holister Corporation’s...
On January 1, 2020, Alison, Inc., paid $73,500 for a 40 percent interest in Holister Corporation’s common stock. This investee had assets with a book value of $234,500 and liabilities of $101,500. A patent held by Holister having a $5,500 book value was actually worth $37,000. This patent had a six-year remaining life. Any further excess cost associated with this acquisition was attributed to goodwill. During 2020, Holister earned income of $49,000 and declared and paid dividends of $16,000. In...
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common stock of Dodo Corp....
On 1/1/20, Coke Co. paid $2,800,000 to acquire all of the common stock of Dodo Corp. On that date, Dodo's equity included $1,000,000 capital stock and $1,600,000 of retained earnings. An appraisal of Dodo's assets identified a patent that had a market value of $140,000 and a life of 5 years that was unrecorded. Dodo's reported earnings for 2020 totaled $512,000 and it paid $160,000 of dividends during the year. The amortization of allocations related to the investment was $28,000....
1. On January 1, 20X5, AKM Corp. paid $450,000 cash to acquire 25% of the common...
1. On January 1, 20X5, AKM Corp. paid $450,000 cash to acquire 25% of the common shares of GKM Corp. At the time of acquisition, the carrying value of GKM’s common shares was $500,000, and its retained earnings were $1,200,000. The fair values of the identifiable net assets (INA) approximated their carrying values except for a patent whose fair value was $20,000 higher than its carrying value. The patent has a five-year remaining useful life, and straight-line depreciation is used....
4.) On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing,...
4.) On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million cash and 500,000 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $16,970,000. On January 1, JDE stock had a market value of $14.90 per share and there was no control premium in this transaction. Any consideration transferred over book value is assigned...
Following is a partially completed balance sheet for Hoeman Inc. at December 31, 2020, together with...
Following is a partially completed balance sheet for Hoeman Inc. at December 31, 2020, together with comparative data for the year ended December 31, 2019. From the statement of cash flows for the year ended December 31, 2020, you determine the following: Net income for the year ended December 31, 2020, was $97,500. Dividends paid during the year ended December 31, 2020, were $65,500. Accounts receivable decreased $11,000 during the year ended December 31, 2020. The cost of new buildings...
On January 1, 2015, KMA Corp. paid $400,000 cash to acquire 40% of the common shares...
On January 1, 2015, KMA Corp. paid $400,000 cash to acquire 40% of the common shares of JDL Corp. At the time of acquisition, the carrying value of JDL’s common shares was $250,000, and its retained earnings were $400,000. The fair values of the INA approximated their carrying values except for equipment whose fair value was $15,000 higher than its carrying value. The equipment has a six-year remaining useful life, and straight-line depreciation is used. The investment was found to...
On January 1, 2019, Roxy Corp. issued shares of its common stock to acquire all of...
On January 1, 2019, Roxy Corp. issued shares of its common stock to acquire all of the outstanding common stock of Westwood Inc. Westwood's book value was only $140,000 at the time, but Roxy issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Roxy was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Westwood's records by $60,000 while equipment (five-year life) was undervalued...
On January 1, 2009, Rand Corp. issued shares of its common stock to acquire all of...
On January 1, 2009, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Suppose that the time (in hours) that Irene spends on an untimed final exam follows an...
    asked 12 minutes ago
  • The following sample observations were randomly selected. (Round intermediate calculations and final answers to 2 decimal...
    asked 25 minutes ago
  • what type of graph is best suitable for data obtained from customer ratings. The ratings are...
    asked 28 minutes ago
  • Determine the cumulative 15-year 18 kip ESAL’s in the design lane for 2-lane highway for the...
    asked 36 minutes ago
  • Q: Dr.Grimace, the evil dentist, is trying to find out if his patients suffer from periodontal...
    asked 36 minutes ago
  • After collecting data on 19283 dogs, you find that male vallhunds have an average weight of...
    asked 38 minutes ago
  • Research Target Corporation and assess your satisfaction with the company you researched and make recommendations about...
    asked 39 minutes ago
  • Evidence suggests that 70% of FSU students like turtles. Suppose we randomly sampled 15 FSU students....
    asked 39 minutes ago
  • Ulrich challenges the appropriateness of the nearly universal symbolism of the spinning wheel as the marker...
    asked 40 minutes ago
  • Differential Equations: Please try to computer type, if not possible be clear and organize. Thank you...
    asked 40 minutes ago
  • In your opinion, what are the three (3) most important benefits an employer can give to...
    asked 46 minutes ago
  • In a test of the effectiveness of garlic for lowering​ cholesterol, 81 subjects were treated with...
    asked 48 minutes ago