Question

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:

Net Income Dividends Declared
2017 $ 18,200 $ 2,600
2018 26,000 2,600

On July 1, 2017, QuickPort sold communication equipment to NetSpeed for $19,000. The equipment originally cost $23,000 and had accumulated depreciation of $7,600 and an estimated remaining life of three years at the date of the intra-entity transfer.

  1. Compute the equity method balance in QuickPort's Investment in NetSpeed, Inc., account as of December 31, 2018.
  2. Prepare the worksheet adjustments for the December 31, 2018, consolidation of QuickPort and NetSpeed.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Calculation:

Consideration Paid (Fair Value) 1089000
Net Income for 2017 18200
Less: Data Base Amortization (Excess of fair value to book value) 13000/5 -2600
Adjusted net Income 12100
Ownership 90% 90%
Quickport share of income 10890
Less: Gain on Equipment transferred 19000-(23000-7600) 3600
Add: Depreciation (6 month 3600/3year=500/2 600
Equity earning of Netspeed 7890
Less: Dividend Share 90% 2600*90% 2340
Balance on 31/12/17 1094550
Net Income for 2018 26000
Less: Data Base Amortization (Excess of fair value to book value) 13000/5 -2600
Adjusted net Income 23400
Ownership % 90%
Quickport share of income 21060
Add: Depreciation 1500/3 1200
Equity earning of Netspeed 22260
Less: Dividend Share 90% 2600*90% 2340
Balance on 31/12/18 1114470
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 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 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 $972,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,020,000 and Retained Earnings of $51,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $108,000. QuickPort attributed the $9,000 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 January 1, 2017, Doone Corporation acquired 70 percent of the outstanding voting stock of Rockne...
On January 1, 2017, Doone Corporation acquired 70 percent of the outstanding voting stock of Rockne Company for $462,000 consideration. At the acquisition date, the fair value of the 30 percent noncontrolling interest was $198,000 and Rockne's assets and liabilities had a collective net fair value of $660,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $220,000 in 2018. Since being acquired, Rockne has regularly supplied inventory...
On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne...
On January 1, 2017, Doone Corporation acquired 80 percent of the outstanding voting stock of Rockne Company for $784,000 consideration. At the acquisition date, the fair value of the 20 percent noncontrolling interest was $196,000 and Rockne's assets and liabilities had a collective net fair value of $980,000. Doone uses the equity method in its internal records to account for its investment in Rockne. Rockne reports net income of $380,000 in 2018. Since being acquired, Rockne has regularly supplied inventory...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $456,000 cash. The acquisition-date fair value of the noncontrolling interest was $50,600. At January 1, 2016, Star’s net assets had a total carrying amount of $354,200. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $51,200. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $498,000 cash. The acquisition-date fair value of the noncontrolling interest was $55,300. At January 1, 2016, Star’s net assets had a total carrying amount of $387,100. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $56,000. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $547,000 cash. The acquisition-date fair value of the noncontrolling interest was $60,800. At January 1, 2016, Star’s net assets had a total carrying amount of $425,600. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $61,600. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January...
Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $590,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $7,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $490,000. Scenic reported net income of $300,000. Placid Lake declared $180,000 in dividends during this period;...
On January 1, 2017, Mona, Inc., acquired 90 percent of Lisa Company’s common stock as well...
On January 1, 2017, Mona, Inc., acquired 90 percent of Lisa Company’s common stock as well as 70 percent of its preferred shares. Mona paid $66,000 in cash for the preferred stock, with a call value of 110 percent of the $50 per share par value. The remaining 30 percent of the preferred shares traded at a $35,000 fair value. Mona paid $558,000 for the common stock. At the acquisition date, the noncontrolling interest in the common stock had a...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $456,000 cash. The acquisition-date fair value of the noncontrolling interest was $50,600. At January 1, 2016, Star’s net assets had a total carrying amount of $354,200. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $51,200. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT