Scott Co. acquired 70% of Gregg Co. for $525,000 on January 01, 2023 when Gregg's book value was $580,000.The Gregg stock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life)that was undervalued in the financial records by $180,000. One year later, the two companies provided theselected amounts shown below. Additionally, no dividends have been paid.Scott Co. Gregg Co.BookValueBookFairValueValueCurrent assetsEquipment$912,000 $430,000 $458,000371,000Buildings290,000 470,000584,000 210,000 210,000LiabilitiesRevenues(564,000) (238,000) (238,000)(1,320,000) (570,000)Expenses780,000440,000Investment income Not GivenWhat is the consolidated balance of the Equipment account at December 31, 2023?O a. $678,000O b. $661,000Oc. $831,000O d. $823,000$814,000O e0

To find the consolidated balance of the Equipment account at December 31, 2023, we need to adjust…

Answered: Scott Co. acquired 70% of Gregg Co. for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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KA. Royce Co. acquired 60% of Park Co. for $420,000 on December 31, 2019 when Park's book value was $560,000. The Royce stock was not actively traded. On the date of acquisition, Park had equipment (with a ten-year life) that was undervalued in the financial records by $140,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have been paid. Current assets Equipment Buildings Liabilities Revenues Expenses Investment Royce Co. Book Value $868,000 364.000 574.000 (546,000) (1,260,000) 700.000 Not Given Park Co Book Value § 420.000 280.000 210.000 (168,000) (560,000) 420.000 Fair Value $448,000 400.000 210,000 (168,000) What is the consolidated balance of the Equipment account at December 31, 2022? O a.$644,400. • b.$784,000. O c.$719,600. O d.$770,000. Oe.$775,600
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2022, in exchange for $495,000 in cash. The subsidiary's stockholders' equity accounts totaled $479,000, and the noncontrolling interest had a fair value of $55,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $47,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life). Brey reported net income from its own operations of $81,000 in 2022 and $97,000 in 2023. Brey declared dividends of $27,500 in 2022 and $31,500 in 2023. Brey sells inventory to Pitino as follows: Inventory Remaining at Year-End (at transfer price) $ 42,000 54,000 45,000 At December 31, 2024, Pitino owes Brey $33,000 for inventory acquired during the period. The separate account balances for the two companies at December 31, 2024, and the year then ended follow. Note: Parentheses indicate a credit balance. Year…
Tyler Company acquired all of Jasmine Company's outstanding stock on January 1, 2022, for $206,000 in cash. Jasmine had a book value of only $140,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $54,400 on Jasmine's financial records. A building with a 20-year remaining life was overvalued by $10,000. Subsequent to the acquisition, Jasmine reported the following: Year 2822 2023 2024 Net Income $ 50,000 60,000 30,000 Dividends Declared $ 10,000 40,000 20,000 In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2024, follow: Accounts Revenues-operating Expenses Equipment (net) Buildings (net) Common stock Retained earnings, 12/31/24 Tyler Company $ (310,000) 198,000 320,000 220,000 a. Investment in Jasmine Company b. Equity in Subsidiary Earnings c. Consolidated Net Income d. Consolidated Equipment (net) e. Consolidated Buildings (net)…
On January 2, 2022, Promenade Company purchased 25% of Twilight Company's ordinary shares; no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight's investment account was P3,800,000 at December 31, 2022. Twilight reported net income of P2,400,000 for the year and paid dividends amounting to P960,000 during 2022. How much did Promenade pay for its investment in Twilight?
Fizzy Inc. acquired 25% of the stock of Bubbly Inc. at the beginning of 2022 for $5,000,000, and reports the investment using the equity method. There is no basis difference, and no intercompany transactions. Bubb ly's retained earnings increased by $800,000 in the two years since acquisition, and its AOCI increased by $20,000. Bubbly declared and paid dividends of $300,000 during this time. What amount does Fizzy report for its investment in Bubbly at the end of 2022? O a. 5,205,000 Ob.5,130,000 O c. 5,125,000 O d. 5,200,00
On January 2, 2022, Promenade Company purchased 25% of Twilight Company’s ordinary shares; no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight’s investment account was P3,800,000 at December 31, 2022. Twilight reported net income of P2,400,000 for the year and paid dividends amounting to P960,000 during 2022. How much did Promenade pay for its investment in Twilight? Present solution in good accounting form
On January 2, 2022, Promenade Company purchased 25% of Twilight Company'S ordinary shares: no goodwill resulted from the purchase. Promenade appropriately carries this investment at equity and the balance in Twilight's investment account was 3,800,000 at December 31, 2022. Twilight reported net income of 2, 400, 000 for the year and paid dividends amounting to 960,000 during 2022. How much did Promenade pay for it's investment?
On May 31,2018, Fedex Company acquired Aramex Company's outstanding stock by paying $400,000 cash and issuing 10,000 shares of its own $30 par value common stock, when the market price was $32 per share. Fedex paid legal and accounting fees amounting to S35,000 in addition to stock issuance costs of $8,000. Aramex is dissolved on the date of the acquisition. Balance sheet information for Fedex and Aramex immediately preceding the acquisition is shown below, including fair values for Aramex's assets and liabilities. Fedex Aramex Aramex Book Value Book Value Fair Value Cash 490,000 $140,000 $140,000 Accounts Receivable 560,000 280,000 280,000 Inventory 520,000 200,000 260,000 Land 460,000 150,000 140,000 Plant Assets - Net 980,000 325,000 355,000 Construction Permits 380,000 170,000 190,000 Accounts Payable Other accrued expenses Notes Payable Common Stock ($30 par) Common Stock ($20 par) (460,000) (160,000) (800,000) (960,000) (140,000) (140,000) (45,000) (45,000) (460,000) (460,000)…
On January 1, 2022, Matsui Co. purchased 42% of the outstanding voting common stock of Yankee, Inc. for $300,500. The book value of the acquired shares was $275,500. The excess of cost over book value is attributable to an intangible asset on Yankee's books that was undervalued and had a remaining useful life of five years. For the year ended December 31, 2022, Yankee reported net income of $125,750 and paid cash dividends of $25,700. What is the carrying value of Matsui's investment in Yankee at December 31, 2022? Multiple Choice $342,521. $337,521. $289,706. $300,500.
On January 1, 2023, Stream Company acquired 29 percent of the outstanding voting shares of Q-Video, Incorporated, for $680,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $2.6 million and $634,000, respectively. A customer list compiled by Q-Video had an appraised value of $262,000, although it was not recorded on its books. The expected remaining life of the customer list was five years with straight-line amortization deemed appropriate. Any remaining excess cost was not identifiable with any particular asset and thus was considered goodwill. Q-Video generated net income of $298,000 in 2023 and a net loss of $102,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $12,000 to its stockholders. During 2023, Q-Video sold Inventory that had an original cost of $88,000 to Stream for $160,000. Of this balance, $80,000 was resold to outsiders during 2023, and the…
Riverbed Inc acquired 108,000 common shares, which is 25% of the outstanding common shares, of Tahiti Ltd. on January 1, 2023 for $637,200. At the time of purchase, Tahiti Ltd's depreciable assets were undervalued by $35,840. The depreciable assets had a remaining useful life of 5 years with no salvage value. Tahiti Ltd. declared and paid a cash dividend of $0.35 per share on July 31, 2023. Tahiti Ltd. reported $1.3 million as net income on December 31, 2023 for the year ending on this date. Assume that Riverbed Inc. is in a position to exercise significant influence over Tahiti Ltd, and that Riverbed follows IFRS. Prepare all the journal entries for 2023 in the books of Riverbed Inc. relating to above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit…
Following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2018:On January 1, 2018, Penske acquired all of Stanza’s outstanding stock for $680,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $440,000 book value but a fair value of $560,000.a. As of December 31, 2018, what is the consolidated copyrights balance?b. For the year ending December 31, 2018, what is consolidated net income?c. As of December 31, 2018, what is the consolidated retained earnings balance?d. As of December 31, 2018, what is the consolidated balance to be reported for goodwill?

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