1. If Elston Company acquired a 30% interest in Alley Company on December 31, 2004 for ₱135,000 and during 2005 Alley Company had net income of ₱50,000 and paid a cash dividend of ₱20,000, applying the equity method would give a debit balance in the Investment in Alley Company Stock account at the end of 2005 of _______________________ 2. Elston Co. acquires 30% interest in Alley Company on December 31, 2004. The carrying amount of Alley’s net assets on December 31, 2004 approximates its fair value. If the acquisition did not result to any implied goodwill, how much is the acquisition cost of the investment? _______________________ 3. Elston Co. acquires 30% interest in Alley Company on December 31, 2004. The carrying amount of Alley’s net assets on December 31, 2004 approximates its fair value. If the acquisition did not result to any implied goodwill, how much is the acquisition cost of the investment?
The summarized balance sheets of Elston Company and Alley Company as of December 31, 2004 are as follows:
Elston Company
Balance Sheet
December 31, 2004
Assets ₱800,000
Liabilities ₱100,000
Capital stock 400,000
Total equities ₱800,000
Alley Company
Balance Sheet
December 31, 2004
Assets ₱600,000
Liabilities ₱150,000
Capital stock 370,000
Retained earnings 80,000
Total equities ₱600,000
1. If Elston Company acquired a 30% interest in Alley Company on December 31, 2004 for ₱135,000 and during 2005 Alley Company had net income of ₱50,000 and paid a cash dividend of ₱20,000, applying the equity method would give a debit balance in the Investment in Alley Company Stock account at the end of 2005 of
_______________________
2. Elston Co. acquires 30% interest in Alley Company on December 31, 2004. The carrying amount of Alley’s net assets on December 31, 2004 approximates its fair value. If the acquisition did not result to any implied
_______________________
3. Elston Co. acquires 30% interest in Alley Company on December 31, 2004. The carrying amount of Alley’s net assets on December 31, 2004 approximates its fair value. If the acquisition did not result to any implied goodwill, how much is the acquisition cost of the investment?
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