Fizer Pharmaceutical paid $85 million on January 2, 2024, for 4 million shares of Carne Cosmetics common stock. The investment represents a 30% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $2 per share on December 21, 2024, and Carne reported net income of $50 million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was $26.50 per share. The book value of Carne's net assets was $200 million. The fair value of Carne's depreciable assets exceeded their book value by $40 million. These assets had an average remaining useful life of twelve years. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries related to the investment during 2024. Complete this question by entering your answers in the tabs below.
Fizer Pharmaceutical paid $85 million on January 2, 2024, for 4 million shares of Carne Cosmetics common stock. The investment represents a 30% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $2 per share on December 21, 2024, and Carne reported net income of $50 million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was $26.50 per share. The book value of Carne's net assets was $200 million. The fair value of Carne's depreciable assets exceeded their book value by $40 million. These assets had an average remaining useful life of twelve years. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries related to the investment during 2024. Complete this question by entering your answers in the tabs below.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
Related questions
Question
Please answer the question below and do the general journal
Transcribed Image Text:Fizer Pharmaceutical paid $85 million on January 2, 2024, for 4 million shares of Carne Cosmetics common stock. The investment
represents a 30% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations.
Fizer received dividends of $2 per share on December 21, 2024, and Carne reported net income of $50 million for the year ended
December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was $26.50 per share.
⚫ The book value of Carne's net assets was $200 million.
• The fair value of Carne's depreciable assets exceeded their book value by $40 million. These assets had an average remaining
useful life of twelve years.
• The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to
goodwill.
Required:
Complete the table below and prepare the appropriate journal entries related to the investment during 2024.
Complete this question by entering your answers in the tabs below.
Calculation
General
Journal
Complete the table below.
Note: Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).
($ in millions)
Purchase Price
Fair Value Carne's assets
Book Value Carne's assets
Depreciation adjustment:
Investment revenue
Investee Net
Assets
Ownership
Interest
Net Assets
Purchased
Difference
Attributable to:
$
85
% =
$
0
X
% =
$
0
Years
Adjustment
0/
< Calculation
General Journal >
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