Lee Company acquired 75% of Winters Company for $600,000 on January 1, 2020. Winters reported common stock of $350,000 and retained earnings of $220,000 on that date. Equipment was overvalued by $10,000 and buildings were undervalued by $60,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. According to an annual review, goodwill has not been impaired. Winters earns income and pays dividends as follows: Net income Dividends 2020 $150,000 65,000 2021 $220,000 90,000 2022 $245,000 110,000 Assume the partial equity method is applied. Compute the noncontrolling interest in Winters at December 31, 2021.

Lee Company acquired 75% of Winters Company for $600,000 on January 1, 2020. Winters reported common stock of $350,000 and retained earnings of $220,000 on that date. Equipment was overvalued by $10,000 and buildings were undervalued by $60,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. According to an annual review, goodwill has not been impaired. Winters earns income and pays dividends as follows: Net income Dividends 2020 $150,000 65,000 2021 $220,000 90,000 2022 $245,000 110,000 Assume the partial equity method is applied. Compute the noncontrolling interest in Winters at December 31, 2021.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 11E

See similar textbooks

Similar questions

On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000