On January 1, 2018, D, Incorporated, paid $88,959 for a 30% interest in SCorporation. This investee had assets with a book value of $500,000 andliabilities of $300,000. A patent held by S Inc having a book value of $10,000was actually worth $48,000 with a four year remaining life. Any goodwillassociated with this acquisition is considered to have an indefinite life.During 2018, S Inc reported income of $55,900 and paid dividends of$28,900 while in 2019 it reported income of $79,900 and dividends of$29,900. Assume D Inc. Has the ability to significantly influence theoperations of S Inc. During the 2018, S Corporation selling inventory costing40,000 to to D Corporation for 60,000 at the end of fiscal year, D Inc, stillretain 20,000. During the 2019 S Corporation selling inventory costing35,000 to to D Corporation for 50,000 at the end of fiscal year, d Inc. stillretain 15,000. The retain inventoy was selling at the beginning of thefollowing year.8-How Much Your Equity Increase For Year 2019.

The Equity in income of S Inc. for 2019 is = $21120.

Answered: On January 1, 2018, D, Incorporated,…

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 3P

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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.
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.
Petes Petroleum, Inc., an SEC registrant with a calendar year-end, is in the business of constructing and operating offs] lore oil platforms. Petes Petroleum is required legally to dismantle and remove the platforms at the end of their useful lives, which is estimated to be 10 years. On January 1, 2019, Pete constructed and began operating an offshore oil platform off the coast of Brazil. The total capitalized cost to construct the platform was 3,700,000. In addition, while the future cost of dismantling the oil platform is difficult to estimate, Pete believes there is a 40% chance that the future cost will be 1,425,000, a 40% chance it will be 1,650,000, and a 20% chance that it will cost 2,125,000. The appropriate discount rate is 12%, and Pete uses the straight-line method of depreciation. Required: 1. Prepare the journal entries that Pete should record in 2019 related to the oil platform. 2. Prepare an amortization schedule for the asset retirement obligation. 3. Next Level Prepare a table showing the effect of accounting for the asset retirement obligation on assets, liabilities, shareholders equity, and net income relative to accounting for the associated costs at the end of the assets service life when the expenditure is made.

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On January 1, 2018, D, Incorporated, paid $88,959 for a 30% interest in S Corporation. This investee had assets with a book value of $500,0000 and