Am. 111. Scott Company acquired 70% of Gregg Company for $525,000 on December 31, 2022 when Gregg's book value was $580,000. The Greggstock was not actively traded. On the date of acquisition, Gregg had equipment (with a ten-year life) that was undervalued in the financialrecords by $170,000. One year later, the two companies provided the selected amounts shown below. Additionally, no dividends have beenpaid.Current assetsEquipmentBuildingsLiabilitiesRevenuesExpensesInvestmentScottBook Value$ 912,000371,000584,000(564,000)(1,320,000)GreggBook Value$ 430,000290,000210,000(238,000)(570,000)410,000Not Given740,000Fair Value$ 458,000450,000210,000(238,000)incomeWhat amount of consolidated net income for 2023 is attributable to Scott's controlling interest?

To provide more context, it's crucial to understand how the non-controlling interest affects the…

Answered: Scott Company acquired 70% of Gregg…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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)…
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 the selected amounts shown below. Additionally, no dividends have been paid. Scott Co. Gregg Co. Book Value Book Fair Value Value Current assets Equipment $912,000 $430,000 $458,000 371,000 Buildings 290,000 470,000 584,000 210,000 210,000 Liabilities Revenues (564,000) (238,000) (238,000) (1,320,000) (570,000) Expenses 780,000 440,000 Investment income Not Given What is the consolidated balance of the Equipment account at December 31, 2023? O a. $678,000 O b. $661,000 Oc. $831,000 O d. $823,000 $814,000 O e 0
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, Grouper Corporation purchased 30% of the common shares of Martz Limited for $201.000. Martz shares are not traded in an active market. The carrying amount of Martz's net assets was $540,000 on that date. Any excess of the purchase cost over Grouper's share of Martz's carrying amount is attributable to unrecorded intangibles with a 20-year life. During the year, Martz earned net income and comprehensive income of $78,000 and paid dividends of $15,600. The investment in Martz had a fair value of $206,000 at December 31, 2023. During 2024, Martz incurred a net loss and comprehensive loss of $83,000 and paid no dividends. At December 31, 2024, the fair value of the investment was $145,000 and the recoverable amount was $154,000. Assume that Grouper follows IFRS. Illustrate how the statement of comprehensive income is affected in 2023. (Enter answers in alphabetical order) Net income will include the of $ A and the of $
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?
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Tyler Company acquired all of Jasmine Company's outstanding stock on January 1, 2019, for $286,400 in cash. Jasmine had a book value of only $220,000 on that date. However, equipment (having an eight-year remaining life) was undervalued by $60,000 on Jasmine's financial records. A building with a 20-year remaining life was overvalued by $15,700. Subsequent to the acquisition, Jasmine reported the following: 2019 2020 2021 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, 2021, follow: Revenues-operating Net Income $ 74,400 62,500 47,800 Expenses Equipment (net) Buildings (net) Common stock Retained earnings, 12/31/21 a. b. C. d. Dividends Declared $10,000 40,000 20,000 e. f. Determine the following account balances as of December 31, 2021: (Input all amounts as positive values.) Investment in Jasmine Company Equity in Subsidiary Earnings Consolidated Net Income Consolidated…
M On January 1, 2023, Stream Company acquired 21 percent of the outstanding voting shares of Q-Video, Incorporated, for $718,000. 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 $768,000, respectively. A customer list compiled by Q-Video had an appraised value of $312,000, although it was not recorded on its books. The expected remaining life of the customer list was six 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 $284,000 in 2023 and a net loss of $108,000 in 2024 In each of these two years, Q-Video declared and paid a cash dividend of $10,000 to its stockholders During 2023, Q-Video sold inventory that had an original cost of $80,000 to Stream for $160,000. Of this balance, $77,000 was resold to outsiders during 2023, and the…
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…
Use the following information for the next two questions. On January 1, 2020, Rae Corporation purchased 30% of the common shares of Martz Limited for $196,000. Martz Limited shares are not traded in an active market. The carrying amount of Martz's net assets was $520,000 on that date. Any excess of the purchase cost over Rae's share of Martz's carrying amount is attributable to unrecorded intangibles with a 20-year life. During the year, Martz earned net income and comprehensive income of $75,000 and paid dividends of $15,000. The investment in Martz had a fair value of $201.000 at December 31., 2020. During 2021, Martz incurred a net loss and comprehensive loss of $80,000 and paid no dividends. At December 31, 2021, the fair value of the investment was $140,000 and the recoverable amount was $149.000. Assume that Rae follows IFRS. Prepare all relevant journal entries related to Rae's investment in Martz for 2020 and 2021. assuming this is its only investment and Rae cannot exercise…
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…
On January 1, 2023, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Incorporated, for $720,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Video reported assets and liabilities with book values of $1.8 million and $772,000, respectively. A customer list compiled by Q-Video had an appraised value of $298,000, although it was not recorded on its books. The expected remaining life of the customer list was twenty 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 $370,000 in 2023 and a net loss of $116,000 in 2024. In each of these two years, Q-Video declared and paid a cash dividend of $18,000 to its stockholders. During 2023, Q-Video sold inventory that had an original cost of $100,040 to Stream for $164,000. Of this balance, $82,000 was resold to outsiders during 2023, and…

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