Chapter 3, Problem 24P

Foxx Corporation acquired all of Greenburg Company's outstanding stock on January 1, 2019, for $743,000 cash. Greenburg's accounting records showed net assets on that date of $609,000, although equipment with a 10-year remaining life was undervalued on the records by $59,500. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2019 of $125,000 and $127,500 in 2020. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2021, follow. Credit balances are indicated by parentheses. Greenburg $ (920,000) 230,000 425,000 Foxx $(1,184,000) 148, 000 392,000 (20,000) $ (664,000) $(1,140,000) (664,000) Revenues Cost of goods sold Depreciation expense Investment income Net income $ (265,000) Retained earnings, 1/1/21 Net income (521,500) (265,000) 20,000 Dividends declared 120,000 Retained earnings, 12/31/21 $(1,684,000) $ (766, 500) 328,000 743,000 1,022,000 844,000 652,000 $…

Bassett Inc. acquired all of the outstanding common stock of Brinkman Corp. on January 1, 2019, for $422,000. Equipment with a ten-year life was undervalued on Brinkman's financial records by $48,000. Brinkman also owned an unrecorded customer list with an assessed fair value of $71,000 and an estimated remaining life of five years. Brinkman earned reported net income of $185,000 in 2019 and $226,000 in 2020. Dividends of $75,000 were paid in each of these two years. Selected account balances as of December 31, 2021, for the two companies follow. Revenues Expenses Investment income Retained earnings, 1/1/21 Dividends paid Multiple Choice $806,000. $811,000. If the equity method had been applied, what would be the Investment in Brinkman Corp. account balance within the records of Bassett at the end of 2021? $863,000. $920,000. Bassett $1,120,000 $1,036,000. 500,000 Not given 850,000 132,000 Brinkman $860,000 600,000 Ø 650,000 80,000

On June 30, 2018, Streeter Company reported the following account balances:On June 30, 2018, Princeton Company paid $310,800 cash for all assets and liabilities of Streeter, which will cease to exist as a separate entity. In connection with the acquisition, Princeton paid $15,100 in legal fees. Princeton also agreed to pay $55,600 to the former owners of Streeter contingent on meeting certain revenue goals during 2019. Princeton estimated the present value of its probability adjusted expected payment for the contingency at $17,900.In determining its offer, Princeton noted the following pertaining to Streeter:• It holds a building with a fair value $43,100 more than its book value.• It has developed a customer list appraised at $25,200, although it is not recorded in its financial records.• It has research and development activity in process with an appraised fair value of $36,400. However, the project has not yet reached technological feasibility and the assets used in the activity…

At the begining of 2019, Cameron Company’s retained earnings was $212,000. For 2019, Cameron has calculated its pretax income from continuing operations to be $120,000. During 2019, the following events also occurred:                                                                                                  1. During July, Cameron sold Division M (a component of the company). It has determined that the pretax income from the operations of Division M during 2019 totals $39,000 and that a pretax loss of $40,500 was incurred on the sale of Division M.                                                                              2. Cameron had 21,000 shares of common stock outstanding during all of 2019. It declared and paid a $1 per share cash dividend on this stock.          Assuming that all the pretax items are subject to a 30% income tax rate:       1. Complete the lower portion of Cameron’s 2019 income statement, beginning with "pre tax income from Continuing Operations.”…

Foxx Corporation acquired all of Greenburg Company’s outstanding stock on January 1, 2016, for $600,000 cash. Greenburg’s accounting records showed net assets on that date of $470,000, although equipment with a 10-year remaining life was undervalued on the records by $90,000. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2016 of $90,000 and $100,000 in 2017. The subsidiary declared dividends of $20,000 in each of these two years. Account balances for the year ending December 31, 2018, follow. Credit balances are indicated by parentheses. a. Determine the December 31, 2018, consolidated balance for each of the following accounts: Depreciation Expense Dividends Declared Revenues Equipment Buildings Goodwill Common Stock b. How does the parent’s choice of an accounting method for its investment affect the balances computed in requirement (a)? c. Which method of accounting for this subsidiary is the parent actually using for internal…

On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year.What is the Noncontrolling interest's share in the Net income of the subsidiary?

On January 2, 2019, Upo Co. purchased 75% of the outstanding shares of Napa Co. resulting to a goodwill of P60,000. On that date, the non-cash assets of Napa Co. whose book values did not equal their book values were accounts receivable which was overstated by P4,500 and equipment with a remaining 5 year life on the purchase date which was understated by P50,000. For the year 2010, Upo and Napa reported net income of P350,000 and P200,000 each respectively. Upo’s beginning inventory included merchandise purchased from Napa Company amounting to P39,000 which was sold to them by Napa at a 30% markup, 80% of these goods were sold during the year. Napa, on the other hand, included inventory items which they purchased from Upo Co. amounting to 18,000. These goods were sold by Upo at a 25% markup. 90% of these goods were sold by Napa for the year.Compute for the total realized gross profit (from upstream and downstream sales)

On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $310,000 in cash. The equipment had originally cost $279,000 but had a book value of only $170,500 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $410,000 in net income in 2021 (not including any investment income) while Brannigan reported $134,300. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $5,100 per year. a. What is consolidated net income for 2021? b. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan and the equipment transfer was upstream? d. What is the consolidated net income for 2022 if Ackerman reports $430,000 (does not…

On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $240,000 in cash. The equipment had originally cost $216,000 but had a book value of only $132,000 when transferred. On that date, the equipment had a five-year remaining life. Depreciation expense is computed using the straight-line method. Ackerman reported $340,000 in net income in 2021 (not including any investment income) while Brannigan reported $111,200. Ackerman attributed any excess acquisition-date fair value to Brannigan's unpatented technology, which was amortized at a rate of $4,400 per year. kipped a. What is consolidated net income for 2021? b. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90 percent of Brannigan? c. What is the parent's share of consolidated net income for 2021 if Ackerman owns only 90-percent of Brannigan and the equipment transfer was upstream? d. What is the consolidated net income for 2022 if Ackerman reports $360,000 (does…