ADV. ACCT CONNECT STAND ALONE
13th Edition
ISBN: 9781266295744
Author: Hoyle
Publisher: MCG
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Question
Chapter 3, Problem 36P
a.
To determine
Determine and explain the account balances of Investment in Company J (on Company T’s individual financial records) as of December 31, 2018.
b.
To determine
Determine and explain the account balances of Equity in Subsidiary Earnings (on Company T’s individual financial records) as of December 31, 2018.
c.
To determine
Determine and explain the account balances of Consolidated Net Income (on Company T’s individual financial records) as of December 31, 2018.
d.
To determine
Determine and explain the account balances of Consolidated Equipment (net) as of December 31, 2018.
e.
To determine
Determine and explain the account balances of Consolidated Buildings (net) as of December 31, 2018.
f.
To determine
Determine and explain the account balances of Consolidated
g.
To determine
Determine and explain the account balances of Consolidated Common stock (net) as of December 31, 2018.
h.
To determine
Determine and explain the account balances of Consolidated
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Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, 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 $10,000. Subsequent to the acquisition, Jasmine reported the following:
Net Income
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$
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$
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60,000
40,000
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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, 2018, follow:
Tyler Company
Jasmine Company
Revenues—operating
$
(310,000
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$
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Expenses
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74,000
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320,000
50,000
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220,000
68,000
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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…
Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, 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:
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, 2018, follow:
Determine and explain the following account balances as of December 31, 2018:
a. Investment in Jasmine Company (on Tyler’s individual financial records).
b. Equity in Subsidiary Earnings (on Tyler’s individual financial records).
c. Consolidated Net Income.
d. Consolidated Equipment (net).
e. Consolidated Buildings (net).
f. Consolidated Goodwill (net).
g. Consolidated Common Stock.
h. Consolidated Retained…
Chapter 3 Solutions
ADV. ACCT CONNECT STAND ALONE
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