ADVANCED ACCOUNTING
13th Edition
ISBN: 9781264046263
Author: Hoyle
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 5, Problem 22P
a.
To determine
Compute the equity method balance in Company Q’s Investment in Company N, account as of December 31, 2018.
b.
To determine
Prepare the worksheet adjustments for the December 31, 2018, consolidation of Company Q and Company N.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
On January 1, 2015, Pomegranate Company acquired 80% of the voting stock of Starfruit Company for $47,100,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $6,900,000. Starfruit's book value was $12,000,000 at the date of acquisition. Starfruit's
assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $13,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $16,000,000 and 5-year life, straight-
line, which were capitalized following GAAP.
Additional information:
Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $1,000,000 in 2015 and 2016, and by $250,000 in 2017. It is now December 31, 2017, the accounting year-end.Here is Starfruit
Company's trial balance at…
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of
NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had
common stock of $800,000 and Retained Earnings of $40,000. The acquisition-date fair value of
the 10 percent noncontrolling interest was $90,000. QuickPort attributed the $60,000 excess of
NetSpeed's fair value over book value to a database with a five-year remaining life.
During the next two years, NetSpeed reported the following:
Net Income
Dividends Declared
$ 80,000
115,000
2017
$8,000
2018
8,000
On July 1, 2017, QuickPort sold communication equipment to NetSpeed for $42,000. The
equipment originally cost $48,000 and had accumulated depreciation of $9,000 and an estimated
remaining life of three years at the date of the intra-entity transfer.
a. Compute the equity method balance in QuickPort's Investment in NetSpeed, Inc., account as
of December 31, 2018.
b. Prepare the worksheet adjustments for…
On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $800,000 and Retained Earnings of $40,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $90,000. QuickPort attributed the $60,000 excess of NetSpeed’s fair value over book value to a database with a five-year remaining life.During the next two years, NetSpeed reported the following: Net Income Dividends Declared2017 $ 80,000 $8,0002018 115,000 8,000On July 1, 2017, QuickPort sold communication equipment to NetSpeed for $42,000. The equipment originally cost $48,000 and had accumulated depreciation of $9,000 and an estimated remaining life of three years at the date of the intra-entity transfer.a. Compute the equity method balance in QuickPort’s Investment in NetSpeed, Inc., account as of December 31,…
Chapter 5 Solutions
ADVANCED ACCOUNTING
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Angela, Inc., holds a 90 percent interest in Corby...Ch. 5 - Prob. 8PCh. 5 - Thomson Corporation owns 70 percent of the...Ch. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Akron, Inc., owns all outstanding stock of Toledo...Ch. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Following are financial statements for Moore...Ch. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Hamilton Hawks Players Association and Mr....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $800,000 and Retained Earnings of $40,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $90,000. QuickPort attributed the $60,000 excess of NetSpeed’s fair value over book value to a database with a five-year remaining life.During the next two years, NetSpeed reported the following:On July 1, 2017, QuickPort sold communication equipment to NetSpeed for $42,000. The equipment originally cost $48,000 and had accumulated depreciation of $9,000 and an estimated remaining life of three years at the date of the intra-entity transfer.a. Compute the equity method balance in QuickPort’s Investment in NetSpeed, Inc., account as of December 31, 2018.b. Prepare the worksheet adjustments for the December 31, 2018, consolidation of QuickPort and NetSpeed.arrow_forwardOn January 1, 2016, Aronsen Company acquired 90 percent of Siedel Company’s outstanding shares. Siedel had a net book value on that date of $480,000: common stock ($10 par value) of $200,000 and retained earnings of $280,000.Aronsen paid $584,100 for this investment. The acquisition-date fair value of the 10 percent noncontrolling interest was $64,900. The excess fair value over book value associated with the acquisition was used to increase land by $89,000 and to recognize copyrights (16-year remaining life) at $80,000. Subsequent to the acquisition, Aronsen applied the initial value method to its investment account.In the 2016–2017 period, the subsidiary’s retained earnings increased by $100,000. During 2018, Siedel earned income of $80,000 while declaring $20,000 in dividends. Also, at the beginning of 2018, Siedel issued 4,000 new shares of common stock for $38 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and…arrow_forwardOn January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,666,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,070,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $300,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $656,250 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends: 2017 2018 $525,000 $701,000 Net…arrow_forward
- On January 1, 2015, Pomegranate Company acquired 80% of the voting stock of Starfruit Company for $47,100,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was 16,900,000. Starfruit's book value was $12,000,000 at the date of acquisition. Starfruit's assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $13,000,000, Starfruit Company had previously unreported intangible assets, with a market value of $16,000,000 and 5-year life, straight-line. which were capitalized following GAAP If Pomegranate follows IFRS and uses the alternative method of valuing the noncontrolling interest, at the date of acquisition the noncontrolling interest in Starfruit appears in the equity section of the consolidated balance sheet in the amount of O$7,800,000 O$6,300,000 O$3,000,000 O$1,300,000arrow_forwardOn January 1, 2015, Pomegranate Company acquired 80% of the voting stock of Starfruit Company for $70,000,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $9,400,000. Starfruit's book value was $11,600,000 at the date of acquisition. Starfruit's assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $13,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $16,000,000 and 5-year life, straight-line, which were capitalized following GAAP. Additional information: Pomegranate uses the complete equity method to account for its investment in Starfruit on its own books. Goodwill recognized in this acquisition was impaired by a total of $3,000,000 in 2015 and 2016, and by $1,000,000 in 2017. It is now December 31, 2017, the accounting year-end. Here is Starfruit Company's trial balance at…arrow_forwardOn January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,141,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $1,380,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $240,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $415,000 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger.During the two years following the acquisition, Sellinger reported the following net income and dividends:Show Palka’s journal entry to record its January 1, 2018, acquisition of an additional 25 percent ownership of Sellinger Company shares.Prepare a schedule showing Palka’s December 31, 2018, equity…arrow_forward
- On January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,125,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,170,000 and Retained Earnings of $58,500. The acquisition-date fair value of the 10 percent noncontrolling interest was $125,000. QuickPort attributed the $21,500 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following: Net Income Dividends Declared 2020 $ 30,100 $ 4,300 2021 43,000 4,300 On July 1, 2020, QuickPort sold communication equipment to NetSpeed for $27,500. The equipment originally cost $30,500 and had accumulated depreciation of $5,400 and an estimated remaining life of three years at the date of the intra-entity transfer. Compute the equity method balance in QuickPort's Investment in NetSpeed, Inc., account as of December 31, 2021.…arrow_forwardOn January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,155,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $840,000, retained earnings of $390,000, and a noncontrolling interest fair value of $495,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income Dividends Declared Inventory Purchases from Corgan 2017 $ 290,000 $ 49,000 $ 240,000 2018 270,000 59,000 260,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 40 percent of the current year purchases remain in Smashing's inventory. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December…arrow_forwardOn January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,540,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $950,000, retained earnings of $500,000, and a noncontrolling interest fair value of $660,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income 2017 $400,000 2018 380,000 Dividends Declared $ 60,000 70,000 Inventory Purchases from Corgan $ 350,000 370,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 30 percent of the current year purchases remain in Smashing's inventory. A.) Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018. B.) Prepare the…arrow_forward
- On January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $1,161,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,220,000 and Retained Earnings of $61,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $129,000. QuickPort attributed the $9,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life. During the next two years, NetSpeed reported the following: Dividends Net Income Declared $ 12,600 18,000 $ 1,800 1,800 2020 2021 On July 1, 2020, QuickPort sold communication equipment to NetSpeed for $15,000. The equipment originally cost $18,500 and had accumulated depreciation of $5,300 and an estimated remaining life of three years at the date of the intra-entity transfer. a. Compute the equity method balance in QuickPort's Investment in NetSpeed, Inc., account as of December 31, 2021. b. Prepare the worksheet adjustments…arrow_forwardOn January 1, 2017, Holland Corporation paid $8 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland’s outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $6.50 per share both before and after the acquisition by Holland. Zeeland’s acquisition date balance sheet follows:On January 1, 2017, Holland assessed the carrying amount of Zeeland’s equipment (5-year remaining life) to be undervalued by $55,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $285,000. Zeeland’s acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Zeeland books showed 260,000 for net stockholder equity Any remaining excess of Zeeland’s acquisition-date fair value over its book value was attributed to goodwill.The companies’ financial statements for…arrow_forwardOn January 1, 2017, Holland Corporation paid $8 per share to a group of Zeeland Corporation shareholders to acquire 60,000 shares of Zeeland’s outstanding voting stock, representing a 60 percent ownership interest. The remaining 40,000 shares of Zeeland continued to trade in the market close to its recent average of $6.50 per share both before and after the acquisition by Holland. Zeeland’s acquisition date balance sheet follows:On January 1, 2017, Holland assessed the carrying amount of Zeeland’s equipment (5-year remaining life) to be undervalued by $55,000. Holland also determined that Zeeland possessed unrecorded patents (10-year remaining life) worth $285,000. Zeeland’s acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Zeeland’s acquisition-date fair value over its book value was attributed to goodwill.The companies’ financial statements for the year ending December 31, 2018, follow:At year-end, there…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning