{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ADVANCEDWEEK4SOLUTIONS08

ADVANCEDWEEK4SOLUTIONS08 - Answers to Problems 1 D 2 B 3 C...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Answers to Problems 1. D 2. B 3. C 4. A Acquisition price. ......................................................................... $1,600,000 Equity income ($560,000 × 40%). ..................................................... 224,000 Dividends (50,000 shares × $2.00). .................................................. (100,000 ) Investment in Harrison Corporation as of December 31. ............. $1,724,000 5. A Acquisition price. ........................................................ $700,000 Income accruals: 2008—$170,000 × 20%. ................. 34,000 2009—$210,000 × 20%. ................ 42,000 Amortization (below): 2008. ........................................ (10,000) Amortization: 2009. ..................................................... (10,000) Dividends: 2008—$70,000 × 20%. .............................. (14,000) 2009—$70,000 × 20%. .............................. (14,000 ) Investment in Bremm, December 31, 2009. ......... $728,000 Acquisition price. ........................................................ $700,000 Bremm’s net assets acquired ($3,000,000 × 20%). .. (600,000 ) Patent. ........................................................................... $100,000 Annual amortization (10 year life) . ............................ $10,000 6. B Purchase Price of Baskett Stock. ................... $500,000 Book Value of Baskett ($900,000 × 40%). ....... (360,000 ) Cost in Excess of Book Value. .................. $140,000 Life Annual Payment identified with undervalued. ............ Amortization Building ($140,000 × 40%). ......................... 56,000 7 yrs. $8,000 Trademark ($210,000 × 40%). ..................... 84,000 10 yrs. 8,400 Total . ................................................................. $ -0- $16,400 Cost of Purchase. ............................................................. $500,000 Income Accrued ($90,000 × 40%). .............................. 36,000 Amortization (above). .................................................. (16,400) Dividend Collected ($30,000 × 40%). ........................ (12,000 ) Investment in Baskett. ........................................... $507,600
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
7. D The 2008 purchase must be reported using the equity method. Purchase Price of Goldman Stock. ................................................. $600,000 Book Value of Goldman Stock ($1,200,000 × 40%). ....................... (480,000 ) Goodwill. ............................................................................................ $120,000 Life of Goodwill. ................................................................................ indefinite Annual Amortization. ........................................................................ (-0- ) Cost on January 1, 2008. .................................................................. $600,000 2008 Income Accrued ($140,000 x 40%). ........................................ 56,000 2008 Dividend Collected ($50,000 × 40%). ...................................... (20,000) 2009 Income Accrued ($140,000 × 40%). ........................................ 56,000 2009 Dividend Collected ($50,000 × 40%). ...................................... (20,000) 2010 Income Accrued ($140,000 × 40%). ........................................ 56,000 2010 Dividend Collected ($50,000 × 40%). ...................................... (20,000 ) Investment in Goldman, 12/31/10. .............................................. $708,000 8. D 9. A Gross Profit Markup: $36,000/$90,000 = 40% Inventory Remaining at Year-End. ................................................... $20,000 Markup. ............................................................................................... × 40% Unrealized Gain. ........................................................................... $8,000 Ownership. ......................................................................................... × 30% Intercompany Unrealized Gain—Deferred. ............................... $2,400
Background image of page 2
10.B Purchase Price of Steinbart Shares. ............................................... $530,000 Book Value of Steinbart Shares ($1,200,000 × 40%). ..................... (480,000 ) Tradename. ........................................................................................ $50,000 Life of Tradename. ............................................................................ 20 years Annual Amortization. ........................................................................ $2,500
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 7

ADVANCEDWEEK4SOLUTIONS08 - Answers to Problems 1 D 2 B 3 C...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon bookmark
Ask a homework question - tutors are online