Equity, Initial, partial method - On January 1 2011 Top...

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On January 1, 2011, Top Company acquired all of Bottom Company’s outstanding common stock for $842,000 in cash. As of that date, one of Bottom’s buildings with a 12-year remaining life was undervalued on its financial records by $72,000. Equipment with a 10-year life was undervalued, but only by $10,000. The book values of all of Bottom’s other assets and liabilities were equal to their fair values at that time except for an unrecorded licensing agreement with an assessed value of $40,000 and a 20-year remaining useful life. Bottom’s book value at the acquisition date was $720,000. During 2011, Bottom reported net income of $100,000 and paid $30,000 in dividends. Earnings were $120,000 in 2012 with $20,000 in dividends distributed by the subsidiary. As of December 31, 2013, the companies reported the following selected balances, which include all revenues and expenses for the year:
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Top's Investment Account Balance determine 1. initial value assigned $842,000 2. the income accrual 3. dividend payments 4. amortization of excess acquisition-date fair value over book value Step 1
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