Solutions to Problem 8-7,8-8 and 8-9 (1).xlsx

Solutions to Problem 8-7,8-8 and 8-9 (1).xlsx - Solution to...

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Solution to Problem No 8-7 The number of shares that Plummer held in Summer is 90% of 4000 shares = 3600 shares July 1 Plummer sold 720 of Summer Shares Shares held by Plummer after the sale = 3600-720 =2880 shares Investment in Summer Account 126,000 140,000 Common Shares 20,000 Retained Earnings 70,000 (90,000) Acquisition Differntial 50,000 Trademarks 50,000 50,000 Goodwill - Amortization Schedule for the periods ended April 1, Septemb Balance Jan 1, Year 8 Trademarks 50,000 2,500 47,500 Total 50,000 2,500 47,500 Plummer's Investment in Summer before the sale of Summer's Share Ai Investment in Summer balance January 1, Year 1 Add income for Jan -June = 20000*6/12* 90% = Less Amortization for Jan -June = 2500*90% = Investment in Summer before the sale of720 Summer's Share Plummer owership in Summer before the Share Issue = Plummer's ownership in Summer after the Share issue = Change in ownership % change in ownership ii Value of 720 shares 20% of $132 750 = 26,550 Value received 720 * 30 = (21,600) Implied Value of 100% of Slacker Less: Book Value of Net Assets of Least Less Fair Market Value Increments Amortization Jan -Jun Year 8 Unamortized FMVI as at Jun 30, Year 8
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Loss on Sale of 720 Shares 4,950 2 Marks iii Investment in Summer before sale of Summer's Share Plummer's sale of 720 Summer's Shares Investment in Summer after sale of Summer's Share Add: Net Income July -December Year 8 = 20,000 * 6/12 * 72% Less: Amortization = 2500 * 72% Less Dividends = 5000* 72% Balance January 1, Year 9 Add: Net Income Jan -December Year 9 = 28,000 * 72% Less: Amortization = 5000 * 72% Less Dividends = 8000 * 72% Balance December 31, Year 9 befor the share issue Summer issued 500 shares of which Plummer did not suscribe to any. Total Shares of Summer = 40 Plummer investment is 2880 shares. Therefore
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