quiz 8 - Fa09

quiz 8 - Fa09 - During Year 1, Charmaine and Natalie...

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Name 4-Digit #_______Section___14516_________ Accounting for Investments: Equity Method: [093Q8] Charmaine Company purchased 50,000 shares of the Natalie Company for $2,500,000 paying cash at the start of Year 1. These shares were purchased from private investors and not from Natalie. Immediately after the purchase of these shares by the Charmaine, the companies have these owners’ equity account balances: Charmaine Natalie Company Company Property, Plant and Equipment $1,480,000 $1,355,000 Contributed Capital $750,000 $700,000 Retained Earnings $1,100,000 $1,080,000 Natalie owns two assets for which the fair market values exceed the net book values: Building and Copyrights. The excess of fair market values over the net book values are $1,100,000 for the Building and $780,000 for Copyrights. The Building has a remaining useful life of twenty years and Copyrights have a remaining useful life of eight years. During Year 1, Charmaine and Natalie had net incomes of $800,000 and $760,000, respectively.
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Unformatted text preview: During Year 1, Charmaine and Natalie declared and paid dividends of $78,000 and $148,000, respectively. Requirements: Assuming Charmaine owns 40% of Natalie and has significant influence over Natalie, what is the Investment account balance at the end of Year 1? Show the components of your answer below. $_2,683,800_______ Assuming Charmaine owns 40% of Natalie and has significant influence over Natalie, by what amount did the income of Charmaine increase in Year 1 as a result of having made this investment in Natalie? Show the components of your answer below. $ 243,000 Assuming Charmaine owns 40% of Natalie and has significant influence over Natalie, how much Goodwill is reflected in the purchase of these shares of Natalie? Show the components of your answer below. $ 1,036,000 Assuming Charmaine owns 40% of Natalie and has significant influence over Natalie, how much Dividend Revenue does Charmaine recognize? Show the components of your answer below. $ 59,200...
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