Equity_Method

Equity_Method - 1 When an investor uses the equity method...

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1 When an investor uses the equity method to account for investments in common st from the investee should be recorded as D. A deduction from the investment account Which of the following does not indicate an investor company's ability to significantl 2 an investee? B. The investor ownd 30 percent of the investee, but another owner holds the reman 3 Sisk company has owned 10 percent of Maust, Inc., for the past several years. Thi allow Sisk to have significant influence over Maust. Recently , Sksk acquired an ad of Maust and now will use the equity method. How will the investor report this chang C. A retrospective adjustmetn is made to restore all prior years using the equity met 4 On January 1, Puckett Company paid $1.6 million for 50,000 shares of Harrison's v which represents a 40 percent investment. No allocation to goodwill of other specific Significant influence over Harrison is achieved by this acquisition and so Puckett app Harrison distributed a dividend of $2 per share during the years and reported net inc What is balance in the Investment in Harrison account found in Puckett's finan Acquisition price Equity income ($560,000 × 40%) plus: Dividends (50,000 shares × $2.00) less: dividends Investment in Harrison Corporation as of December 31 5 In January 2008, Wilkinson, Inc., acquired 20% of the outstanding common stock of Bremm, I This investment gave Wilkinson the ability to exercise significant influence over Bremm. Brem recorded at $3,900,000 with liabilities of $900,000. Any excess of cost over book value of the to a patent having a remaining useful life of 10 years. In 2008, Bremm reported net income of $170,000. In 2009, Bremm reported net income of $2 paid in each of these two years. What is the equity method balance of Wilkinsong's invetsem 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 1. Acquisition price
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6 Ace purchases 40 percent of Baskett Company on January 1 for $500,000. Althou the ability to apply significant influence to Baskett's operating and financial policies. with liabilities of $500,000. One building with a seven-year life is undervalued on Ba for its trademark (10 year life) is undervalued by $210,000. During the year, Baskett dividends of $30,000. What is the Investment in Baskett Company balance (equity m Purchase Price of Baskett Stock $500,000 Book Value of Baskett ($900,000 × 40%) $360,000 Cost in Excess of Book Value $140,000 Payment identified with undervalued Building ($140,000 × 40%) 56,000 Trademark ($210,000 × 40%) 84,000 Total $0 Cost of Purchase $500,000 Income Accrued ($90,000 × 40%) 36,000 Amortization (above) -16,400 Dividend Collected
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Equity_Method - 1 When an investor uses the equity method...

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