Problem-12and13

Problem-12and13 - Problem 12 Cost of 75 of Rabb 117,000...

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Problem 12 Cost of 75% of Rabb 117,000 Implied value of 100% of Rabb 156,000 Book value of Rabb’s net assets = Book value of Rabb’s shareholders’ equity Book value of Rabb – common shares 50,000 retained earnings 30,000 80,000 Acquisition differential 76,000 Allocated: Fv –Bv Inventory -11,000 Equipment 24,000 S o f t w a r e 15,000 28,000 Goodwill 48,000 Bal Amortization Impairment Bal Jan. 1/Yr3 to Dec.31/Yr5 Yr6 Loss/Yr6 Dec.31/Yr6 Inventory - 11,000 - 11,000 Equipment 24,000 12,000 4,000 8,000 Software 15,000 4,500 1,500 1,000 8,000 Goodwill 48,000 28,000 20,000 76,000 5,500 5,500 29,000 36,000 (a) Calculation of consolidated net income attributable to Foxx’s shareholders – Year 6 Net income Foxx 120,000 Less Dividends from Rabb (.75 x 20,000) 15,000 105,000 Net income Rabb 48,000 Less: PD amortization - 5,500
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Impairment loss - 29,000 13,500 75% 10,125 115,125 Foxx Corp. Year 6 Consolidated Income Statement Sales (821,000 + 320,000) 1,141,000 Investment income (15,000 – 15,000 + 3,600) 3,600 1,144,600 Cost of sales (480,000 + 200,000) 680,000 Administrative expenses (40,000 + 12,000 + 5,500)
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Problem-12and13 - Problem 12 Cost of 75 of Rabb 117,000...

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