Chapter 4-18 - CHAPTER 4 CONSOLIDATED FINANCIAL STATEMENTS...

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CHAPTER 4 CONSOLIDATED FINANCIAL STATEMENTS AND OUTSIDE OWNERSHIP Answers to Problems 31. (25 Minutes) (A variety of consolidated questions and balances) a. Monroe is applying the cost method because the original price of $414,000 is still in the Investment in Sunrise account. In addition, the Investment Income account is equal to 60 percent of the dividends paid by the subsidiary during the year. b. Purchase price. .......................................... $414,000 Book value of Sunrise ($550,000 × 60%). . (330,000 ) Purchase price In excess of book value . $84,000 Excess purchase price assigned based Annual Excess on Fair value: Life Amortizations Buildings ($60,000 × 60%) . .................. 36,000 6 years $6,000 Equipment ([$20,000] × 60%) . ............. (12,000) 4 years (3,000) Patent ($100,000 × 60%) . ..................... 60,000 10 years 6,000 Total . ................................................... -0- $9,000 c. If the partial equity method had been applied, the Investment Income
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Chapter 4-18 - CHAPTER 4 CONSOLIDATED FINANCIAL STATEMENTS...

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