Practice 1- Ch 1 Equity Method

Practice 1- Ch 1 Equity Method - Ch 1: Equity Method Three...

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1 Ch 1: Equity Method Three Practice Problems: 1-14a, 1-17, and 1-29 Solutions: Problem 1: 1- a. Acquisition price . ....................................................................................................... $60,000 14.(10 minutes) (Investment account after 2 years with fair value option included) Book value—assets minus liabilities ($125,000 × 40%) . ........................................ Excess payment . ................................................................................................ $10,000 50,000 Value of patent in excess of book value ($15,000 × 40%) . ..................................... Goodwill . ................................................................................................................. $4,000 6,000 Amortization: Patent ($6,000 ÷ 6) . ........................................................................................... $1,000 Goodwill . ........................................................................................................... Annual amortization. ................................................................................... $1,000 -0- Acquisition price . ..................................................................................................... $60,000 Basic equity accrual 2010 ($30,000 × 40%) . ........................................................... 12,000 Dividends—2010 ($10,000 × 40%) . ........................................................................ (4,000) Amortization—2010 (above) . .................................................................................. (1,000
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Practice 1- Ch 1 Equity Method - Ch 1: Equity Method Three...

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