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Unformatted text preview: tee assets on the
date of acquisition:
A. Reduces the investment account and increases investment revenue.
B. Increases the investment account and increases investment revenue.
C. Reduces the investment account and reduces investment revenue.
D. Increases the investment account and reduces investment revenue.
99. On January 1, 2013, Green Corporation purchased 20% of the outstanding voting common stock of
Gold Company for $300,000. The book value of the acquired shares was $275,000. The excess of cost
over book value is attributable to an intangible asset on Gold's books that was undervalued and had a
remaining useful life of five years. For the year ended December 31, 2013, Gold reported net income of
$125,000 and paid cash dividends of $25,000. What is the carrying value of Green's investment in Gold at
December 31, 2013?
At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $45 million. At the time
of purchase, the carrying value of Sky Tech's net assets was $75 million. The fair value of Sky Tech's
depreciable assets was $15 million in excess of their book value. For this year, Sky Tech reported a net
income of $75 million and declared and paid $15 million in dividends.
100.The amount of purchased goodwill is:
A. $18 million.
B. $30 million.
C. $60 million.
D. None of the above is correct. 101.The total amount of additional depreciation to be recognized by SBC over the remaining life of the assets
A. $4.5 million.
B. $15 million.
C. $27 million.
D. None of the above is correct.
102.Assume that, on January 1, 2013, Sosa Enterprises paid $3,000,000 for its investment in 36,000 shares of
Orioles Co. Further, assume that Orioles has 120,000 total shares of stock issued and estimates an eightyear remaining useful life and straight-line depreciation with no residual value for its depreciable assets.
At January 1, 2013, the book value of Orioles' identifiable net assets was $7,000,000, and th...
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This document was uploaded on 07/05/2013.
- Spring '09
- Balance Sheet