BUSI 4423 Solutions to chapter 4 In Class Problems FALL 2016
Problem 4-3
(a)
Cost of 90% investment
$52,200
Implied value of 100% investment
58,000
Carrying amount of Seeview Co.s net assets
Assets
$94,650
Liabilities
67,700
26,950
Acquisition differentia
BUSI 4425 in class self study solutions
Problem 5-1
Part A
(a)
Carrying value of assets as a group
$2,094
Fair value of assets as a group
1,860
Total impairment loss
$234
(b)
Tangible assets, net
$1,164
Recognized intangible assets, net
510
Internally dev
Problem 6-14 Solution and marking key
(a)
100 marks
Acquisition cost Allocation
Acquisition January 1, Year 7
Cost (60,000 x 80)
$4,800,000 (1)
Implied value of 100% investment (80,000 shares x 80)
$6,400,000 (1)
CA: Ordinary Shares
$3,440,000
Retained Ea
BUSI 4423 Solutions to the In Class problems for chapter 2
Problem 2-3
(a)
January 1, Year 5
Investment in Stergis
Cash
To record purchase of 25% of Stergis.
1,850,000
1, 850,000
December 31, Year 5
Investment in Stergis
12,950
Equity method income
To rec
BUSI 4423 Chapter 4 Self Study Problems
Self Study Problem 1
CAN buys 80% of the ordinary shares of UKS market value is $35,200
Proprietary Method
Plant assets
Goodwill
Investment in
UKS
Current
Assets
Total
Shareholders
Equity
controlling
interest
Nonco
BUSI 4423 Chapter 2
Self Study Problem 1 (pages 80-82 of the textbook)
Part A
Journal entries for Year 5 and year 6
Date
Jan 1 Yr 5
Dec 31 Yr 5
Dec 31 Yr 5
Jan 1 Yr 6
Dec 31 Yr 6
Dec 31 Yr 6
Investment in Lowe
Cash
Cash
Dividend income (10% x $120,00)
Inv
BUSI 4423 Self Study Problem Chapter 1
Net Income for year 3 under ASPE
$1,000,000
Adjustments:
Deferred tax expense
(30,000)
Additional depreciation on revalued equipment
(10,000)
Development costs capitalized
60,000
Additional interest expense for amort
BUSI 4423 Solutions to the chapter 9 in class self study work
Problem 7-9
Calculation, allocation, and amortization of acquisition differential
Total
70%
Cost of investment, Jan. 1, Year 6
483,000
483,000
Fair value of NCI
195,000
30%
195,000
678,000
Carr
Chapter 6 Self Study Problem 1
Unrealized Profits
Before Tax
40% Tax
After Tax
Equipment (Penn Selling)
Gain recorded January 1 Year 15
Excess Depreciation Year 15
($14,000/8)
Unrealized gain December 31 Year 15
$14,000
$5,600
$8,400
1,750
700
1,050
$12,2
BUSI 4423
Chapter 3 Self Study Problem 1
Goodwill
Plant Assets (net)
Current assets
Total
P Company
Carrying
Fair
Amount
Value
0
80,000
50,000
130,000
75,000
25,000
30,000
130,000
Shareholders Equity
Long-term debt
Current liabilities
Total
38,000
90,000