ave On January 1, 2020, Club Corporation purchased 120,000 shares of Liptona views Company common stock for $1,200,000, giving Club 35% ownership and the abil to apply significant influence over Liptona views. On that date, the book value of Liptona views was $2,025,000. A building with a carrying value of $570,000 was wo $780,000. The building had a remaining life of 10 years. Liptona owned a trademark, the trademark was undervalued by $420,000 with a ten-year remaining life. Cle attributed to goodwill any unidentified excess cost Liptons views Co. reported nat income of $675,000 during 2020 and declared and paid dividends of $255,000 Required: Prepare all of Club's journal entries for 2020 in relation to its investment in Liptona views Co. PLEASE SHOW COMPUTATIONS For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)

ave On January 1, 2020, Club Corporation purchased 120,000 shares of Liptona views Company common stock for $1,200,000, giving Club 35% ownership and the abil to apply significant influence over Liptona views. On that date, the book value of Liptona views was $2,025,000. A building with a carrying value of $570,000 was wo $780,000. The building had a remaining life of 10 years. Liptona owned a trademark, the trademark was undervalued by $420,000 with a ten-year remaining life. Cle attributed to goodwill any unidentified excess cost Liptons views Co. reported nat income of $675,000 during 2020 and declared and paid dividends of $255,000 Required: Prepare all of Club's journal entries for 2020 in relation to its investment in Liptona views Co. PLEASE SHOW COMPUTATIONS For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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On January 1, 2020, Mickey Mouse Co. acquired 30,000 ordinary shares out of the 100,000 outstanding ordinary shares of Minnie Mouse Inc. for P5,000,000. Minnie Mouse’s assets and liabilities approximate their fair except for inventory which carrying amount was undervalued by P500,000; machinery is undervalued by P300,000. The remaining useful life of the machinery is 5-years. Minnie Mouse’s net assets has a book value of P10,000,000.On December 31, 2020, Minnie Mouse reported net income of P2,000,000 and declared and paid dividends of P800,000. On December 31, 2021, Minnie Mouse reported net income of P4,500,000 and declared and paid dividends of P1,600,000.How much is the carrying amount of Investment in Associate in 2021? 6,194,000 4,490,000 6,230,000 5,342,000
On January 1, 2020, Mickey Mouse Co. acquired 30,000 ordinary shares out of the 100,000 outstanding ordinary shares of Minnie Mouse Inc. for P5,000,000. Minnie Mouse’s assets and liabilities approximate their fair except for inventory which carrying amount was undervalued by P500,000; machinery is undervalued by P300,000. The remaining useful life of the machinery is 5-years. Minnie Mouse’s net assets has a book value of P10,000,000.On December 31, 2020, Minnie Mouse reported net income of P2,000,000 and declared and paid dividends of P800,000. On December 31, 2021, Minnie Mouse reported net income of P4,500,000 and declared and paid dividends of P1,600,000.How much is the carrying amount of Investment in Associate in 2020? 5,342,000 5,378,000 4,658,000 5,200,000 How much is the Share in Profit account of Mickey Mouse for the year ended December 2020? 582,000 618,000 258,000 222,000
On January 1, 2018, P Company purchased 6,000 shares of the 7,500 outstanding shares of S Company by paying P700,000. On that date, S Company had P300,000 capital stock and P500,000 of retained earnings. The excess cost over book value was attributable to the building with a remaining life of 25 years. All other assets and liabilities of S Company had book value approximated their fair market value. The fair value of NCI on this date was P175,000. P Company's retained earnings as of January 1, 2018 was P550,000. The 2018 and 2019 net income and dividends were as follows: Net income Dividends 2018 P340,000 150,000 2019 P440,000 250,000 2018 2019 P Company S Company P100,000 50,000 P150,000 100,000 On April 1, 2018, S Company sold equipment with a book value of P30,000 to P Company for P60,000. The equipment is expected to have a remaining useful life of five years from the date of sale. On August 31, 2018, P Company sold machinery with a book value of P40,000 to S Company for P85,000.…
On January 1, 2022, Mojito Corporation purchased 20% (20,000 shares) of the outstanding stock of Dulcinea Corporation for $153,000. During 2022, Dulcinea Corporation paid total dividends of $45,000 and earned $80,000 in net income. At the end of 2022, Dulcinea Corporation’s stock had a fair market value of $155,000. Required: Prepare the journal entries that Mojito would make during 2022 assuming that they do NOT have significant influence over Dulcinea as a result of their stock ownership (i.e. fair value method). Prepare the journal entries that Mojito would make during 2022 assuming that they do have significant influence over Dulcinea as a result of their stock ownership (i.e. equity method).
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On January 1st 2020, the Tesla Company purchased 400 of the 1000 shares of the Spaceship Enterprise Company (SEC)for $4,000,000. At this time Spaceship Enterprise's assets has a book value equal to market value for all assets exceptthe NCC1701 which has a 5 year life, a book value of $200,000 and a market value of $350000. On July 1st 2020, SEC declared and paid a $2 per share dividendOn December 31st 2020 SEC's stock was selling for $11,000 per share. SEC reported income of $222,000On July 1st 2021 SEC declared and paid a $2 per share dividendOn December 31st 2021, SEC's stock was selling for $9999 per share. SEC reported a loss of $111,000On July 1st 2022 SEC had a 2 for one stock splitOn December 31st 2022, SEC's stock was selling for $5555 per share. SEC reported a profit of $333,000On February 4th 2023 Tesla sold all of its stock in Spaceship Enterprise Company for $5700 per share. REQUIRED; AMAKE ALL OF THE JOURNAL ENTRIES FOR TESLA BEGINNING WITH THE PURCHASE OF THE…
On January 2, 2021, A Company purchased 25,000 shares of V Company's 100,000 outstanding ordinary shares for P300 per share. The book value of V Company's net assets is P29,000,000.00. The book value of V Company's factory equipment is P4,000,000.00 and its fair value is P5,000,000.00. The factory equipment has a remaining useful life of 10 years. All through out the year 2021, the factory equipment was carried at carrying value. On December 31, 2021, V Company paid P2,000,000.00 cash dividends to its ordinary shareholders. V Company reported net of tax income for the whole year in the amount of P4,500,000.00. On January 1, 2022, A Company revalued its equipment. At the time of revaluation, the equipment has a carrying value of P4,500,000.00. The revaluation was made known to A Company. For the year ended December 31, 2022, V Company reported a net of tax income of P5,000,000.000 and paid a cash dividends of P2,800,000.00. Income tax rate is 32%. What amount of income should A…
Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2020. As of that date, Jackson had the following trial balance: Debit Credit Accounts payable $ 60,000 Accounts receivable $ 50,000 Additional paid-in capital 60,000 Buildings (net) (20-year life) 140,000 Cash and short-term investments 70,000 Common stock 300,000 Equipment (net) (8-year life) Intangible assets (indefinite life) 240,000 110,000 Land 90,000 Long-term liabilities (mature 12/31/22) Retained earnings, 1/1/20 Supplies 180,000 120,000 20,000 Totals $ 720,000 $ 720,000 During 2020, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2021, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2020, Jackson's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of…
On January 1, 2020, Graham Co. acquired 40% of the outstanding voting common shares of Lenore Co. for $700,000. On that date, Lenore reported assets and liabilities with book values of $2,200,000 and $700,000, respectively. A building owned by Lenore had an appraised value of $300,000 although it had a book value of only $120,000. This building had a 10-year remaining life and no salvage value. It was being depreciated on the straight-line basis. Lenore generated net income of $400,000 in 2020 and paid a cash dividend of $90,000 to its stockholders. During 2018, Lenore sold inventory to Graham that had an original cost of $60,000. The merchandise was sold to Graham for $96,000. Of this balance, $65,000 was resold to outsiders during 2020. Required: Calculate the equity income to be reported by Graham for 2020.
On Jan. 1, 2020, ABC bought 250,000 shares of XYZ Corporation for P8,000,000. All 1,000,000 P20-par shares of XYZ were issued and outstanding. The net assets were valued at P32,000,000 but they were carried in the accounting books at P30,000,000. The difference is attributable to an equipment that has a useful life of 4 years. Details relating to XYZ for the years 2020 and 2021 are as follows: (the table is shown in the image uploaded.) What is the balance of the Investment in Associate as of Dec. 31, 2021?
On August 1, 2023, Sandhill Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation for $1,220,000. At the time of purchase, WLT's net assets were undervalued by $70,000 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $300,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,342,000. On January 10, 2024, WLT paid a cash dividend. Sandhill's ownership entitles it to $15,000 of the dividend. Prepare the journal entries on the books of Sandhill Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Sandhill elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order…