1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Goryan [66]
3 years ago
6

On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,

000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years. Plus uses the equity method in accounting for its investment in Side.
1. Based on the preceding information, the increase in the fair value of patents held by Side is:

a. $20,000
b. $25,000
c. $15,000
d. $5,000

2. Based on the preceding information, what balance would Plus report as its investment in Side at January 1, 20X8?

a. $230,400
b. $180,000
c. $234,000
d. $203,400
Business
1 answer:
LenKa [72]3 years ago
5 0

Answer:

1)  b) $25,000

2) d. $203,400

Explanation:

1)

Ref                            Particulars                                               Amount

a                            Fair value of entity                               200,000

b                            Total value without patent                       175,000

c=a-b                     Patent                                                       25,000

Therefore,  the increase in the fair value of patents held by Side is;

b) $25,000

Fair value of consideration given:

Ref                               Particulars                                    Amount

                                     Stock                                             0

                                     Cash                                                    180,000

a                               Total consideration                            180,000

b                               Stake acquired                            90%

c=a/b                       Fair value of subsidiary                    200,000

d=100%-b               Minority interest                            10%

e=c*d                       Fair value of minority interest            20,000

On acquisition date

Value of subsidiary without patent

Common stock                   100,000

Paid in capital                       -  

Retained earnings                   60,000

Fair value adjustment:  

Patent                                      -  

Equipment                           10,000

Land                                    5,000

Fair value without patent   175,000

2)

Particulars                                      Investment

Acquisition date                              180,000

Add: share of net income              54,000

Less: Dividends                              18,000

Less: Fair value amortization      12,600

Balance Jan 1, 20X8                      203,400

{Share of earnings for 2 years = 30,000 × 2 × 90% = 54,000 }

{Share of dividends for 2 years = 10,000 × 2 × 90% = 18,000 }

{Fair value amortization for 2 years = 7,000 × 90% × 2 = 12,600}

Therefore Balance as at Jan 1, 20X8 is

d) $203,400

You might be interested in
Assume that we are back to talking about bags of oranges (a private good), but that the government has decided that tossed orang
ruslelena [56]

Answer:

If negative externalities pop up in a market, the equilibrium is higher than the efficient output.

Thus when it comes to the government rectification regarding the side effects of that commercial , activity, if the amount of bags is (1) then the new equilibrium would be: <em>p*= $17</em>

8 0
3 years ago
In a traditional economy decisions are based largely on
Luden [163]
Custom

Hope this helps ;)
5 0
3 years ago
According to the FASB's conceptual framework, the quality of information that helps users increase the likelihood of correctly f
Kisachek [45]

Answer:

C. Predictive value.

Explanation:

Relevant information is able to make a difference in user decisions. To do so, it must have predictive value, confirmatory value, or both. Financial information has predictive value if it can be used as an input in a predictive process.

4 0
3 years ago
Young Co. issues $800,000 of 10% bonds dated January 1, Year 1. Interest is payable semiannually on June 30 and December 31. The
Andreyy89

Answer:

Young should report proceeds from the sale of bonds as equal to $864,884

Explanation:

The proceeds on the sale of bonds is equivalent to the present value of all the cash flows that are likely to accrue to an investor once the bond is bought. These cash-flows are the periodic coupon payments that are paid semi-annually and the par value of the bond that will be paid at the end of the 5 years.

During the 5 years, there are 10 equal periodic coupon payments that will be made. In each  year, the total coupon paid will be

$800,000*0.1=$80,000

and this payment will be split into two equal payments equal to \frac{$80,000}{2} = $40,000 . This stream of cash-flows is an ordinary annuity

The periodic market rate is equal to \frac{0.08}{2}=0.04

The  PV of the cashflows = PV of the coupon payments + PV of the par value of the bond

=$40,000*PV Annuity Factor for 10 periods at 4%+ $800,000*\frac{1}{(1+0.04)^10}

=$40,000*8.1109+$800,000*0.67556=$864,884

4 0
3 years ago
Broker James has had his license suspended for two years. The licenses of all the broker-associates and salespersons who work fo
Ostrovityanka [42]

Available Options Are:

A. Revoked, subject to reinstatement after 30 days.

B. Not affected by the suspension

C. Automatically suspended

D. Placed on inactive status

Answer:

D. Placed on inactive status

Explanation:

The reason is that James was jointly responsible for the actions of his broker-associates and salesperson because they were working under his supervision and that's why now as the license of James has been suspended for 2 years, James is no more jointly accountable for the actions of his associates and salesperson. Hence the licenses of associates and salesperson will be placed on inactive status. To reactive they will have to affiliate themselves to a broker who possesses an active license.

5 0
3 years ago
Other questions:
  • XYZ Corp is doing a study of consumers' use of soap across the US. The questiuonnaire for the sttudy will include questions abou
    6·1 answer
  • Cado Co.'s payroll for the month ended January 31 is summarized as follows:Total wages $100,000Amount of wages subject to payrol
    14·1 answer
  • Working regular hours is a drawback of being a wage earner ..... true or false
    7·2 answers
  • You are analyzing a company that has cash of $8,800, accounts receivable of $15,800, fixed assets of $87,600, accounts payable o
    7·1 answer
  • What does a company's code of ethics cover?
    13·1 answer
  • Can debit collectors call you anytime and what hours are they able to call you on the phone ? please help :) i’ll give brainlest
    9·1 answer
  • A _________________________ is calculated as a flat percentage of income earned, regardless of level of income.
    14·2 answers
  • he auditors have some uncertainties, but these uncertainties are not so material that they cannot form an opinion on the fairnes
    7·1 answer
  • ________ seem as a group to be mildly regressive, and ________ seem as a group to be mildly progressive.
    14·1 answer
  • What methods can you use for setting the price? What tools are available for measuring the impact on your price decision?
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!