Ask question

Ask question

All categories

3 years ago

15

Dodge, Incorporated acquires 15% of Gates Corporation on January 1, 2013, for $105,000 when the book value of Gates was $600,000

. During 2013 Gates reported net income of $150,000 and paid dividends of $50,000. On January 1, 2014, Dodge purchased an additional 25% of Gates for $200,000. Any excess cost over book value is attributable to goodwill with an indefinite life. The fair-value method was used during 2013 but Dodge has deemed it necessary to change to the equity method after the second purchase. During 2014 Gates reported net income of $200,000 and reported dividends of $75,000.
1. Which adjustment would be made to change from the fair-value method to the equity method?

1 answer:

nata0808 [166]3 years ago

8 0

Answer:

Goodwill 35,000 debit

Investment in Gates 25,000 credit

Retained Earnings 10,000 credit

--to adjust for change of method--

Explanation:

600,000 x 15% = 90,000

purchased at 105,000

<em>goodwill of 15,000</em>

<em />

+ 150,000 x 15% of net income = 22,500

- 50,000 x 15% dividends = (7,500)

<em>investment at the end of 2013:</em>

90,000 + 22,500 - 7,500 = 105,000

Then we purchase 25%

105,000 represent 15%

thus 25% would be: 105,000 / 0.15 x 0.25 = 175,000

purchased at 200,000

goodwill of 25,000 to be recognized.

So, equity method will be:

105,000 + 175,000 = 280,000 for the proportional equity

and 15,000 + 25,000 = 35,000 goodwill

Total of 315,000

While fair value will not recognize goodwill. and also, the investment is not modified when dividends and the gain for the year are delcared.

It measure at cost unless the market value of the stock decrease so we got:

105,000 1st purchase + 200,000 2nd purchase = 305,000

To adjust we are going to decrease investment by 25,000 and increase goodwill by 35,000 the other will go into retained earnings to balance out.

You might be interested in

The short-run aggregate supply curve shows: a. Changes in output in an economy as the price level changes, holding all other det

Neporo4naja [7]

<h3>The short-run aggregate supply curve shows the relationship between the price level and aggregate expenditure </h3>

Explanation:

A short-run aggregate supply curve (SRAS) is a graphical model that shows the positive relationship between aggregate price level and aggregate production amount supplied in an economy. The short-run aggregate supply curve is sloping upward as the supplied quantity increases as the prices increase.

The short-run aggregate supply curve captures the relationship between the actual output and the price level. True production becomes bigger as the price level increases. As the price level decreases, actual production decreases too.

8 0

3 years ago

The Shirt Shop had the following transactions for T-shirts for Year 1, its first year of operations: Jan. 20 Purchased 400 units

viva [34]

Answer:

WA 1,682

LIFO 910

FIFO 2,260

Explanation:

$\left[\begin{array}{cccc}Date&Cost&Units&Subtotal\\$Jan 20th&8&400&3200\\$April 21th&10&200&2000\\$July 25th&13&280&3640\\$Sept 19th&15&90&1350\\$Total&10.51&970&10190\\\end{array}\right]$

We add the units purchase and the subtotal to get the total units available for sale.

Ending inventory physical units: 970 - 810 = 160 units

<u>Then, we calculate for each method:</u>

Weighted average:

cost of goods / available units = 10,190 / 970 = 10.51

160 units x 10.51 = 1,681.6‬

LIFO:

Ending inventory will be the oldest units:

160 units x 8 = 960

FIFO:

Ending inventory will be the newest units as the units are sold as soon as they come in

90 x 15 = 1,350

70 x 13 = 910

Total 2,260

5 0

3 years ago

What is photo synthesis?

Vlad1618 [11]

Answer:

photo synthesis is the process in which green plants use water and carbon dioxide to create their food.

8 0

2 years ago

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or

Vlada [557]

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the <u>Time period principle.</u>

The time period principle- Financial results and other material business activities should be reported over a consistent time period, such as a month, week, day, etc., in accordance with the time period concept. Depending on the frequency of the chosen time period, the firm must then adhere to a distinct set of regulations for each financial statement in accordance with US Generally Accepted Accounting Principles.

Any company's financial statements can be thought of as a snapshot in time that reveals both the company's history and its current status. That's why it's crucial to disclose to readers the time frame in which the financial statements were generated in accordance with the time period concept.

In its broadest sense, the time period principle holds that any enterprise may conveniently categorize its financial operations into discrete time intervals. That is to say, all cash inflows and outflows may be neatly categorised into separate and sequential accounting periods.

<u></u>

To know more about Time period principle refer here:

brainly.com/question/13035515

#SPJ4

3 0

1 year ago

A body in the solar system has a period of 10,759.22 days and a perihelion speed of 10.18 km/s. a. Calculate the aphelion radius

anastassius [24]

Answer:

Explanation:

From the information given, by applying Kepler's 3rd law,

$T^2 \alpha a^3$

where;

T = period

a = semi major axis

T = 356 days (for earth)

a = 1 AU = 1.496 $\times 10^8 \ km$

Therefore, $T^2 = ca^3$

$c= \dfrac{365^2}{(1.496 \times 10^8)^3}$

c = 3.9791 $\times 10^{20} \ day^2/km^3$

However, if the body in the solar system has a period of 10.759.22 days, then, a =?

∴

$T^2 = ca^3$

$a3 = \dfrac{10759.22^2}{3.9791 \times 10^{-20}}$

$a^3 = 2.9092 \times 10^{27}$

$a= \sqrt[3]{2.9092 \times 10^{27}}$

a = 1.4275 $\times 10^9 \ km$

However, the velocity for a perihelion = 10.18 km/s

Using the formula

$v = \sqrt{GM ( \dfrac{2}{r}-\dfrac{1}{a})}$ to calculate the radius, we have:

G = $6.674 \times 10^{-11}$

M = $1.989\times 10^{30} \ kg$

r = perihelion

$v ^2= GM ( \dfrac{2}{r}-\dfrac{1}{a})$

$(10.18 \times 10^3) ^2= 6.674 \times 10^{-11} \times 1.989 \times 10^{30} ( \dfrac{2}{r}-\dfrac{1}{1.425 \times 10^{12}})$

$7.8068 \times 10^{-13}= \dfrac{2}{r}-\dfrac{1}{1.425 \times 10^{12}}$

$\dfrac{2}{r} = 1.4824 \times 10^{-12}$

$r = \dfrac{2}{1.4824 \times 10^{-12}}$

$r = 1.349 \times 10^{12}$

Similarly, the perihelion is expressed by the equation,

r = a(1 - e)

where ;

e= eccentricity

∴

$1.349 \times 10^{12} = 1.425 \times 10^{12} ( 1 - e)$

$1.349 \times 10^{12} - 1.425 \times 10^{12}= - 1.425 \times 10^{12} (e)$

$-7.6\times 10^{10}= - 1.425 \times 10^{12} (e)$

$\dfrac{-7.6\times 10^{10}}{- 1.425 \times 10^{12}}= (e)$

e ( eccentricity) = 0.0533

Aphelion radius in natural miles, r = a( 1+ e)

$r = 1.425 \times 10^{12} ( 1 + 0.0533)$

$r = 1.50 \times 10^{12} \ m$

to nautical miles, we have:

$r = 1.50 \times 10^{12} \times 0.00054 \ nautical \ mile$

radius of aphelion $\mathbf{r = 8.10 \times 10^8}$ nautical miles

In respect to the value of a( i.e $1.4275 \times 10^9 \ km)$

the body of the solar system is Saturn

5 0

3 years ago