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VLD [36.1K]
3 years ago
13

Equity Method Investment with Basis Differences Several Years LaterSaxton Corporation purchased 25 percent of Taylor Company's v

oting stock on January 1, 2013, for $3 million in cash. At the date of acquisition, Taylor reported its total assets at $60 million and its total liabilities at $56 million. Investigation revealed that Taylor's plant and equipment (15-year life) was overvalued by $1.8 million and it had an unreported customer database (2-year life) valued at $500,000. Taylor declares and pays $100,000 in dividends and reports net income of $250,000 in 2016.RequiredPrepare the necessary journal entries on Saxton's books to report the above information for 2016 assuming Saxton uses the equity method to report its investment.Enter answers in thousands. For example, $1 million is $1,000 and $100,000 is $100.Calculation of 2016 Equity in Taylor's Net Income:Saxton's share of Taylor's reported income $Answer+/- Revaluation adjustments AnswerEquity in net income of Taylor $Answer General JournalDate Description Debit Credit1/1/16 AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer12/31/16 AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer AnswerCashInvestment in TaylorEquity in net income of Taylor Answer Answer
Business
1 answer:
konstantin123 [22]3 years ago
6 0

Answer:

<u>Calculation of Saxton's equity in Taylor's net Income</u>

Saxton's share of Taylor reported Income         $62,500

($250,000 * 25%)

Less: Revaluation adjustment                              <u>$30,000</u>

($1,800,000/15)*25%

Equity in net income of Taylor                            <u>$32,500</u>

Saxton's equity in Taylor's net income is $32,500

<u>Preparation of the required Journal entries</u>

Account Titles and Explanation              Debit      Credit

Cash ($100,000*25%)                              $25,000

       Investment in Taylor                                          $25,000

(To record receipt of dividends)

Investment in Taylor                                  $32,500

          Equity in Net Income of Taylor                        $32,500

(To record earnings of the investee)

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Although only certain leases are currently accounted for as a sale or purchase, considering all leases to be sales or purchases
notka56 [123]

Answer:

A lease reflects the purchase or sale of a quantifiable right to the use of property

Explanation:

Sale

This is commonly known as the transfer of title, deeds from seller to buyer for a price

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Lease

This is the transfer of right to possession and use in return for some consideration.

It is als refered to as contractual agreement. This agreement is between a lessor and a Lessee. The lessor gives or conveys the right to use real or personal property or asset while the lessee is the one agrees to pay periodic rents over a time period.

The means of Lease payments include fixed payment, variable payments based on an index, bargain purchase option and guaranteed residual value.

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3 years ago
In an organization that has a ________, a centralized decision-making mechanism helps in the resolution of conflict between subu
Jlenok [28]

We have that the statement is as follows

In an organization that has a ____ functional structure____, a centralized decision-making <em>mechanism </em>helps in the resolution of conflict between subunits.

<h3>Centralized decision-making mechanism</h3>

Generally,Centralized selection making in a useful shape helps in stopping feasible conditions the place disputes can arise.

We see that centralized choice making mechanism does is that every purposeful branch is required to comply with choices that go with the flow down from the pinnacle administration.

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2 years ago
In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by
il63 [147K]

Here's the options that completes the question:

A. building a state-of-the-art facility to fully capture scale economies via an export strategy.

B. using export, licensing, or franchising strategies so as to minimize risk and capital investment.

C. locating buyer-related activities in all countries where it sells its product.

D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets.

E. avoiding the use of strategies that entail coordinating its domestic strategic moves with its strategic moves in the various foreign markets that it enters.

Answer:

D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets

Explanation:

A key condition that makes a firm achieve competitive advantage or a favourable business position is it's costs and product design.

If a firm can lower it's cost in a foreign market while also maintaining quality just as it is has done in it's domestic market then it stands a better chance of success.

For example, if a firm in the clothing line industry decides to expand its operations to a foreign market eg Africa.

A key factor in determining its success is its ability to lower its cost in the foreign market as compared to competitors, while also achieving the same quality standards of products.

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4 years ago
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Tanzania [10]

Answer:

False.

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Revenue should be recorded when the business has earned the revenue even it has not been paid by customers to finance expenditures

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