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mihalych1998 [28]
3 years ago
8

McGuire Company acquired 90 percent of Hogan Company on January 1, 2010, for $234,000 cash. This amount is reflective of Hogan's

total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:
Book value Fair value

Buildings (10 year life) 10,000 8,000

Equipments ( 4 year life) 14,000 18,000

Land 5,000 12,000

Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.

In consolidation at December 31, 2010, what adjustment is necessary for Hogan's Buildings account?


A. $1,620 increase.

B. $1,620 decrease.

C. $1,800 increase.

D. $1,800 decrease.

E. No adjustment is necessary.
Business
1 answer:
anzhelika [568]3 years ago
5 0

Answer:

D. $1,800 Decrease

Explanation:

                                       book value      Fair value       adjustment

01 Jan                             10,000               8,000             2,000

Depreciation                  -1000                 -800                  -200

31 Dec                             9,000                7,200              1,800 Decrease  

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7 0
1 year ago
Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poo
wolverine [178]

Answer: See explanation

Explanation:

a. Compute the incremental income after taxes that would result from these projections:

Sales increase= $200,000

Less: Uncollectible accounts:

= 7% × $200,000

= ($14,000)

Annual incremental value= $186,000

Less: Collection cost:

= 3% × $200,000

= ($6000)

Less: Production and selling cost:

= 80% × $200,000

= ($160,000)

Incremental income before tax= $20000

Tax at 30% = ($6000)

Incremental income after tax = $14000

b. Compute the incremental Return on Sales if these new credit customers are accepted If the receivable turnover ratio is expected to be 4 to 1 and no other asset buildup is needed to serve the new customer.

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= 7%

c. Compute the additional investment in Accounts Receivable.

Since the receivable turnover ratio will be 4, then the additional investment in the accounts receivable will be:

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= $200000 /4

= $50,000

Therefore, the additional investment in the accounts receivable will be $50,000.

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The incremental return on new investment will be:

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5 0
3 years ago
Key aspects of the process selection challenge include __________ and __________ Capital Intensity; Process Flexibility Informat
Ugo [173]

Answer:

A. capital intensity; process flexibility

Explanation:

Capital Intensity is the mix of equipment and human skills in the process; the greater the relative cost of equipment, the greater is the capital intensity.

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8 0
2 years ago
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ahrayia [7]

Answer:

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Answer:

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