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60. On January 4, 2011, Mason Co. purchased 40,000 shares (40%) of the common
stock of Hefly Corp., paying $560,000. At that time, the book value and fair value of
Hefly's net assets was $1,400,000. The investment gave Mason the ability to exercise
significant influence over the operations of Hefly. During 2011, Hefly reported income
of $150,000 and paid dividends of $40,000. On January 2, 2012, Mason sold 10,000
shares for $150,000.
What was the balance in the investment account before the shares were sold?
61. On January 4, 2011, Mason Co. purchased 40,000 shares (40%) of the common
stock of Hefly Corp., paying $560,000. At that time, the book value and fair value of
Hefly's net assets was $1,400,000. The investment gave Mason the ability to exercise
significant influence over the operations of Hefly. During 2011, Hefly reported income
of $150,000 and paid dividends of $40,000. On January 2, 2012, Mason sold 10,000
shares for $150,000.
What is the gain/loss on the sale of the 10,000 shares?
62. On January 4, 2011, Mason Co. purchased 40,000 shares (40%) of the common
stock of Hefly Corp., paying $560,000. At that time, the book value and fair value of
Hefly's net assets was $1,400,000. The investment gave Mason the ability to exercise
significant influence over the operations of Hefly. During 2011, Hefly reported income
of $150,000 and paid dividends of $40,000. On January 2, 2012, Mason sold 10,000
shares for $150,000.
What is the balance in the investment account after the sale of the 10,000 shares?
63. On January 4, 2011, Mason Co. purchased 40,000 shares (40%) of the common
stock of Hefly Corp., paying $560,000. At that time, the book value and fair value of
Hefly's net assets was $1,400,000. The investment gave Mason the ability to exercise
significant influence over the operations of Hefly. During 2011, Hefly reported income
of $150,000 and paid dividends of $40,000. On January 2, 2012, Mason sold 10,000
shares for $150,000.
What is the appropriate journal entry to record the sale of the 10,000 shares?
64. On January 4, 2011, Bailey Corp. purchased 40% of the voting common stock
of Emery Co., paying $3,000,000. Bailey properly accounts for this investment using
the equity method. At the time of the investment, Emery's total stockholders' equity
was $5,000,000. Bailey gathered the following information about Emery's assets and
liabilities whose book values and fair values differed:
Any excess of cost over fair value was attributed to goodwill, which has not been
impaired. Emery Co. reported net income of $400,000 for 2011, and paid dividends of
$200,000 during that year.
What is the amount of the excess of purchase price over book value?
65. On January 4, 2011, Bailey Corp. purchased 40% of the voting common stock
of Emery Co., paying $3,000,000. Bailey properly accounts for this investment using
the equity method. At the time of the investment, Emery's total stockholders' equity
was $5,000,000. Bailey gathered the following information about Emery's assets and
liabilities whose book values and fair values differed:
Any excess of cost over fair value was attributed to goodwill, which has not been
impaired. Emery Co. reported net income of $400,000 for 2011, and paid dividends of
$200,000 during that year.
How much goodwill is associated with this investment?
66. On January 4, 2011, Bailey Corp. purchased 40% of the voting common stock
of Emery Co., paying $3,000,000. Bailey properly accounts for this investment using
the equity method. At the time of the investment, Emery's total stockholders' equity
was $5,000,000. Bailey gathered the following information about Emery's assets and
liabilities whose book values and fair values differed:
Any excess of cost over fair value was attributed to goodwill, which has not been
impaired. Emery Co. reported net income of $400,000 for 2011, and paid dividends of
$200,000 during that year.
What is the amount of excess amortization expense for Bailey's investment in Emery
for the first year?
67. On January 1, 2011, Jackie Corp. purchased 30% of the voting common stock
of Rob Co., paying $2,000,000. Jackie properly accounts for this investment using the
equity method. At the time of the investment, Rob's total stockholders' equity was
$3,000,000. Jackie gathered the following information about Rob's assets and
liabilities whose book values and fair values differed:
Any excess of cost over fair value was attributed to goodwill, which has not been
impaired. Rob Co. reported net income of $300,000 for 2011, and paid dividends of
$100,000 during that year.
What is the amount of the excess of purchase price over book value?
68. On January 1, 2011, Jackie Corp. purchased 30% of the voting common stock
of Rob Co., paying $2,000,000. Jackie properly accounts for this investment using the
equity method. At the time of the investment, Rob's total stockholders' equity was
$3,000,000. Jackie gathered the following information about Rob's assets and
liabilities whose book values and fair values differed:
Any excess of cost over fair value was attributed to goodwill, which has not been
impaired. Rob Co. reported net income of $300,000 for 2011, and paid dividends of
$100,000 during that year.
How much goodwill is associated with this investment?
69. On January 1, 2011, Jackie Corp. purchased 30% of the voting common stock
of Rob Co., paying $2,000,000. Jackie properly accounts for this investment using the
equity method. At the time of the investment, Rob's total stockholders' equity was
$3,000,000. Jackie gathered the following information about Rob's assets and
liabilities whose book values and fair values differed:
Any excess of cost over fair value was attributed to goodwill, which has not been
impaired. Rob Co. reported net income of $300,000 for 2011, and paid dividends of
$100,000 during that year.
What is the amount of excess amortization expense for Jackie Corp's investment in
Rob Co. for year 2011?
70. On January 1, 2011, Jackie Corp. purchased 30% of the voting common stock
of Rob Co., paying $2,000,000. Jackie properly accounts for this investment using the
equity method. At the time of the investment, Rob's total stockholders' equity was
$3,000,000. Jackie gathered the following information about Rob's assets and
liabilities whose book values and fair values differed:
Any excess of cost over fair value was attributed to goodwill, which has not been
impaired. Rob Co. reported net income of $300,000 for 2011, and paid dividends of
$100,000 during that year.
What is the balance in Jackie Corp's Investment in Rob Co. account at December 31,
2011?
71. Acker Inc. bought 40% of Howell Co. on January 1, 2010 for $576,000. The
equity method of accounting was used. The book value and fair value of the net assets
of Howell on that date were $1,440,000. Acker began supplying inventory to Howell
as follows:
Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying
$40,000 in dividends each year.
What is the amount of unrealized intra-entity inventory profit to be deferred on
December 31, 2010?
72. Acker Inc. bought 40% of Howell Co. on January 1, 2010 for $576,000. The
equity method of accounting was used. The book value and fair value of the net assets
of Howell on that date were $1,440,000. Acker began supplying inventory to Howell
as follows:
Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying
$40,000 in dividends each year.
What is the amount of unrealized intra-entity inventory profit to be deferred on
December 31, 2011?
73. Acker Inc. bought 40% of Howell Co. on January 1, 2010 for $576,000. The
equity method of accounting was used. The book value and fair value of the net assets
of Howell on that date were $1,440,000. Acker began supplying inventory to Howell
as follows:
Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying
$40,000 in dividends each year.
What is the Equity in Howell Income that should be reported by Acker in 2010?
74. Acker Inc. bought 40% of Howell Co. on January 1, 2010 for $576,000. The
equity method of accounting was used. The book value and fair value of the net assets
of Howell on that date were $1,440,000. Acker began supplying inventory to Howell
as follows:
Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying
$40,000 in dividends each year.
What is the balance in Acker's Investment in Howell account at December 31, 2010?
75. Acker Inc. bought 40% of Howell Co. on January 1, 2010 for $576,000. The
equity method of accounting was used. The book value and fair value of the net assets
of Howell on that date were $1,440,000. Acker began supplying inventory to Howell
as follows:
Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying
$40,000 in dividends each year.
What is the Equity in Howell Income that should be reported by Acker in 2011?
76. Acker Inc. bought 40% of Howell Co. on January 1, 2010 for $576,000. The
equity method of accounting was used. The book value and fair value of the net assets
of Howell on that date were $1,440,000. Acker began supplying inventory to Howell
as follows:
Howell reported net income of $100,000 in 2010 and $120,000 in 2011 while paying
$40,000 in dividends each year.
What is the balance in Acker's Investment in Howell account at December 31, 2011?
77. Cayman Inc. bought 30% of Maya Company on January 1, 2011 for $450,000.
The equity method of accounting was used. The book value and fair value of the net
assets of Maya on that date were $1,500,000. Maya began supplying inventory to
Cayman as follows:
Maya reported net income of $100,000 in 2011 and $120,000 in 2012 while paying
$40,000 in dividends each year.
What is the amount of unrealized intra-entity inventory profit to be deferred on
December 31, 2011?
78. Cayman Inc. bought 30% of Maya Company on January 1, 2011 for $450,000.
The equity method of accounting was used. The book value and fair value of the net
assets of Maya on that date were $1,500,000. Maya began supplying inventory to
Cayman as follows:
Maya reported net income of $100,000 in 2011 and $120,000 in 2012 while paying
$40,000 in dividends each year.
What is the amount of unrealized inventory profit to be deferred on December 31,
2012?
