The Vera, Wade, and Xena partnership was dissolved, and a cash distribution plan was
developed, as follows:
Required:
If $1,000,000 of cash was distributed by the partnership, how much was received
respectively by the priority creditors, Vera, Wade, and Xena?
At the end of 2013, the partnership of Piatta, Ragoo, and Sauss was dissolved. By
February 1, 2014, all assets had been converted into cash and all partnership liabilities
were paid. The partnership balance sheet on February 1, 2014 (with partner residual
profit and loss sharing percentages) was as follows:
The value of partners’ personal assets and liabilities on February 1, 2014 were as
follows:
Required:
Prepare the final statement of partnership liquidation.
The following data relate to Elle Corporation’s industry segments. (Elle HQ represents
the corporate headquarters). All other segments are geographical sales segments.
Required:
1. Prepare a report which reconciles the reportable segment profits to total consolidated
profits assuming that corporate expenses are not allocated to the operating segments.
2. Prepare a report which reconciles the reportable segment profits to total consolidated
profits assuming that corporate expenses are allocated evenly among the operating
segments.
For internal decision-making purposes, Calam Corporation’s operating segments have
been identified as follows:
Required:
1.In applying the “operating profit or loss” test to identify reporting segments, what is
the test value for Calam Corporation?
2.Using the “reported profit or loss” test, which of Calam’s operating segments will also
be reporting segments?
Passcode Incorporated acquired 90% of Safe Systems International for $540,000, the
market value at that time. On the date of acquisition, Safe Systems showed the
following balances on their ledger:
Safe Systems has determined that their buildings have a remaining life of 10 years, and
their equipment has a remaining useful life of 8 years.
Requirement 1: Calculate the amount of goodwill that will appear on the general ledger
of Passcode and Safe Systems, as well as the amount that will appear on the
consolidated financial statements.
Requirement 2: Calculate the amount of amortization that will appear on the
consolidated financial statements for buildings and equipment, and explain how this
amortization of excess fair value is shown on the separate general ledgers of Passcode
and Safe Systems.
For each of the 12 accounts listed in the table below, select the correct exchange rate to
use when either remeasuring or translating a foreign subsidiary for its U.S. parent
company.
Codes
C = Current exchange rate
H = Historical exchange rate
A = Average exchange rate
Park Corporation paid $180,000 for a 75% interest in Stem Co.’s outstanding Capital
Stock on January 1, 2014, when Stem’s stockholders’ equity consisted of $150,000 of
Capital Stock and $50,000 of Retained Earnings. Book values of Stem’s net assets were
equal to their fair values on this date. The adjusted trial balances of Park and Stem on
December 31, 2014 were as follows:
Required: Complete the partially prepared consolidated balance sheet working papers
that appear below.
Nettle Corporation is preparing its first quarterly interim report. It is subject to a
corporate income tax rate of 20% on the first $50,000 of taxable income and 35% on
taxable income above $50,000. Its estimated pretax accounting income for 2014, by
quarter, is:
Nettle expects to earn and receive operating income for the year and does not
contemplate any changes in accounting procedures or principles that would affect its
pretax accounting income.
Required:
1. Determine Nettle’s estimated effective tax rate for 2014.
2. Prepare a schedule to show Nettle’s estimated net income for each quarter of 2014.
On January 2, 2013, Pilates Inc. paid $900,000 for all of the outstanding common stock
of Spinning Company, and dissolved Spinning Company. The carrying values for
Spinning Company’s assets and liabilities are recorded below.
Cash $200,000
Accounts Receivable 220,000
Copyrights (purchased) 400,000
Goodwill 120,000
Liabilities (180,000)
Net assets $760,000
On January 2, 2013, Spinning anticipated collecting $185,000 of the recorded Accounts
Receivable. Pilates entered into the acquisition because Spinning had Copyrights that
Pilates wished to own, and also unrecorded patents with a fair value of $100,000.
Required:
Calculate the amount of goodwill that will be reported on Pilate’s balance sheet as of the
date of acquisition.
