ACC 4100 Chapter Notes - Chapter ch 1: Historical Cost, Intangible Asset, Financial Statement
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Assume an investee has the following financial statement information for the three years ending December 31, 2013:
| (At December 31) | 2011 | 2012 | 2013 |
|---|---|---|---|
| Current assets | $310,500 | $416,550 | $428,205 |
| Tangible fixed assets | 844,500 | 861,450 | 992,595 |
| Intangible assets | 75,000 | 67,500 | 60,000 |
| Total assets | $1,230,000 | $1,345,500 | $1,480,800 |
| Current liabilities | $150,000 | $165,000 | $181,500 |
| Noncurrent liabilities | 330,000 | 363,000 | 399,300 |
| Common stock | 150,000 | 150,000 | 150,000 |
| Additional paid-in capital | 150,000 | 150,000 | 150,000 |
| Retained earnings | 450,000 | 517,500 | 600,000 |
| Total liabilities and equity | $1,230,000 | $1,345,500 | $1,480,800 |
| (At December 31) | 2011 | 2012 | 2013 |
|---|---|---|---|
| Revenues | $1,275,000 | $1,380,000 | $1,455,000 |
| Expenses | 1,162,500 | 1,260,000 | 1,314,000 |
| Net income | $112,500 | $120,000 | $141,000 |
| Dividends | $37,500 | $52,500 | $58,500 |
Review of pre-consolidation cost method (controlling investment in affiliate, fair value equals book value)
Assume that on January 1, 2011, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values. In addition, the acquisition resulted in no goodwill or bargain purchase gain recognized in the consolidated financial statements of the investor company. Assuming that the investor company uses the cost method to account for its investment in the investee, what is the balance in the "investment in investee" account in the investor company's preconsolidation balance sheet on December 31, 2013?
A. $900,000
B. $750,000
C. $675,000
D. $1,480,800
Assume that on January 1, 2011, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values. In addition, the acquisition resulted in no goodwill or bargain purchase gain recognized in the consolidated financial statements of the investor company. Assuming that the investor company uses the cost method to account for its investment in the investee, what is the balance in the "income from investee" account in the investor company's preconsolidation income statement for the year ended December 31, 2013?
A. $141,000
B.$82,500
C. $58,500
D. $112,500
Assume that on January 1, 2011, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values, except for tangible fixed assets, which had fair value that was $150,000 higher than the investee's recorded book value. The tangible fixed assets had a remaining useful life of 10 years. In addition, the acquisition resulted in goodwill in the amount of $300,000 recognized in the consolidated financial statements of the investor company. Assuming that the investor company uses the equity method to account for its investment in the investee, what is the balance in the "income from investee" account in the investor company's pre-consolidation income statement for the year ended December 31, 2013?
A. $126,000
B. $82,500
C. $67,500
D. $141,000
Review of pre-consolidation equity method (controlling investment in affiliate, fair value differs from book value)
Assume an investee has the following financial statement information for the three years ending December 31, 2013:
| (At December 31) | 2011 | 2012 | 2013 |
|---|---|---|---|
| Current assets | $310,500 | $416,550 | $428,205 |
| Tangible fixed assets | 844,500 | 861,450 | 992,595 |
| Intangible assets | 75,000 | 67,500 | 60,000 |
| Total assets | $1,230,000 | $1,345,500 | $1,480,800 |
| Current liabilities | $150,000 | $165,000 | $181,500 |
| Noncurrent liabilities | 330,000 | 363,000 | 399,300 |
| Common stock | 150,000 | 150,000 | 150,000 |
| Additional paid-in capital | 150,000 | 150,000 | 150,000 |
| Retained earnings | 450,000 | 517,500 | 600,000 |
| Total liabilities and equity | $1,230,000 | $1,345,500 | $1,480,800 |
| (For they year ended December 31) | 2011 | 2012 | 2013 |
|---|---|---|---|
| Revenues | $1,275,000 | $1,380,000 | $1,455,000 |
| Expenses | 1,162,500 | 1,260,000 | 1,314,000 |
| Net income | $112,500 | $120,000 | $141,000 |
| Dividends | $37,500 | $52,500 | $58,500 |
Assume that on January 1, 2011, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values. In addition, the acquisition resulted in no goodwill or bargain purchase gain recognized in the consolidated financial statements of the investor company. Assuming that the investor company uses the equity method to account for its investment in the investee, what is the balance in the "investment in investee" account in the investor company's preconsolidation balance sheet on December 31, 2013?
A. $900,000
B. $750,000
C. $675,000
D. $1,480,800
Assume that on January 1, 2011, an investor company purchased 100% of the outstanding voting common stock of the investee. On the date of the acquisition, the investee's identifiable net assets had fair values that approximated their historical book values. In addition, the acquisition resulted in no goodwill or bargain purchase gain recognized in the consolidated financial statements of the investor company. Assuming that the investor company uses the equity method to account for its investment in the investee, what is the balance in the "income from investee" account in the investor company's preconsolidation income statement for the year ended December 31, 2013?
A. $58,500
B. $141,000
C. $112,500
D. $82,500
Anderson acquires 10 percent of the outstanding voting shares ofBarringer on January 1, 2013, for $102,520 and categorizes theinvestment as an available-for-sale security. |
| Year | NetIncome | Cash Dividends |
| 2013 | $196,000 | $79,000 |
| 2014 | 243,200 | 116,000 |
| 2015 | 322,200 | 116,000 |
Anderson sells its entire investment in Barringer stock onJanuary 1, 2016 for $472,005. | ||
| In addition, the fair value of the Barringer shares isindeterminate.
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