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Georgia, Inc. bought 30% of Carolina Company on January 1, 2016 for $225,000. The equity method...
Georgia, Inc. bought 30% of Carolina Company on January 1, 2016 for $225,000. The equity method was used. No amortization was required. In 2016, Carolina shipped to Georgia merchandise with a cost of $12,000 and a selling price of $15,600. One-third of the merchandise remained in Georgia's inventory at year-end and was sold in 2017. In 2017, Carolina received merchandise from Georgia, who recorded a gross profit of $18,000 on the sale. One-fourth of the merchandise remainded in ending inventory, Carolina reported net income of $50,000 in 2016 and $62,000 in 2017. Dividends of $8,000 were paid to Georgia each year. Prepare all equity method entries for 2016 and 2017.
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ekkarill92 answered 2 years agoRelated Solutions
3. Georgia, Inc. bought 30% of Carolina Company on January 1, 2016 for $225,000. The equity...
3. Georgia, Inc. bought 30% of Carolina Company on January 1,
2016 for $225,000. The equity method was used. No amortization was
required. In 2016, Carolina shipped to Georgia merchandise with a
cost of $12,000 and a selling price of $15,600. One-third of the
merchandise remained in Georgia’s inventory at year-end and was
sold in 2017. In 2017, Carolina received merchandise from Georgia,
who recorded a gross profit of $18,000 on the sale. One-fourth of
the merchandise remained in ending...
Cayman Inc. bought 30% of Maya Company on January 1, 2018 for $450,000. The equity method...
Cayman Inc. bought 30% of Maya Company on January 1, 2018 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:
Cost to Maya Transfer Price Amount Held by Cayman at Year-End 2018
$ 30,000 $ 45,000 $9,000 2019 $ 48,000 $ 80,000 20,000 Maya
reported net income of $100,000 in 2018 and $120,000 in 2019...
Potter Corporation buys 30% of Sunshine Supply Company on January 1, 2017, for $300,000. The equity method...
Potter Corporation buys 30% of Sunshine Supply Company on
January 1, 2017, for
$300,000. The
equity method of accounting is to be
used. Sunshine’s net assets on
that date were
$750,000. Any excess of cost over book value is
attributable to a
customer list with a 10-year
remaining life. Sunshine immediately begins
supplying
inventory to Potter as
follows:
Year
Cost to
Sunshine
Transfer
Price
Sunshine’s
Gross Profit %
Amount Held
By Potter at
Year-end
(at transfer price)
2017
$70,000
$100,000
30%
$25,000
2018
$96,000...
Exercise 12-23 (Algo) Equity method [LO12-6, 12-7] On January 1, 2021, Cameron Inc. bought 20% of...
Exercise 12-23 (Algo) Equity method [LO12-6, 12-7]
On January 1, 2021, Cameron Inc. bought 20% of the outstanding
common stock of Lake Construction Company for $240 million cash,
giving Cameron the ability to exercise significant influence over
Lake’s operations. At the date of acquisition of the stock, Lake's
net assets had a fair value of $600 million. Its book value was
$500 million. The difference was attributable to the fair value of
Lake's buildings and its land exceeding book value,...
Dosmann, Inc., bought all outstanding shares of Lizzi Corporation on January 1, 2016, for $830,000 in...
Dosmann, Inc., bought all outstanding shares of Lizzi
Corporation on January 1, 2016, for $830,000 in cash. This portion
of the consideration transferred results in a fair-value allocation
of $63,000 to equipment and goodwill of $109,200. At the
acquisition date, Dosmann also agrees to pay Lizzi’s previous
owners an additional $198,000 on January 1, 2018, if Lizzi earns a
10 percent return on the fair value of its assets in 2016 and 2017.
Lizzi’s profits exceed this threshold in both...
On January 1, 2016, Cameron Inc. bought 20% of the outstanding common stock of Lake Construction...
On January 1, 2016, Cameron Inc. bought 20% of the outstanding
common stock of Lake Construction Company for $300 million cash. At
the date of acquisition of the stock, Lake's net assets had a fair
value of $900 million. Their book value was $800 million. The
difference was attributable to the fair value of Lake’s buildings
exceeding book value. Lake's net income for the year ended December
31, 2016, was $150 million. During 2016, Lake declared and paid
cash dividends...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding
common stock of Lake Construction Company for $600 million cash. At
the date of acquisition of the stock, Lake's net assets had a fair
value of $800 million. Their book value was $700 million. The
difference was attributable to the fair value of Lake's buildings
and its land exceeding book value, each accounting for one-half of
the difference. Lake’s net income for the year ended December 31,
2018, was...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding common stock of Lake Construction...
On January 1, 2018, Cameron Inc. bought 30% of the outstanding
common stock of Lake Construction Company for $420 million cash. At
the date of acquisition of the stock, Lake's net assets had a fair
value of $800 million. Their book value was $700 million. The
difference was attributable to the fair value of Lake's buildings
and its land exceeding book value, each accounting for one-half of
the difference. Lake’s net income for the year ended December 31,
2018, was...
Phillips Company bought 30 percent ownership in Jones Bag Company on January 1, 20X1, at underlying...
Phillips Company bought 30 percent ownership in Jones Bag
Company on January 1, 20X1, at underlying book value. During the
period of January 1, 20X1, through December 31, 20X3, the market
value of Phillips' investment in Jones' stock increased by $1,500
each year. In 20X1, 20X2, and 20X3, Jones Bag reported the
following:
Year
Net Income
Dividends
20X1
$
22,000
$
29,000
20X2
26,000
24,000
20X3
34,000
24,000
The balance in Phillips Company’s investment account on December
31, 20X3, was...
On January 1, 2016, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this...
On January 1, 2016, Badger Inc. adopted the dollar-value LIFO
method. The inventory cost on this date was $114,000. The 2016
ending inventory, valued at year-end costs, was $165,000. The
relative cost index for this inventory in 2016 was 1.20.
Suppose that Badger's 2017 ending inventory, valued at year-end
costs, was $176,400 and that the relative cost index for this
inventory in 2017 was 1.26. In determining the inventory balance
should Badger report in its 12/31/17 balance sheet:
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