Question

In: Accounting

On January 1, 2017, Buffalo Co. purchased 25,000 shares (a 10% interest) in Elton John Corp....

On January 1, 2017, Buffalo Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,290,000. At the time, the book value and the fair value of John’s net assets were $14,300,000.

On July 1, 2018, Buffalo paid $2,910,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John’s identifiable assets net of liabilities was equal to their carrying amount of $15,500,000. As a result of this transaction, Buffalo owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess fair value is attributed to goodwill.)

John reported the following net income and declared and paid the following dividends.

Net Income

Dividend per Share
Year ended 12/31/17 $670,000 None
Six months ended 6/30/18 540,000 None
Six months ended 12/31/18 876,000 $1.40


Determine the ending balance that Buffalo Co. should report as its investment in John Corp. at the end of 2018.

Investment in Elton John Corp. $

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Bonita Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,470,000. At the time, the book value and the fair value of John’s net assets were $14,200,000. On July 1, 2018, Bonita paid $2,830,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John’s identifiable assets net of liabilities was equal to their carrying amount of $15,500,000. As a result of this transaction,...
On January 1, 2020, Windsor Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Windsor Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,300,000. At the time, the book value and the fair value of John’s net assets were $12,900,000. On July 1, 2021, Windsor paid $2,890,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Windsor owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
a. On January 1, 2017, Buffalo Corporation purchased 333 of the $1,000 face value, 9%, 10-year...
a. On January 1, 2017, Buffalo Corporation purchased 333 of the $1,000 face value, 9%, 10-year bonds of Walters Inc. The bonds mature on January 1, 2027, and pay interest annually beginning January 1, 2018. Buffalo purchased the bonds to yield 11%. How much did Buffalo pay for the bonds? Buffalo must pay for the bonds = ? b. Buffalo Corporation purchased a special tractor on December 31, 2017. The purchase agreement stipulated that Buffalo should pay $20,180 at the...
On January 1st, 2018, MTU Inc. purchased 25,000 of the 100,000 common shares of Blizzard Co....
On January 1st, 2018, MTU Inc. purchased 25,000 of the 100,000 common shares of Blizzard Co. for $14 per share. Blizzard declared a dividend of $30,000 on June 30th, 2018. On Dec. 31, 2018, Blizzard reported net income of $400,000 and the fair market value of its stock at that point in time was $18 per share. Prepare all necessary journal entries relating to this investment for MTU Inc.
On January 1, 2017, Wayne Co. purchased 80,000 shares (40%) of the common stock of Grayson...
On January 1, 2017, Wayne Co. purchased 80,000 shares (40%) of the common stock of Grayson Corp., paying $1,000,000. At that time Grayson Corp. book value was $2,250,000. Grayson had a equipment undervalued by $100,000 and a useful life of 5 years. Any other excess fair value from this transaction was attributable to good will. During 2015, Grayson reported income of $400,000 and paid dividends of $160,000. At the close of business on 12/31/2017, Wayne Co. sold 10,000 shares (or...
4.            John buys shares of stock in Acme Corp. on January 1, 2018 for $50. John...
4.            John buys shares of stock in Acme Corp. on January 1, 2018 for $50. John dies July 1, 2018 when the stock has a fmv of $60. Mary inherits the stock from John’s estate.          Mary sells the stock on September 1, 2018 for $80.                a.            What is the gain /loss recognized by John’s estate?      ______________                                 What is the character of the gain/loss? _____________                b.            What is the gain /loss recognized by Mary?      ______________                                 What...
On January 1, 2021, Buffalo Corp. had 472,000 shares of commonstock outstanding. During 2021, it...
On January 1, 2021, Buffalo Corp. had 472,000 shares of common stock outstanding. During 2021, it had the following transactions that affected the Common Stock account.February 1Issued 125,000 sharesMarch 1Issued a 10% stock dividendMay 1Acquired 100,000 shares of treasury stockJune 1Issued a 3-for-1 stock splitOctober 1Reissued 63,000 shares of treasury stocka) The weighted-average number of shares outstandingb) Assume that Buffalo Corp. earned net income of $3,568,000 during 2021. In addition, it had 101,000 shares of 9%, $100 par nonconvertible, noncumulative...
On January 3, 2018, Dart Co. purchased 500 shares of Mina Corp. ordinary shares for P36,000....
On January 3, 2018, Dart Co. purchased 500 shares of Mina Corp. ordinary shares for P36,000. On December 2, 2019, Dart received 500 stock rights from Mina. Each right entitles the holder to acquire one share of stock for P85. The market price of Mina’s stock was P100 a share immediately before the right were issued, and P90 a share immediately after the rights were issued. Dart sold its rights on December 31, 2020, for P10 a right. Dart’s gain...
On January 1, 2017, Buffalo Company purchased  12% bonds, having a maturity value of $ 304,000, for...
On January 1, 2017, Buffalo Company purchased  12% bonds, having a maturity value of $ 304,000, for $ 327,047.70. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest received on January 1 of each year. Buffalo Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as...
On January 1, 2018, Buffalo Corp. had 488,000 shares of common stock outstanding. During 2018, it...
On January 1, 2018, Buffalo Corp. had 488,000 shares of common stock outstanding. During 2018, it had the following transactions that affected the Common Stock account. February 1 Issued 115,000 shares March 1 Issued a 10% stock dividend May 1 Acquired 96,000 shares of treasury stock June 1 Issued a 3-for-1 stock split October 1 Reissued 61,000 shares of treasury stock a.Determine the weighted-average number of shares outstanding as of December 31, 2018. b.Assume that Buffalo Corp. earned net income...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT