On January 1st 2020, Hulk Company acquired all of the stock of Spiderman Company at book value.
Hulk uses the initial value method to account for its investment in Spiderman and Spiderman doesn't pay any dividends.
On January 1st 2015 Hulk purchased a piece of equipment for $100,000. This equipment is expected to last 10 years with $7000 salvage; Hulk uses straight line depreciation.
On January 1, 2018, Hulk sold the equipment to Spiderman for $81,000 receiving a 1 year 12% note with principle and interest due January 1, 2019. Spiderman believes the equipment will last 7 years and have a $4000 salvage.
On January 1, 2021 Spiderman sold the equipment to Aquaman (an outside company) for $57,000 cash.
REQUIRED:
A) Make Hulk's journal entry when they sold the equipment at to Spiderman
b) make Spiderman's journal entry when they buy the equipment from Hulk
c) Make the necessary worksheet entries for 2018
d) Hulk reported unconsolidated income of $500,000 in 2018 and Spiderman reported income of $70,000. What is consolidated income?
e) make the necessary worksheet entries for 2019
f) make the journal entry Spiderman makes when it sells the equipment to Aquaman
g) In 2021 Hulk reported income (unconsolidated) of $625,000 and Spiderman reported income of $123,000 what is consolidated income
In: Accounting
On January 1st 2020, Hulk Company acquired all of the stock of Spiderman Company at book value. Hulk uses the initial value method to account for its investment in Spiderman and Spiderman doesn't pay any dividends
On January 1st 2015 Hulk purchased a piece of equipment for $100,000. This equipment is expected to last 10 years with $7000 salvage; Hulk uses straight line depreciation.
On January 1, 2018, Hulk sold the equipment to Spiderman for $81,000 receiving a 1 year 12% note with principle and interest due January 1, 2019. Spiderman believes the equipment will last 7 years and have a $4000 salvage.
On January 1, 2021 Spiderman sold the equipment to Aquaman (an outside company) for $57,000 cash.
Required:
A) Make Hulk's journal entry when they sold the equipment at to Spiderman
b) make Spiderman's journal entry when they buy the equipment from Hulk
c) Make the necessary worksheet entries for 2018
d) Hulk reported unconsolididated income of $500,000 in 2018 and Spiderman reported income of $70,000. What is consolidated income?
e) make the necessary worksheet entries for 2019
f) make the journal entry Spiderman makes when it sells the equipment to Aquaman
g) In 2021 Hulk reported income (unconsolidated) of $625,000 and Spiderman reported income of $123,000 what is consoldiated income
In: Accounting
On January 1st 2020, Hightower Company acquired all of the stock of Striker Company at book value. Hightower uses the initial value method to account for its investment in Striker and Striker doesn't pay any dividends.
On January 1st 2015 Hightower purchased a piece of equipment for $100,000. This equipment is expected to last 10 years. with $7000 salvage; Hightower uses straight line depreciation.
On January 1, 2018, Hightower sold the equipment to Striker for $81,000 receiving a 1 year 12% note with principle and interest due January 1, 2019. Striker believes the equipment will last 7 years and have a $4000 salvage.
On January 1, 2021 Striker sold the equipment to Smith Co. (an outside company) for $57,000 cash.
A) Make Hightower's journal entry when they sold the equipment at to Striker
B) Make Striker's journal entry when they buy the equipment from Hightower
C) Make the necessary worksheet entries for 2018
D) Hightower reported unconsolidated income of $500,000 in 2018 and Striker reported income of $70,000. What is consolidated income?
E) Make the necessary worksheet entries for 2019
F) Make the journal entry Striker makes when it sells the equipment to Smith Co.
G) In 2021 Hightower reported income (unconsolidated) of $625,000 and Striker reported income of $123,000 what is consolidated income
In: Accounting
C3. On January 1, 2020, Wondersome Company acquired a 70% interest in Philmore Company for a purchase price that was $240,000 over the book value of the Philmore’s Stockholders’ Equity on the acquisition date. Wondersome uses the cost method to account for its investment in Philmore. On the date of acquisition, Philmore’s retained earnings balance was $350,000. Wondersome assigned the acquisition-date AAP as follows:
|
AAP Items |
Initial Fair Value |
Useful Life (years) |
|
PPE, net |
90,000 |
20 |
|
Patent |
150,000 |
10 |
|
$350,000 |
Philmore sells inventory to Wondersome (upstream) which includes that inventory in products that it, ultimately, sells to customers outside of the controlled group. You have compiled the following data for the years ending 2022 and 2023:
|
2022 |
2023 |
|
|
Transfer price for inventory sale |
$94,500 |
$70,000 |
|
Cost of goods sold |
-64,500 |
-45,000 |
|
Gross profit |
$30,000 |
$25,000 |
|
% inventory remaining |
30% |
20% |
|
Gross profit deferred |
$9,000 |
$5,000 |
|
EOY Receivable/Payable |
$32,000 |
$29,500 |
The inventory not remaining at the end of the year has been sold outside of the controlled group.
The parent and the subsidiary report the following financial statements at December 31, 2023:
|
Income Statement |
||
|
Wondersome |
Philmore |
|
|
Sales |
$2,400,000 |
$602,400 |
|
Cost of goods sold |
-1,580,000 |
-465,398 |
|
Gross Profit |
820,000 |
137,002 |
|
Income (loss) from subsidiary |
10,500 |
|
|
Operating expenses |
-711,200 |
-56,000 |
|
Net income |
$119,300 |
$81,002 |
|
Statement of Retained Earnings |
||
|
Wondersome |
Philmore |
|
|
BOY Retained Earnings |
$3,360,350 |
$608,000 |
|
Net income |
119,300 |
81,002 |
|
Dividends |
-85,000 |
-15,000 |
|
EOY Retained Earnings |
$3,394,650 |
$674,002 |
|
Balance Sheet |
||
|
Wondersome |
Philmore |
|
|
Assets: |
||
|
Cash |
$450,000 |
$84,700 |
|
Accounts receivable |
425,000 |
113,200 |
|
Inventory |
654,000 |
142,100 |
|
Investment in subsidiary |
634,550 |
|
|
PPE, net |
4,432,100 |
1,000,002 |
|
$6,595,650 |
$1,340,002 |
|
|
Liabilities and Stockholders’ Equity: |
||
|
Current Liabilities |
$505,900 |
$99,500 |
|
Long-term Liabilities |
703,500 |
250,000 |
|
Common Stock |
402,000 |
75,300 |
|
APIC |
1,589,600 |
241,200 |
|
Retained Earnings |
3,394,650 |
674,002 |
|
$6,595,650 |
$1,340,002 |
|
Required
In: Accounting
Identifiable Intangibles and Goodwill, U.S. GAAP
International Foods, a U.S. company, acquired two companies in 2013. As a result, its consolidated financial statements include the following acquired intangibles:
| Intangible Asset | Date of Acquisition | Fair Value at Date of Acquisition | Useful Life |
|---|---|---|---|
| Customer relationships | January 1, 2013 | $3,200,000 | 10 years |
| Favorable leaseholds | June 30, 2013 | 4,800,000 | 12 years |
| Brand names | June 30, 2013 | 14,400,000 | Indefinite |
| Goodwill | January 1, 2013 | 400,000,000 | Indefinite |
Goodwill was assigned to the following reporting units:
| Asia | $80,000,000 |
| South America | 120,000,000 |
| Europe | 200,000,000 |
| Total | $400,000,000 |
It is now December 31, 2014, the end of International Foods' accounting year. No impairment losses were reported on any intangibles in 2013. Assume that International Foods bypasses step 0 of the goodwill impairment test. The following information is available on December 31, 2014:
| Intangible Asset | Sum of Future Expected Undiscounted Cash Flows | Sum of Future Expected Discounted Cash Flows |
|---|---|---|
| Customer relationships | $960,000 | $720,000 |
| Favorable leaseholds | 4,800,000 | 3,520,000 |
| Brand names | 11,200,000 | 5,600,000 |
| Reporting Unit | Unit Carrying Value | Unit Fair Value |
|---|---|---|
| Asia | $240,000,000 | $320,000,000 |
| South America | 160,000,000 | 280,000,000 |
| Europe | 480,000,000 | 400,000,000 |
Compute 2014 amortization expense and impairment losses on the above intangibles, following U.S. GAAP.
Enter answers in millions, using decimal places when applicable.
| (in millions) | |
|---|---|
| Amortization expense - identifiable intangibles | Answer |
| Impairment losses - identifiable intangibles | Answer |
| Goodwill impairment loss | Answer |
| Total | Answer |
In: Accounting
Identifiable Intangibles and Goodwill, U.S. GAAP
International Foods, a U.S. company, acquired two companies in 2016. As a result, its consolidated financial statements include the following acquired intangibles:
| Intangible Asset | Date of Acquisition | Fair Value at Date of Acquisition | Useful Life |
|---|---|---|---|
| Customer relationships | January 1, 2016 | $4,000,000 | 4 years |
| Favorable leaseholds | June 30, 2016 | 8,000,000 | 5 years |
| Brand names | June 30, 2016 | 18,000,000 | Indefinite |
| Goodwill | January 1, 2016 | 500,000,000 | Indefinite |
Goodwill was assigned to the following reporting units:
| Asia | $100,000,000 |
| South America | 150,000,000 |
| Europe | 250,000,000 |
| Total | $500,000,000 |
It is now December 31, 2017, the end of International Foods' accounting year. No impairment losses were reported on any intangibles in 2016. Assume that International Foods bypasses the qualitative option for impairment testing of goodwill and indefiite life intangibles.
| Intangible Asset | Sum of Future Expected Undiscounted Cash Flows | Sum of Future Expected Discounted Cash Flows |
|---|---|---|
| Customer relationships | $1,200,000 | $900,000 |
| Favorable leaseholds | 6,000,000 | 4,400,000 |
| Brand names | 14,000,000 | 7,000,000 |
| Reporting Unit | Unit Carrying Value | Unit Fair Value | Fair Value of Identifiable Net Assets |
|---|---|---|---|
| Asia | $300,000,000 | $400,000,000 | $375,000,000 |
| South America | 200,000,000 | 350,000,000 | 280,000,000 |
| Europe | 600,000,000 | 500,000,000 | 385,000,000 |
Required
Compute 2017 amortization expense and impairment losses on the above intangibles, following U.S. GAAP.
| Summary: | |
|---|---|
| Amortization expense - identifiable intangibles | $Answer |
| Impairment losses - identifiable intangibles | Answer |
| Goodwill impairment loss | Answer |
| Total | $Answer |
In: Accounting
Tuxedo Company (a U.S. based company) acquired 100% of a Swiss company, Roche AG, for 8.2 million Swiss francs on December 30, Year 1. At the date of acquisition, the exchange rate was $0.60 per franc. The acquisition price is attributable to the flowing assets and liabilities denominated in Swiss francs:
|
Cash |
1,000,000 |
|
Common Stock |
8,200,000 |
|
Inventory (@ cost) |
2,000,000 |
|||
|
Fixed Assets |
7,000,000 |
|||
|
Notes Payable |
(1,800,000) |
Tuxedo Corporate prepares consolidated financial statements on December 31, Year 1. By that date, the Swiss franc appreciated to $0.65. Because of the year-end holidays, no transactions took place between the date of acquisition and the end of the year.
Assignment:
In: Accounting
The Coronavirus (COVID19) pandemic defined as global health crisis that consider being a great challenge since World War Two. In December 2019, the COVID19 phenomena appeared in a seafood market, Wuhan – China, while registered as a new disease officially on 7th of January 2020 (WHO, 2020)1 . Countries all over the world are battling with the spread of COVID19 through enormous amount of testing kits, mandate/by-choice quarantine of citizen and cancelling large events all over the world (WHO, 2020). Constantly, the battle against the COVID19 stressing all the resources of the countries. In other words, its pandemic goes beyond more than a global health crisis, it influence the social, educational, economic and political dimensions in the world, and creates related crisis in the future that require years to recover (UN, 2020)2 . Many of our great cities and communities are deserted as people stay indoors either by choice or government order, social life changed dramatically, shops theatres and restaurants closed during the pandemic. Assume you are a managerial accountant in a small and medium-sized perfume production company in Doha, which was established five years ago. In the current economic situation, the company is facing some financial challenges. The company's CEO held a meeting with you to discuss ways out of that crisis so that the company could survive and even compete under the current circumstances.
1. Discuss the various activities that the managerial accountant may be assigned to in the company in order to help the CEO make rational decisions under the current circumstances.
In: Finance
Bellingham Corporation, a U.S. company, acquired a 100% interest in Kayno Manufacturing, a Japanese company, on December 31, 2017, when the exchange rate for the Japanese yen (JPY)) was 103.960. Kayno’s functional currency is the Japanese Yen. Relevant exchange rates for JPY are:
| Japanese yen | |||
|
Current rate December 31,2018 |
¥101.94 | ||
|
Current rate December 31,2017 |
¥103.96 | ||
|
Average rate for 2018 |
¥103.03 | ||
| March 31, 2018 | ¥102.34 | ||
|
Rate when dividends were paid |
¥103.75 |
|
Kanyo Adjusted trial balance |
|||||
| December 31, | December 31, | ||||
| 2017 | 2018 | ||||
| ¥- | ¥- | ||||
|
Accounts payable |
-4,300 | -5,200 | |||
|
Accounts receivable |
2,050 | 2,810 | |||
|
Accumulated depreciaiton |
-6,600 | -8,325 | |||
|
Additional paid-in-capital |
-10,625 | -10,625 | |||
|
Amortization expense |
- | 785 | |||
| Bonds payable | -10,000 | -10,000 | |||
| Cash | 1,650 | 2,650 | |||
| Common stock | -4,000 | -4,000 | |||
|
Cost of goods sold |
- | 9,500 | |||
|
Depreciation expense |
- | 1,725 | |||
|
Discount on bonds payable |
250 | 200 | |||
| Dividends | - | 1,250 | |||
| Inventory (at FIFO cost) | (at FIFO cost) | 3,590 | 5,220 | ||
|
Other operating expenses Patent |
- | 925 | |||
| Patent | 7,850 | 7,065 | |||
|
Plant& equipment |
24,750 | 26,250 | |||
|
Retained earnings |
-4,615 | -4,615 | |||
| Sales | -15,615 |
|
Information relevant to selected balance sheet items |
- | - | ||||
|
1. Kayno's inventories were purchased evenly throughout the year. The 12/18/18 inventory was acquired |
||||||
|
when the exchange rate was JPY 103.881. |
||||||
|
2. Kayno Manufacturing purchased the Plant & Equipment on the opening balance sheet in 2012 when |
||||||
|
the exchange rate was JPY 98.153. On March 31, 2017, Kayno purchased JPY 1,500 in equipment. The |
||||||
|
equipment has a 15 year life with no salvage value. Kayno computes depreciation to the nearest month. |
||||||
|
3. There have been no changes in Kayno's capital stock since Bellingham purchased its 100% interest on 12/31/17 |
||||||
|
4. Other operating expenses were incurred proportionately throughout 2018. |
||||||
|
Required: Prepare an unclassified balance sheet, multistep income statement and a retained earnings |
||||||
|
statement, in good form, for Kayno Manufacturing in U.S. dollars for the year ended December 31, 2018 |
||||||
|
assuming Kayno's functional currency is the Japenese yen. Also prepare a proof of the translation adjustment. |
In: Accounting
Ingenuous Company acquired a building on January 1, 2020 for P9,000,000. At that date, the building had a useful life of 30 years.
On December 31, 2020, the fair value of the building was P9,600,000 and on December 31, 2021, the fair value is P9,800,000.
The building was classified as an investment property and accounted for under the cost model.
What amounts should be carried in the statement of financial position and recognized in profit or loss for 2021?
In: Accounting