KLM reported net income of 2 million and made dividend distributions of 1 million during the year ending 12/31/2020
Assuming XYZ is using the EQUITY METHOD for this investment
In: Accounting
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 equity method to account for its investment in Philmore. Wondersome assigned the acquisition-date AAP as follows:
| AAP | Initial FV | Useful Life (in years) |
|---|---|---|
| PPE, net | $90,000 | 20 |
| Patent | $50,000 | 10 |
| $240,000 |
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, Inventory sale | $94,500 | $70,000 |
| COGS | -64,500 | -45,000 |
| Gross Profit | $30,000 | $25,000 |
| % inventory remain | 30% | 20% |
| GP 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 |
2,400,00 | 602,400 |
| COGS | -1,580,000 | -465,398 |
| Gross Profit | 820,000 | 137,002 |
| Income (loss) from subsidiary | 45,851 | |
| Operating expenses | -711,200 | -56,000 |
| Net income | $154,651 | $81,002 |
Statement of Retained Earnings
| Wondersome | Philmore | |
| BOY Retained earnings | 3,500,000 | 608,000 |
| Net income | 154,651 | 81,002 |
| Dividends | -85,000 | -15,000 |
| EOY Retained earnings | $3,569,651 | $674,002 |
Balance Sheet
| Wondersome | Philmore | |
| Assets: | ||
| Cash | 450,000 | 84,700 |
| Accounts receivable | 425,000 | 113,200 |
| Inventory | 654,000 | 142,100 |
| Equity investment | 803,251 | |
| PPE, net | 4,438,400 | 1,000,002 |
| TOTAL Assets | $6,770,651 | $1,340,002 |
| Liabilities & Stockholders' Equity: | ||
| Current liabilities | 505,900 | 99,500 |
| Long-term liabilities | 703,500 | 250,00 |
| Common stock | 402,000 | 75,300 |
| APIC | 1,589,600 | 241,200 |
| Retained earnings | 3,569,651 | 674,002 |
| TOTAL L & SE | $6,770,651 | $1,340,002 |
Required:
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 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
In: Economics
Harvard University is USA’s number one university in the 2020 Times Higher Education Impact Ranking. The university presently measures its performance by comparing its actual costs against its budgeted costs for the year. Given the university’s international status, it is currently facing stiff competition from both public and privately-owned universities in USA. At one of its executive meetings, a member in the finance department has suggested that Harvard needs to consider additional performance measures such as those indicated by the Balanced Scorecard.
Required:
Briefly elaborate on your understanding of the Balanced Scorecard and how the management of Harvard university can utilize this approach to performance measurement
Discuss two (2) non-financial indicators (from different perspectives of the balanced scorecard) that Harvard University could use for its performance evaluation.
In: Accounting
Exceed, a US Company acquired all of the Outstanding Common Stock of Silver company on Jan 1 2019. Silver Company's functional currency is the peso. The exchange rates are as follows:
| Peso 1 = | |
| Jan. 1 | $0.39 |
| Dec. 31 | $0.32 |
| Average for the year | $0.35 |
REQUIRED: Translate the 2019 financial statements of the subsidiary to U.S. Dollars from Pesos.
| Peso | Exchange Rate | US $ | |
| Income Statement | |||
| Net Sales | 820,000 | ||
| Costs & Expenses | (550,000) | ||
| Net Income | 270,000 | ||
| Statement of Retained Earnings | |||
| Beg. Retained Earnings | 100,000 | ||
| Net Income | 270,000 | ||
| Subtotal | 370,000 | ||
| Div. Declared/paid 12/31/18 | (60,000) | ||
| Ending, Retained earnings | 310,000 | ||
| Balance Sheet | |||
| Assets | |||
| Current Assets | 700,000 | ||
| Plant Assets (net) | 436,000 | ||
| Total Assets | 1,136,000 | ||
| Liabilities & Stockholder's Equity | |||
| Current Liabilities | 308,000 | ||
| Long-term Debt | 90,000 | ||
| Common Stock | 150,000 | ||
| Additional Paid-In Capital | 278,000 | ||
| Retained Earnings | 310,000 | ||
| Translation Adjustment | |||
| Total Liabilities & Stockholder's Equity | 1,136,000 | ||
In: Accounting
In: Accounting