Equity in Net Income and Noncontrolling Interest in Net Income

Palm Resorts acquired its 70 percent interest in Sun City on January 1, 2017, for $41,750,000. The fair value of the 30 percent noncontrolling interest at the date of acquisition was $14,750,000. Sun City’s date-of-acquisition reported net assets of $5,000,000 were carried at amounts approximating fair value, but it had unrecorded identifiable intangibles, capitalizable per ASC Topic 805, valued at $7,500,000. These intangibles are determined to have limited lives, amortized on a straight-line basis over five years. It is now December 31, 2020, and Sun City reports net income of $10,000,000.

Required

a. Calculate the amount of goodwill originally reported for this acquisition, and its allocation to the controlling and noncontrolling interests.

Enter answers in thousands (example, $41,750,000 equals $41,750 in thousands).

b. Calculate equity in net income and the noncontrolling interest in net income for 2020, assuming goodwill from this acquisition is impaired by $2,000,000 in 2020.

Enter answers in thousands (example, $3,000,000 equals $3,000 in thousands).

Use negative signs with answers that reduce net income amounts.

Problem 11-9 (Algo) Straight-line depreciation; disposal; partial period; change in estimate [LO11-2, 11-5] The property, plant, and equipment section of the Jasper Company’s December 31, 2020, balance sheet contained the following: Property, plant, and equipment: Land $ 118,000 Building $ 798,000 Less: Accumulated depreciation (190,000 ) 608,000 Equipment 174,450 Less: Accumulated depreciation ? ? Total property, plant, and equipment ? The land and building were purchased at the beginning of 2016. Straight-line depreciation is used and a residual value of $38,000 for the building is anticipated. The equipment is comprised of the following three machines: Machine Cost Date Acquired Residual Value Life (in Years) 101 $ 67,800 1/1/2018 $ 6,800 10 102 78,200 6/30/2019 7,800 8 103 28,450 9/1/2020 2,800 9 The straight-line method is used to determine depreciation on the equipment. On March 31, 2021, Machine 102 was sold for $51,500. Early in 2021, the useful life of machine 101 was revised to seven years in total, and the residual value was revised to zero. Required: 1. Calculate the accumulated depreciation on the equipment at December 31, 2020. 2. Prepare the journal entry to record 2021 depreciation on machine 102 up to the date of sale. 3. Calculate the gain or loss on the sale of machine 102. 4. Prepare the journal entry for the sale of machine 102. 5. Prepare the 2021 year-end journal entries to record depreciation on the building and remaining equipment.

The balances in the accounts of Maybe Ltd at 30 June 2019 and 30 June 2020 are:

Other information:

Share capital is increased by the bonus issue of 24 000 shares for $1.00 each out of retained earnings. Plant is acquired during the period at a cost of $36 000, while plant with a carrying amount of $nil (cost of $24 000, accumulated depreciation of $24 000) is scrapped.

Required:

a)      Reconstruct the allowance for doubtful debts and accounts receivable.

b)      Reconstruct inventory and accounts payable

c)      Reconstruct accrued salaries

d)      Reconstruct property, plant and equipment and accumulated depreciation

e) Present a statement of cash flow for Maybe Ltd for the year ended 30 june 2020

PLEASE DO NOT COPY OTHERS ANSWERS

Pacific Jewel Airlines is a U.S.-based air freight firm with a wholly owned subsidiary in Hong Kong. The subsidiary, Jewel Hong Kong, has just completed a long-term planning report for the parent company, in which it has estimated the following expected earnings and payout rates for 2014.

Earnings before interest and taxes $10,000

Less interest expense $1,000

Earnings before taxes $9,000

The current Hong Kong corporate tax rate on this category of income is 16.5 percent. Hong Kong imposes no withholding taxes on dividends remitted to U.S. investors (per the Hong Kong-United States bilateral tax treaty). The U.S. corporate income tax rate is 35 percent. The parent wants to repatriate 75 percent of net income as dividends.

1)Calculate the net income available for distribution by the Hong Kong subsidiary in 2014.

2)What is the expected amount of the dividend to be remitted to the U.S. parent next year?

3)After estimating the theoretical U.S. tax liability on the expected dividend (what is often terms gross-up in the U.S.), what is the total dividend after tax, including all Hong Kong and U.S. taxes, expected next year?

4)What is the effective tax rate on this foreign-sourced income next year?

Pacific Jewel Airlines is a U.S.-based air freight firm with a wholly owned subsidiary in Hong Kong. The subsidiary, Jewel Hong Kong, has just completed a long-term planning report for the parent company, in which it has estimated the following expected earnings and payout rates for 2014.

Earnings before interest and taxes           $10,000

Less interest expense                                    $1,000

Earnings before taxes                                   $9,000

The current Hong Kong corporate tax rate on this category of income is 16.5 percent. Hong Kong imposes no withholding taxes on dividends remitted to U.S. investors (per the Hong Kong-United States bilateral tax treaty). The U.S. corporate income tax rate is 35 percent. The parent wants to repatriate 75 percent of net income as dividends.

1. Calculate the net income available for distribution by the Hong Kong subsidiary in 2014.
2. What is the expected amount of the dividend to be remitted to the U.S. parent next year?
3. After estimating the theoretical U.S. tax liability on the expected dividend (what is often terms gross-up in the U.S.), what is the total dividend after tax, including all Hong Kong and U.S. taxes, expected next year?
4. What is the effective tax rate on this foreign-sourced income next year?

For the publicly traded U.S. company Apple (AAPL), explain how things such as tax rates, unemployment, and government fiscal policies have affected the company's economic decisions.

An ESOP under which employees may purchase shares of the company for $ 20 per share was established . The option premium is $ .50 per share and 20,000 shares were set aside for the plan. On January 1, 2020, 12,000 options are purchased by employees. On December 1, 2020, all 12,000 options are exercised. Required Prepare the journal entries to record the above events

2. Capital Company issued $600,000, 10%, 20-year bonds on January 1, 2020, at 103. Interest is payable semiannually on July 1 and January 1. The effective interest rate is 8%. Capital uses the straight-line method of amortization and has a calendar year end. Instructions: Prepare all journal entries made in 2020 related to the bond issue.

Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Windsor Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $66,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $5,000, none of which is guaranteed. 4. The agreement requires equal annual rental payments of $21,328 to the lessor, beginning on January 1, 2020. 5. The lessee’s incremental borrowing rate is 5%. The lessor’s implicit rate is 4% and is unknown to the lessee. 6. Windsor uses the straight-line depreciation method for all equipment.

Prepare an amortization schedule that would be suitable for the lessee for the lease term

Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31

Big Construction Company signs a contract on 1 July 2019, agreeing to build a warehouse for Buyer Corporation Ltd at a fixed contract price of $10 million. Buyer Ltd will be in control of the asset throughout the construction process. Big Construction Company estimates that construction costs will be as follows: 2019 2.5 million 2020 $4 million 2021 $1.5 million The contract provides that Buyer Corporation Ltd will make payments on 31 December each year as follows: 2019 $2 million 2020 $5 million 2021 $3 million The contract is completed and accepted on 31 December 2021. Assume that actual costs and cash collections coincide with expectations and that cost (an input measure) is used as the basis for assessing progress on the construction contract. Big Construction Company has a financial year ending 31 December. Required: a) Using the above data, compute the gross profit to be recognised for each of the three years, assuming that the outcome of the contract can be reliably estimated. (1.5 marks) b) Prepare the journal entries for 2019, 2020 and 2021 financial year to recognise revenue on the assumption that the measure of progress on the contract can be reliably estimated. c) Prepare the journal entries for 2019, 2020 and 2021 financial year, assuming that the measure of progress on the contract cannot be reliably assessed. (3.5 marks