Upper Division of Lower Company acquired an asset with a cost of $550,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows:
The cost of the asset is expected to increase at a rate of 10 percent per year, compounded each year. Performance measures are based on beginning-of-year gross book values for the investment base. Ignore taxes.
Year Cash Flow
1 $200,000
2 $245,000
3 $280,000
4 $305,000
Required:
a. What is the ROI for each year of the asset's life, using a historical cost approach? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)
ROI
Year
1 _____ %
2 _____ %
3 _____ %
4 _____ %
b. What is the ROI for each year of the asset's life if both the investment base and depreciation are determined by the current cost of the asset at the start of each year? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)
ROI
Year
1 _____ %
2 _____ %
3 _____ %
4 _____ %
In: Accounting
Upper Division of Lower Company acquired an asset with a cost of $580,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows:
| Year | Cash Flow | ||
| 1 | $ | 185,000 | |
| 2 | 265,000 | ||
| 3 | 285,000 | ||
| 4 | 305,000 | ||
The cost of the asset is expected to increase at a rate of 20 percent per year, compounded each year. Performance measures are based on beginning-of-year gross book values for the investment base. Ignore taxes. Required: a. What is the ROI for each year of the asset's life, using a historical cost approach? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)
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b. What is the ROI for each year of the asset's life if both the investment base and depreciation are determined by the current cost of the asset at the start of each year? (Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).)
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In: Accounting
On January 1, 2018, Panorama Company acquired 80% of Scann Corporation for $6,400,000. At the time of the acquisition, the book value of Scann's assets and liabilities was equal to the fair value except for equipment that was undervalued $80,000 with a four-year remaining useful life and inventories that were undervalued $20,000 and sold in 2018. Panorama separate net income in 2018 and 2019 was $1,100,000 and $1,150,000, respectively. Scann separate net income in 2018 and 2019 was $300,000 and $360,000, respectively. Dividend payments by Scann in 2018 and 2019 were $60,000 and $60,000, respectively Required: Using equity method,
Calculate Investment in Scann shown on Panorama's ledger at December 31, 2018 and 2019.
Calculate Investment in Scann shown on the consolidated statements at December 31, 2018 and 2019.
Calculate consolidated net income for 2018 and 2019.
Calculate Noncontrolling interest balance on Panorama's ledger at December 31, 2018 and 2019.
Calculate Noncontrolling interest balance on the consolidated statements at December 31, 2018 and 2019.
In: Accounting
Assume that on January 1, 2009, a parent company acquired a 90% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. On January 1, 2011, the subsidiary purchased a building for $486,000. The building has a useful life of 10 years and is depreciated on a straight-line basis with no salvage value. On January 1, 2013, the subsidiary sold the building to the parent for $420,000. The parent estimated that the building had an 8 year remaining useful life and no salvage value. The parent also uses the straight-line method of amortization. The parent's "stand-alone" income (i.e., net income before recording any adjustments related to pre-consolidation investment accounting) is $500,000. The subsidiary's recorded net income is $115,000.
Intercompany sale of depreciable assets
Consolidated net income attributable to the controlling
interest:
$578,930
Please show your calculation.
In: Accounting
On January 1, 2015, Losi Company acquired a 30% interest in an associate for P5,000,000. The equity of the associate at the date of acquisition consisted of share capital pf P10,000,000 and retained earnings of P5,000,000. All the identifiable assets and liabilities of the associate were recorded at fair value. The associate reported the following:
2015 2016
Profit before tax 3,000,000 4,000,000
Income tax expense 900,000 1,200,000
Dividend paid 2,500,000 2,000,000
What is the goodwill arising from the acquisition? {
Select one:
a. 2,000,000
b. 0
c. 1,000,000
d. 500,000
In: Accounting
On September 12, 3,800 shares of Aspen Company are acquired at a price of $43.00 per share plus a $190 brokerage commission. On October 15, a $1.10-per-share dividend was received on the Aspen Company stock. On November 10, 1,520.00 shares of the Aspen Company stock were sold for $36 per share less a $76 brokerage commission. When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method.
Sept. 12
Oct. 15
Nov. 10
In: Accounting
In: Economics
Monty Company acquired a plant asset at the beginning of Year 1.
The asset has an estimated service life of 5 years. An employee has
prepared depreciation schedules for this asset using three
different methods to compare the results of using one method with
the results of using other methods. You are to assume that the
following schedules have been correctly prepared for this asset
using (1) the straight-line method, (2) the
sum-of-the-years'-digits method, and (3) the
double-declining-balance method.
|
Year |
Straight-Line |
Sum-of-the- |
Double-Declining- |
|||||||||
| 1 | $10,620 | $17,700 | $23,600 | |||||||||
| 2 | 10,620 | 14,160 | 14,160 | |||||||||
| 3 | 10,620 | 10,620 | 8,496 | |||||||||
| 4 | 10,620 | 7,080 | 5,098 | |||||||||
| 5 | 10,620 | 3,540 | 1,746 | |||||||||
| Total | $53,100 | $53,100 | $53,100 | |||||||||
What is the cost of the asset being depreciated?
| Cost of asset |
$ |
What amount, if any, was used in the depreciation calculations
for the salvage value for this asset?
| Salvage value |
Which method will produce the highest charge to income in Year
1?
|
The method that produces the highest charge to income in Year 1 is |
Which method will produce the highest charge to income in Year
4?
| The method that produces the highest charge to income in Year 4 is |
Which method will produce the highest book value for the asset
at the end of Year 3?
| The method that produces the highest book value for the asset at the end of Year 3 is |
If the asset is sold at the end of Year 3, which method would
yield the highest gain (or lowest loss) on disposal of the
asset?
| The method that will yield the highest gain (or lowest loss) on disposal of the asset if the asset is sold at the end of Year 3 is |
In: Accounting
QUESTION 22
Real services or products are acquired by a company at inflated prices during the execution of which of the following fraudulent schemes?
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Skimming |
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Lapping scheme |
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Over billing scheme |
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Receivable fraud |
QUESTION 28
According to the "Internal Fraud and the Auditor" video, stealing cash from scrap sales falls into which catergory of fraudulent acitivity?
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Accounts receivable fraud |
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Inventory fraud |
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Skimming |
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Lapping |
In: Accounting
Early in 2018 Johnson Company was acquired by a new owner who discovered errors in the accounting records. The new owner would like you to analyze the error described and then determine the impact the accounting items listed. Each error should be analyzed separately. Be Sure to indicate the dollar amount or not the error caused the items to be overstated (OS) or Understated (US) or No Effect.
Vacation pay earned in 2017 of 31100 was not accrued in 2017. The vacation pay occurred in 2018 and expensed when paid.
Analysis:
Net Income for the period ending 12/31/2017__________________
Retained Earnings as of 12/31/2017__________________
Working Capital as of 12/31/2017_______________
Net Income for the period ending 12/31/2018________________
Retained Earnings as of 12/31/2018________________________
December 31, 2017 ending inventory was overstated by 50,000
Analysis:
Net Income for the period ending 12/31/2017 _______________
Retained Earnings as of 12/31/2017__________________
Working Capital as of 12/31/2017_________________
Net Income for the period ending 12/31/2018__________________
Retained Earnings as of 12/31/2018_________________
3.At the beginning of 2017 a machine was purchased for total cost of $50,000. The Machine had no salvage value and had a life of 15 years. The bookkeeper accidentally expensed the entire cost of the machine in 2017. Johnson company normally uses straight line depreciation.
Analysis:
Net Income for the period ending 12/31/2017____________________________
Retained Earnings as of 12/31/2017_____________________
Working Capital as of 12/31/2017_____________________
Net Income for the period ending 12/31/2018_____________________
Retained Earnings as of 12/31/2018_______________________
4.At the end of 2017. $30,000 of cash collected in advance for future services was included is Service revenue for the period ending 12/31/2017. The services will be performed equally in 2018 and 2019.
Net Income for the period ending 12/31/2017____________________________
Retained Earnings as of 12/31/2017_____________________
Working Capital as of 12/31/2017_____________________
Net Income for the period ending 12/31/2018_____________________
Retained Earnings as of 12/31/2018_______________________
In: Accounting