A. A company acquired a new high-tech printing press on January 1, 2016, for $90,000. At that time, the company estimated the press would have a six-year life and salvage value of $6,000. The company uses the straight-line depreciation method for all its equipment. In December 2017, a newer high-tech printing press is introduced in the market. The company controller is concerned that the value of the press may be impaired. The controller has provided you with the following data as of December 2017 and asked you to determine if there is any impairment using US GAAP or IFRS. If there is any impairment, please provide the journal entries. Additionally, as part of the 2018 budget process, the controller has asked you to calculate depreciation expense of the press using both US GAAP and IFRS. (6)

Scrap value should be reduced to $4,000.

Expected future undiscounted cash flows from operating the press are $51,000.

Discounted net present value of expected cash flows from the press is $49,000.

Fair value of the press at December 31, 2017, is $45,000 and selling costs are minimal.

B. Use the same facts as problem A above, except assume that at December 31, 2018, the controller asks what, if any, impairment reserve can be reversed using US GAAP and IFRS, because the controller concludes the press is not impaired at December 31, 2018. The controller has told you to assume the scrap value should remain $4,000.

On January 2, 2014, Able Company acquired new equipment at a cost of $290,000. The machine has an estimated useful life of 5 years, or 25,000 operating hours, after which it will have an estimated residual value of $15,000. Compute the depreciation charges for the first two years (2014 and 2015), using the following methods. (Show all computations).

a. Straight-line

b. Units-of-production (Equipment was used 8,000 hours during 2014 and 7,000 hours during 2015.)

c. Double-declining balance

Agee Corporation acquired a 35% interest in Trent Company on January 1, 2018, for $500,000. At that time, Trent had 1,000,000 shares of its $1 par common stock issued and outstanding. During 2018, Trent paid cash dividends of $168,000 and thereafter declared and issued a 5% common stock dividend when the fair value was $2 per share. Trent's net income for 2018 was $360,000. What is the balance in Agee's equity investment account at the end of 2018? Balance in equity investment account

Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Spark Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows:

On January 1, 20X8, Plug's inventory contained filters purchased for $68,000 from Spark Filter, which had produced the filters for $48,000. In 20X8, Spark Filter spent $108,000 to produce additional filters, which it sold to Plug for $153,000. By December 31, 20X8, Plug had sold all filters that had been on hand January 1, 20X8, but continued to hold in inventory $45,900 of the 20X8 purchase from Spark Filter.

Required:
a. Prepare all consolidation entries needed to complete a consolidation worksheet for 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the basic consolidation entry.
• Record the entry to reverse last year's deferral.
• Record the entry to defer the current year's unrealized profits on inventory transfers.

b. Compute consolidated net income and income assigned to the controlling interest in the 20X8 consolidated income statement.

c. Compute the balance assigned to the noncontrolling interest in the consolidated balance sheet as of December 31, 20X8.

(1) 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,

1. Calculate Investment in Scann shown on Panorama's ledger at December 31, 2018 and 2019.
2. Calculate Investment in Scann shown on the consolidated statements at December 31, 2018 and 2019.
3. Calculate consolidated net income for 2018 and 2019.
4. Calculate Noncontrolling interest balance on Panorama's ledger at December 31, 2018 and 2019.
5. Calculate Noncontrolling interest balance on the consolidated statements at December 31, 2018 and 2019.

(Support your answer in all points with detailed calculations and explanation)        

(A) Corporation acquired 20,000 of the 100,000 outstanding common shares of (B) Company on January 1, 2016, for a cash consideration of $200,000. During 2016, (B) Company had net income of $120,000 and paid dividends of $80,000. At the end of 2016, shares of (B) Company were trading for $11 each. During 2017, (B) Company had a loss of $60,000 and paid dividends of $40,000. Income for the first half of the year was $80,000 and the loss in the second half of the year was $140,000. The dividends were paid on June 30. On July 2, 2017, (A) Corporation sold 5,000 shares of (B) Company for a consideration of $12 per share. At the end of 2017, the share price of (B) Company had fallen to $6 per share. The average of market analysts' forecasts was that the share price could be expected to rise to $8 per share over the next five years. (Assume that the future recoverable value of the shares is assessed to be $8 per share.)​

Provide journal entries for (A) Corporation for all transactions relating to its investment in (B) Company for the year 2017 if it accounts for its investment in (B) Company using the equity method. ​

Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at underlying book value on August 30, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Spark Filter. Summarized trial balance data for the two companies as of December 31, 20X8, are as follows:

On January 1, 20X8, Plug's inventory contained filters purchased for $63,000 from Spark Filter, which had produced the filters for $43,000. In 20X8, Spark Filter spent $103,000 to produce additional filters, which it sold to Plug for $150,907. By December 31, 20X8, Plug had sold all filters that had been on hand January 1, 20X8, but continued to hold in inventory $45,272 of the 20X8 purchase from Spark Filter.

Required:
a. Prepare all consolidation entries needed to complete a consolidation worksheet for 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Consolidation Worksheet Entries

• Record the basic consolidation entry.
• Record the entry to reverse last year's deferral.
• Record the entry to defer the current year's unrealized profits on inventory transfers.

Note: Enter debits before credits.

b. Compute consolidated net income and income assigned to the controlling interest in the 20X8 consolidated income statement.

Consolidated net income

Income assigned to the controlling interest

c. Compute the balance assigned to the noncontrolling interest in the consolidated balance sheet as of December 31, 20X8.

Petunia Corporation acquired 90 percent of the stock of Spring Company on January 1, 20X2, for $360,000. At that date, the fair value of the noncontrolling interest was $40,000. Spring’s balance sheet contained the following amounts at the time of the combination:

  
During each of the next three years, Spring reported net income of $70,000 and paid dividends of $20,000. On January 1, 20X4, Petunia sold 3,000 shares of Spring’s $5 par value shares for $90,000 in cash. Petunia used the fully adjusted equity method in accounting for its ownership of Spring Company.

Based on the preceding information, in the consolidation entries to complete a consolidation worksheet at January 1, 20X4 (after the sale of the 3,000 shares of Spring stock), Investment in Spring Stock will be credited for what amount?

1. Millburn Company has acquired a property that included both land and a building for $530,000. The company hired an appraiser who has determined that the market value of the land is $320,000 and that of the building is $480,000.

Prepare the journal entry to record the purchase of these assets. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

2. Calculate the depreciation expense using the straight-line and units-of-production methods for all years for the following operating asset.

Cost $65,000

Salvage value $5,000

Expected useful life is 4 years and total expected output is 150,000 units as follows:

Yr. 1 70,000

Yr. 2 35,000

Yr. 3 25,000

Yr. 4 20,000