On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,600,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $910,000, retained earnings of $460,000, and a noncontrolling interest fair value of $400,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.
During the next two years, Smashing reported the following:
| Net Income | Dividends Declared | Inventory Purchases from Corgan | |||||||
| 2020 | $ | 360,000 | $ | 56,000 | $ | 310,000 | |||
| 2021 | 340,000 | 66,000 | 330,000 | ||||||
Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 50 percent of the current year purchases remain in Smashing's inventory.
In: Accounting
Heidebrecht Design acquired 30% of the outstanding common stock of Blossom Company on January 1, 2020, by paying $844,000 for the 42,200 shares. Blossom declared and paid $0.20 per share cash dividends on March 15, June 15, September 15, and December 15, 2020. Blossom reported net income of $381,500 for the year. At December 31, 2020, the market price of Blossom common stock was $26 per share.
Prepare the journal entries for Heidebrecht Design for 2020 assuming Heidebrecht Design cannot exercise significant influence over Blossom. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
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Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
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enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Prepare the journal entries for Heidebrecht Design for 2020, assuming Heidebrecht Design can exercise significant influence over Blossom. Use the equity method. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
|
choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
|
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
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choose a transaction date Jan. 1Mar. 15June 15Sept. 15Dec. 15Dec. 31 |
enter an account title |
enter a debit amount |
enter a credit amount |
|
enter an account title |
enter a debit amount |
enter a credit amount |
eTextbook and Media
List of Accounts
Indicate the balance sheet and income statement account balances at December 31, 2020, under each method of accounting.
|
Cost |
Equity |
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|---|---|---|---|---|
|
Stock Investments |
$enter a dollar amount | $enter a dollar amount | ||
|
Dividend revenue |
enter a dollar amount | enter a dollar amount | ||
|
Unrealized gain income |
enter a dollar amount | enter a dollar amount | ||
|
Revenue from stock investments |
enter a dollar amount | enter a dollar amount |
In: Accounting
On December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.023 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2020, the book and fair values of the subsidiary’s assets and liabilities were as follows:
| Cash | CHF | 823,000 | |
| Inventory | 1,323,000 | ||
| Property, plant, and equipment | 4,023,000 | ||
| Notes payable | (2,146,000 | ) | |
Stephanie prepares consolidated financial statements on December 31, 2020. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation.
Determine the translation adjustment to be reported on Stephanie’s December 31, 2020, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary’s functional currency. What is the economic relevance of this translation adjustment?
Determine the remeasurement gain or loss to be reported in Stephanie’s 2020 consolidated net income, assuming that the U.S. dollar is the functional currency. What is the economic relevance of this remeasurement gain or loss?
In: Accounting
On January 1, 2020, Ridge Road Company acquired 20 percent of the voting shares of Sauk Trail, Inc., for $2,800,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities.
The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow:
| Carrying Amount | Fair Value | |||||
| Cash and receivables | $ | 115,000 | $ | 115,000 | ||
| Computing equipment | 5,045,000 | 5,780,000 | ||||
| Patented technology | 105,000 | 4,010,000 | ||||
| Trademark | 155,000 | 2,010,000 | ||||
| Liabilities | (190,000 | ) | (190,000 | ) | ||
Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a four-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost.
During the next two years, Sauk Trail reported the following net income and dividends:
| Net Income | Dividends Declared | |||||
| 2020 | $ | 1,810,000 | $ | 155,000 | ||
| 2021 | 1,995,000 | 165,000 | ||||
How much of Ridge Road’s $2,800,000 payment for Sauk Trail is attributable to goodwill?
What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021?
What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021?
In: Accounting
On January 1, 2020, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,505,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $940,000, retained earnings of $490,000, and a noncontrolling interest fair value of $645,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Net Income Dividends Declared Inventory Purchases from Corgan 2020 $ 390,000 $ 59,000 $ 340,000 2021 370,000 69,000 360,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2020 and 2021, 50 percent of the current year purchases remain in Smashing's inventory. Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2021. Prepare the worksheet adjustments for the December 31, 2021, consolidation of Corgan and Smashing.
In: Accounting
On January 1, 2020, Ridge Road Company acquired 20 percent of the voting shares of Sauk Trail, Inc., for $3,200,000 in cash. Both companies provide commercial Internet support services but serve markets in different industries. Ridge Road made the investment to gain access to Sauk Trail’s board of directors and thus facilitate future cooperative agreements between the two firms. Ridge Road quickly obtained several seats on Sauk Trail’s board, which gave it the ability to significantly influence Sauk Trail’s operating and investing activities.
The January 1, 2020, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow:
| Carrying Amount | Fair Value | |||||
| Cash and receivables | $ | 135,000 | $ | 135,000 | ||
| Computing equipment | 5,225,000 | 6,100,000 | ||||
| Patented technology | 125,000 | 4,050,000 | ||||
| Trademark | 175,000 | 2,050,000 | ||||
| Liabilities | (210,000 | ) | (210,000 | ) | ||
Also, as of January 1, 2020, Sauk Trail’s computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a four-year remaining useful life. The trademark's useful life was considered indefinite. Ridge Road attributed to goodwill any unidentified excess cost.
During the next two years, Sauk Trail reported the following net income and dividends:
| Net Income | Dividends Declared | |||||
| 2020 | $ | 1,850,000 | $ | 175,000 | ||
| 2021 | 2,035,000 | 185,000 | ||||
How much of Ridge Road’s $3,200,000 payment for Sauk Trail is attributable to goodwill?
What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2020 and 2021?
What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2020 and 2021?
In: Accounting
Imagine the following scenario at a company where you are the computer specialist: Your company recently installed high-speed Internet access at the office where you work. There are 50 workstations connected to the network and the Internet. Within a week, half the computers in the office were down because of a virus that was contracted by a screen saver. In addition, network personnel from a university in England contacted the company, claiming that your computer systems were being used as a part of a DDoS attack on their Web site. By the time the damage was repaired, your company had lost about 500 work hours when employees could not use their computers. The company also lost approximately $10,000 in potential revenue by not being able to respond to purchase requests, and narrowly averted a lawsuit from the university. Take steps to prevent this from happening again: • Research the price of at least three antivirus and firewall packages on the Internet and determine the most cost-effective package for the company to implement on 50 workstations. • Draft a memo to the CEO with your recommendations. Include the following in your memo: o A list of the antivirus and firewall packages you researched. You should research and list at least three different antivirus and firewall packages. o The antivirus and firewall package you recommend and your reasons for recommending it over the other two packages. o An explanation of how the antivirus and firewall products that you recommend would prevent future problems with viruses and with DDoS attacks from your computers on web sites belonging to other organizations. o If you need help with creating a memo, please click How to Create a Memo to download the instructions. • Compile a list strategies for avoiding virus infections and incorporate this list into a document to be sent to all employees. • Use the Networks and Security thread in the Experts Exchange class forum if you need some help, or if you are knowledgeable about computer security and can help others identify antivirus and firewall software.
In: Computer Science
Meredith’s currently makes $6,000 a month and is considering enrolling in a full-time MBA program that will require her to leave her job. In addition, the MBA program will cost $2,000 a month.
Q: The explicit cost of attending the MBA program is ___ per month.
Q: The implicit cost of attending the MBA program is ___ per month.
Q: The opportunity cost of attending the MBA program is ___ per month.
In: Economics
1. Trident Corporation acquires Uvell Company’s assets and liabilities for $40,000,000 in cash. At the date of acquisition, Uvell’s balance sheet reported assets of $90,000,000 and liabilities of $82,000,000. Investigation reveals that Uvell’s buildings are overvalued by $6,000,000 and it has unreported liabilities valued at $5,000,000.
What journal entry will Trident Corp record as a result of this acquisition?
2. An acquiring company pays $45 million in cash, and issues new no-par stock with a fair value of $75 million, to the acquired company’s former owners, for the assets and liabilities of the acquired company. Registration fees associated with the new stock issuance are $300,000, paid in cash. Consulting fees for the acquisition are $1 million, paid in cash. The fair value of the acquired company’s identifiable net assets is $65 million.
What entry does the acquiring company make to record the acquisition?
3. A company invests $300,000 in equity securities on November 30, 2019, and classifies them as investments with no significant influence. At December 31, 2019, the company’s year-end, the securities have a fair value of $310,000. On February 1, 2020, the company sells the securities for $295,000.
What is reported on the Balance Sheet and Income Statement regarding the securities for 2019 and 2020?
4. Precision Company acquires all of Springfield Company’s voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows:
Book Values
Current assets $ 500,000
Land, buildings and equipment (net) $2,000,000
Liabilities ($600,000)
Capital stock ($500,000)
Retained earnings ($1,400,000)
Fair Values
Current assets $700,000
Land, buildings and equipment (net) $3,500,000
Liabilities ($550,000)
Capital stock
Retained earnings
In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair value of $400,000.
Prepare the eliminating entries
In: Accounting
Exceed, a US company, on January 1, 2019 acquired all the outstanding common stock of Silver Company, which is located in a country whose currency is the peso. The peso is the functional currency of Silver. For 2019, exchange rates for the peso were as follows:
|
Peso 1 = |
|
|
Jan. 1 |
$0.39 |
|
Dec. 31 |
$0.32 |
|
Average for the year |
$0.35 |
Notes: Read carefully and follow strictly so that Bb can grade
you correctly!
1. Use comma in numbers, one thousand is 1,000, not 1000. Round to
the nearest dollar: 1,000.45 should be 1,000, and 1,000.55 should
be 1,001, no decimal points. No $ sign.
2. Use parenthesis ( ) for expenses, accumulated depreciation,
dividends, and G/L or adjustments only!
Required: Translate the 2019 financial statements of the subsidiary to U.S. dollars from pesos.
Translation of Financial Statements to U.S. Dollars
For Year Ended December 31, 2019
|
Peso |
Exchange Rate |
U.S. Dollars |
|
|
Income Statement |
|||
|
Net sales |
820,000 |
Blank 1 |
|
|
Costs and expenses |
(550,000) |
Blank 2 |
|
|
Net income |
270,000 |
Blank 3 |
|
|
Statement of Retained Earnings |
|||
|
Retained earnings, beginning of year |
100,000 |
Blank 4 |
|
|
Net income |
270,000 |
Blank 5 |
|
|
Subtotal |
370,000 |
Blank 6 |
|
|
Div declared/paid 12/31/2018 |
(60,000) |
Blank 7 |
|
|
Retained earnings, end of year |
310,000 |
Blank 8 |
|
|
Balance Sheet |
|||
|
Assets |
|||
|
Current assets |
700,000 |
Blank 9 |
|
|
Plant assets (net) |
436,000 |
Blank 10 |
|
|
Total assets |
1,136,000 |
Blank 11 |
|
|
Liabilities & Stockholders’ Equity |
|||
|
Current liabilities |
308,000 |
Blank 12 |
|
|
Long-term debt |
90,000 |
Blank 13 |
|
|
Common stock |
150,000 |
Blank 14 |
|
|
Additional paid-in capital |
278,000 |
Blank 15 |
|
|
Retained earnings |
310,000 |
Blank 16 |
|
|
Translation adjustment |
Blank 17 |
||
|
Total liabilities & stockholders’ equity |
1,136,000 |
Blank 18 |
In: Accounting