On January 1, 2017, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $3,700,000 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, 2017, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow:
| Carrying Amount | Fair Value | |||||
| Cash and receivables | $ | 160,000 | $ | 160,000 | ||
| Computing equipment | 5,450,000 | 6,500,000 | ||||
| Patented technology | 150,000 | 4,100,000 | ||||
| Trademark | 200,000 | 2,100,000 | ||||
| Liabilities | (235,000 | ) | (235,000 | ) | ||
Also as of January 1, 2017, 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 | |||||
| 2017 | $ | 1,900,000 | $ | 200,000 | ||
| 2018 | 2,085,000 | 210,000 | ||||
How much of Ridge Road's $3,700,000 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 2017 and 2018?
What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2017 and 2018?
In: Accounting
CC Ltd, a company incorporated in Singapore with December 31 year-ends, acquired a retail shop on 2 January 20X1 for $600,000 with the intention of renting it out. The property is leasehold with 20 years remaining on the lease. It has a zero residual value. On 1 July 20X1, CC Ltd rented out the retail shop to an unrelated company for a monthly rental of $8,000, payable at the end of each month. After 2 years, CC Ltd managed to terminate the lease with the existing tenant on 30 June 20X3. CC Ltd used the retail shop for its own operations from 1 July 20X3 onwards.
The market value of CC Ltd’s retail shop was determined as follows:
31 December 20X1 : $800,000
31 December 20X2 : $700,000
1 July 20X3 : $740,000
CC Ltd adopts the fair value model under FRS 40 Investment Property and adopts the cost model under FRS 16 Property, Plant and Equipment. CC Ltd depreciates all its assets on a straight-line basis where applicable.
Required:
Illustrate the accounting for the retail shop by preparing the journal entries (with journal narratives) to record the various events relating to CC Ltd’s retail shop from 2 January 20X1 to 31 December 20X3. Please round your answers to the nearest dollar.
Since CC Ltd adopts fair value, the gain or loss arising from the change in the fair value of the investment property must be recognised in the calculation of profit or loss for the period in which it arises.
In: Accounting
On October 30, 2016, Sanchez Company acquired a piece of machinery and signed a 12-month note for $24,000. The face value of the note includes the price of the machinery and interest. The note is to be paid in four $6,000 quarterly installments. The value of the machinery is the present value of the four quarterly payments discounted at an annual interest rate of 16%. Required: 1. Prepare all the journal entries required to record the preceding information including the year-end adjusting entry and any payments. Present value techniques should be used. 2. Show how the preceding items would be reported on the December 31, 2016, balance sheet.
In: Accounting
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $428,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $585,000 and the fair value of the 20 percent noncontrolling interest was $107,000. No excess fair value over book value amortization accompanied the acquisition.
The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:
| Protrade | Seacraft | |||||
| Sales | $ | 700,000 | $ | 420,000 | ||
| Cost of goods sold | 320,000 | 227,000 | ||||
| Operating expenses | 156,000 | 111,000 | ||||
| Retained earnings, 1/1/18 | 800,000 | 240,000 | ||||
| Inventory | 352,000 | 116,000 | ||||
| Buildings (net) | 364,000 | 163,000 | ||||
| Investment income | Not given | 0 | ||||
Each of the following problems is an independent situation:
In: Accounting
Pastorall Ltd is an Australian
pastoral company. It recently acquired a beef cattle farm near
Gunnedah, New South Wales. The following assumptions
apply:
The company was created as at 1 November 2022; at that
time, 1100 baby cattle (calves) and 700 mature cattle were
acquired. The cost of acquisition for each unit of baby cattle
(calf) and mature cattle is the same as the costs to sell in the
table below
Calves becomes mature after six months.
On 28 February 2023, 500 calves were born.
On 30 May 2023, 900 mature cattle were sold.
The fair value for the baby cattle (calves) and the
mature cattle as well as costs to sell is as follows:
Fair value per baby cattle (calf) per unit
2022- $26
2023-$30
Fair value per mature cattle per unit
2022-$36
2023-$40
Costs to sell or acquisition cost
Auctioneer’s fee
2022-$1.5
2023-2.0
Required
Provide journal entries for the following items
according to the requirement of IAS 41 Agriculture:
Establishment of the cattle farm on 1 November
2022
New born calves on 28 February 2023
Sale of mature cattle on 30 May 2023
The fair value change of the calves and the mature cattle as at 30 June 2023
that is all the data
In: Accounting
On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 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, 2017, the book and fair values of the subsidiary’s assets and liabilities were:
| Cash | CHF | 804,000 | |
| Inventory | 1,304,000 | ||
| Property, plant & equipment | 4,004,000 | ||
| Notes payable | (2,108,000 | ) | |
Stephanie prepares consolidated financial statements on December 31, 2017. 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, 2017, 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 2017 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, 2017, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,100,000 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, 2017, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow:
| Carrying Amount | Fair Value | |||||
| Cash and receivables | $ | 180,000 | $ | 180,000 | ||
| Computing equipment | 5,630,000 | 6,820,000 | ||||
| Patented technology | 170,000 | 4,140,000 | ||||
| Trademark | 220,000 | 2,140,000 | ||||
| Liabilities | (255,000 | ) | (255,000 | ) | ||
Also as of January 1, 2017, Sauk Trail's computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-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 | |||||
| 2017 | $ | 1,940,000 | $ | 220,000 | ||
| 2018 | 2,125,000 | 230,000 | ||||
How much of Ridge Road's $4,100,000 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 2017 and 2018?
What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2017 and 2018?
In: Accounting
On January 1, 2017, Ridge Road Company acquired 25 percent of the voting shares of Sauk Trail, Inc., for $4,100,000 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, 2017, carrying amounts and corresponding fair values for Sauk Trail's assets and liabilities follow:
| Carrying Amount | Fair Value | |||||
| Cash and receivables | $ | 180,000 | $ | 180,000 | ||
| Computing equipment | 5,630,000 | 6,820,000 | ||||
| Patented technology | 170,000 | 4,140,000 | ||||
| Trademark | 220,000 | 2,140,000 | ||||
| Liabilities | (255,000 | ) | (255,000 | ) | ||
Also as of January 1, 2017, Sauk Trail's computing equipment had a seven-year remaining estimated useful life. The patented technology was estimated to have a five-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 | |||||
| 2017 | $ | 1,940,000 | $ | 220,000 | ||
| 2018 | 2,125,000 | 230,000 | ||||
How much of Ridge Road's $4,100,000 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 2017 and 2018?
What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2017 and 2018?
In: Accounting
|
On January 1, 2017, Ridge Road Company acquired 30 percent of the voting shares of Sauk Trail, Inc. for $4,600,000 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, 2017, carrying amounts and corresponding fair values for Sauk Trail’s assets and liabilities follow: |
|
Carrying Amount |
Fair Value |
|||||
| Cash and receivables | $ | 205,000 | $ | 205,000 | ||
| Computing equipment | 5,855,000 | 7,220,000 | ||||
| Patented technology | 195,000 | 4,190,000 | ||||
| Trademark | 245,000 | 2,190,000 | ||||
| Liabilities | (280,000 | ) | (280,000 | ) | ||
|
Also as of January 1, 2017, Sauk Trail’s computing equipment had a remaining estimated useful life of seven years. The patented technology was estimated to have a 3-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 | |||||
| 2017 | $ | 1,990,000 | $ | 245,000 | ||
| 2018 | 2,175,000 | 255,000 | ||||
|
The fair value of the Sauk Trail stock was $4,607,000 on December 31, 2017 and $4,605,500 on December 31, 2018. 1. How much of Ridge Road’s $4,600,000 payment for Sauk Trail on January 1, 2017 is attributable to revaluation increments and decrements and goodwill or gain on bargain purchase? 2. What amount should Ridge Road report for its equity in Sauk Trail’s earnings on its income statements for 2017 and 2018? 3. Prepare all of the journal entries necessary for Ridge Road Company regarding their investment in Sauk Trail, Inc. for 2017 and 2018? including : a.Record the acquisition of Sauk Trail stock on 1/1/17 b.Record Ridge Roads share of the Income from Sauk Trail Inc for year 2017 c.Record the Dividends received from Sauk Trail for 2017 d.Record amortization of any revaluation increments for 2017 e.Record amortization of any revaluation decremdnets for 2017 f.Record change in fair value of investment in Sauk Trial stock on 12/31/17 g.Record any impairment of goodwill on 12/31/17 h.Record Ridge Roads share of income for Sauk trail for year 2018 i.Record the dividends received from sauk trail for 2018 j.Record amortization of any revaluation increments for 2018 k.Record amortization of any revaluation decrements for 2018 l.Record change in fair value of investment in Sauk trail on 12/31/18 m.Record any impairment of goodwill on 12/31/18 4. What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at the end of 2017 and 2018? 5.
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a.Record the acquisition of Sauk Trail stock on 1/1/17 b.Record Ridge Roads share of the Income from Sauk Trail Inc for year 2017 c.Record the Dividends received from Sauk Trail for 2017 d.Record amortization of any revaluation increments for 2017 e.Record amortization of any revaluation decremdnets for 2017 f.Record change in fair value of investment in Sauk Trial stock on 12/31/17 g.Record any impairment of goodwill on 12/31/17 h.Record Ridge Roads share of income for Sauk trail for year 2018 i.Record the dividends received from sauk trail for 2018 j.Record amortization of any revaluation increments for 2018 k.Record amortization of any revaluation decrements for 2018 l.Record change in fair value of investment in Sauk trail on 12/31/18 m.Record any impairment of goodwill on 12/31/18 6. What amount should Ridge Road report for its investment in Sauk Trail on its balance sheets at December 31, 2017 and December 31, 2018? |
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In: Accounting
Fanning Manufacturing Company was started on January 1, 2018, when it acquired $78,000 cash by issuing common stock. Fanning immediately purchased office furniture and manufacturing equipment costing $7,700 and $34,300, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $3,100 salvage value and an expected useful life of four years. The company paid $11,200 for salaries of administrative personnel and $15,700 for wages to production personnel. Finally, the company paid $12,020 for raw materials that were used to make inventory. All inventory was started and completed during the year. Fanning completed production on 4,800 units of product and sold 3,850 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)
***Please show me step by step***
C. Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.)
D. Determine the amount of net income that would appear on the 2018 income statement.
E. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet.
F. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet.
In: Accounting