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Book/movie review
22/08/2022
1. ) Ace Company acquires Billings Company in a combination accounted for as an acquisition and adopts the equity method to account for Investment in Billings. At the end of 4 years, the Investment in Billings account on Ace’s books is $198,000. What items constitute this balance?
2. On January 2, 20X1, Heinreich Co. paid $500,000 for 24% of the voting common stock of Jones Corp. At the time of the investment, Jones had net assets with a book value and fair value of $1,800,000. During 20X1, Jones incurred a net loss of $60,000 and paid dividends of $100,000. Any excess cost over book value is attributable to goodwill with an indefinite life.
Required:
-1) Prepare a schedule to show the amount of goodwill from Heinrich’s investment in Jones.
-2) Prepare a schedule to show the balance in Heinreich’s investment account at December 31, 20X1.
3. Nathan Inc. sold $180,000 in inventory to Miller Co. during 20X0 for $250,000. Miller resold $108,000 of this merchandise in 20X0 with the remainder to be disposed of during 20X1.
Assume Nathan owns 25% of Miller and applies the equity method.
Required:
-1) Determine Nathan’s share of the unrealized gain at the end of 20X0.
-2) Prepare the journal entry Nathan should record at the end of 20X0 to defer the unrealized intra-entity inventory profit.
4. Jasper Inc. holds 30% of the outstanding voting shares of Kinson Co. and appropriately applies the equity method of accounting. Amortization associated with this investment equals $11,000 per year. For 20X1, Kinson reported earnings of $100,000 and paid cash dividends of $40,000. During 20X1, Kinson acquired inventory for $62,400, which was then sold to Jasper for $96,000. At the end of 20X1, Jasper still held some of this inventory at its transfer price of $50,000.
Required:
-1) Determine the amount of intra-entity profit at the end of 20X1.
-2) Determine the amount of Equity in Investee Income that Jasper should have reported for 20X1.
The writer is very fast, professional and responded to the review request fast also. Thank you.
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