Assume an investor acquired 100% of the voting common stock of an investee on January 1,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Assume an investor acquired 100% of the voting common stock of an investee on January 1, 2015 in a transaction that qualifies as a business combination. As a result of the acquisition, the investor recognized no goodwill and no bargain purchase gain in the post-acquisition consolidated financial statements (i.e., all of the resulting Acquisition Accounting Premium relates to identifiable net assets). The investor uses the equity method to account for its pre-consolidation investment in the investee. In addition, there are no intercompany transactions between the investor and investee. The following summarized pre-consolidation financial statement information is for the year ending December 31, 2022: Income Statement Revenues Income from investee Expenses Net income Investor Investee $2,678,400 $368,640 169,920 (2,160,000) (187,200) $688,320 $181,440 Retained Earnings Statement Retained earnings, January 1 Net Income Dividends declared Investor Investee $864,000 $43,200 688,320 181,440 (72,000) (43,200) Retained earnings, December 31 $1,480,320 $181,440 Balance Sheet Investment in investee All other assets Investor Investee $339,840 5,518,080 460,800 Total assets Liabilities Common stock & APIC Retained earnings $5,857,920 $460,800 $3,456,000 $178,560 921,600 100,800 1,480,320 181,440 Total liabilities and equity $5,857,920 $460,800 What amount of "expenses" will appear in the consolidated income statement for the year ending December 31, 2022? Select one: a. $2,358,720 b. $2,370,240 c. $2,347,200 x d. $2,160,000 Your answer is incorrect. Parent's expenses Add: Subsidiary's expenses Add: AAP amortization Consolidated expenses $2,160,000 187,200 11,520 $2,358,720 Assume an investor acquired 100% of the voting common stock of an investee on January 1, 2015 in a transaction that qualifies as a business combination. As a result of the acquisition, the investor recognized no goodwill and no bargain purchase gain in the post-acquisition consolidated financial statements (i.e., all of the resulting Acquisition Accounting Premium relates to identifiable net assets). The investor uses the equity method to account for its pre-consolidation investment in the investee. In addition, there are no intercompany transactions between the investor and investee. The following summarized pre-consolidation financial statement information is for the year ending December 31, 2022: Income Statement Revenues Income from investee Expenses Net income Investor Investee $2,678,400 $368,640 169,920 (2,160,000) (187,200) $688,320 $181,440 Retained Earnings Statement Retained earnings, January 1 Net Income Dividends declared Investor Investee $864,000 $43,200 688,320 181,440 (72,000) (43,200) Retained earnings, December 31 $1,480,320 $181,440 Balance Sheet Investment in investee All other assets Investor Investee $339,840 5,518,080 460,800 Total assets Liabilities Common stock & APIC Retained earnings $5,857,920 $460,800 $3,456,000 $178,560 921,600 100,800 1,480,320 181,440 Total liabilities and equity $5,857,920 $460,800 What amount of "expenses" will appear in the consolidated income statement for the year ending December 31, 2022? Select one: a. $2,358,720 b. $2,370,240 c. $2,347,200 x d. $2,160,000 Your answer is incorrect. Parent's expenses Add: Subsidiary's expenses Add: AAP amortization Consolidated expenses $2,160,000 187,200 11,520 $2,358,720
Expert Answer:
Answer rating: 100% (QA)
The correct answer is a 2358720 The consolidated expen... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
Posted Date:
Students also viewed these accounting questions
-
Judy starts a new business, ABC company, on October 1, in the current tax year. Judy has some accounting experience and does the bookkeeping for the company. During the year, ABC company made various...
-
The Platinum Seating Company had been in the furniture business since 1975. They had focused the business mainly on office furniture. Over the years they had developed a niche market in high-end...
-
3. Zwick Company bought 27,500 shares of the voting common stock of Handy Corporation in January 2018. In December, Handy announced a $206,400 net income for 2018 and declared and paid a cash...
-
For the given year, find the standard quotas for the New York City boroughs given in Table 17.5 in Problems 23-28. Assume there are eight council seats. Table 17. 5 1990 Year Total 1790 49 1800 81...
-
What are the main tasks involved in international sales management?
-
The prepaid insurance account had a balance of $10,800 at the beginning of the year. The account was increased for $7,200 for premiums on policies purchased during the year. What is the adjustment...
-
Using probabilities in budget estimates The Wing Manufacturing Corporation produces a chemical compound, product X, which deteriorates and must be discarded if it is not sold by the end of the month...
-
Wong Corporation sold $2,000,000, 7%, 5-year bonds on January 1, 2012. The bonds were dated January 1, 2012, and pay interest on January 1. Wong Corporation uses the straight-line method to amortize...
-
Silven Industries, which manufactures and sells summer lotions and insect repellents, has decided to diversify in order to stabilize sales throughout the year. A natural area for the company to...
-
37m left H ALL O 1 2 3 4 5 7 8 5. Minimum Processing Time A computing cluster has multiple processors, each with 4 cores. The number of tasks to handle is equal to the total number of cores in the...
-
Size of the Tip in a Restaurant The dataset RestaurantTips has information from First Crush bistro in northern New York state. Computer output of descriptive statistics for the variable giving the...
-
Shares in India's Tata Motorsfellas much as 6.6% as volatile markets raised concerns that investors may reject its huge $885 million rights issue. Shares in India'stop vehicle maker have taken a...
-
4. When properly aligned, gears transmit torques to a shaft. When designing a bioreactor for cell culture, you have been assigned the task of designing the shafts inside the bioreactor. A motor...
-
The hypothesis testing procedures for comparing means of INDEPENDENT samples would be appropriate for comparing?
-
December 20, 20XX STA 48 STA 1 21 STA 1 STA 48 69 1 STA 21 STA 69 December 20, 20XX STA 69 STA 21 48 Traverse of a 4-sided Polygon HI 1.38 HCR VCR SD 0:00:00 89:40:28 96.655 180:00:00 270:19:32...
-
(i) Consider a structural steel with yield stress y = 350 M Pa. Estimate the specimen dimensions required for a valid K test; i.e. a. W and the maximum thickness B. Assume that the test specimen is a...
-
. Each of Mom & Dad Frozen Foods' machine costs $37,450 and lasts about 4 years before it needs replaced. The operating cost per machine is $5,650 a year. What is the equivalent annual cost of o...
-
Linda Lopez opened a beauty studio, Lindas Salon, on January 2, 2011. The salon also sells beauty supplies. In January 2012, Lopez realized she had never filed any tax reports for her business and...
-
Define a business transaction in the broad sense and give examples of the two different kinds of transactions.
-
What two equalities in accounting must be maintained in transaction analysis?
-
What is a T-account? What is its purpose?
Study smarter with the SolutionInn App