Prey Company purchases a controlling interest in Shark Company by issuing $3,000,000 worth of new Common...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Prey Company purchases a controlling interest in Shark Company by issuing $3,000,000 worth of new Common Shares. On that date, Prey's shares had a market value of $100 per share. A contingent agreement was drawn up whereby Prey would also pay 72% of any earnings in excess of $600,000 to Shark's shareholders in the year following the acquisition. Required: Assuming that Shark's net income the next year was $570,000. Prepare Prey's journal entry that you feel is necessary to reflect these results. (1 mark) Prey Company purchases a controlling interest in Shark Company by issuing $3,000,000 worth of new Common Shares. On that date, Prey's shares had a market value of $100 per share. A contingent agreement was drawn up whereby Prey would also pay 72% of any earnings in excess of $600,000 to Shark's shareholders in the year following the acquisition. Required: Assuming that Shark's net income the next year was $570,000. Prepare Prey's journal entry that you feel is necessary to reflect these results. (1 mark)
Expert Answer:
Answer rating: 100% (QA)
To reflect the contingent agreement with Sharks shareholders Prey Company would need ... View the full answer
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
Students also viewed these accounting questions
-
On January 1, 2013, Heckert Company purchases a controlling interest in Aker Company. The following information is available: a. Heckert Company purchases 1,600 shares of Aker Company outstanding...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Bill and Fiona Russell have always enjoyed craft beer, and in recent years have started making small batches at home. As they experimented, they mastered several niche recipes including a key lime...
-
Starting with acetylene as your only source of carbon atoms, identify how you would prepare each member of the following homologous series of aldehydes: a. Ethanal b. Propanal c. Butanal d. Pentanal
-
Return on communications investment is more important a measure than the effects of communication on behaviour". Explain what this means.
-
How does Web advertising work to target ads for individuals? How can users avoid targeted ads?
-
The 23 rd Fibonacci number is 28,657 and the 24 th is 46,368 . Show that the ratio of the 24 th and 23 rd Fibonacci numbers is approximately \(\phi\). Round your answer to the nearest thousandth.
-
Sandy is asked to produce 250 squidgets an hour. It takes 30 minutes to receive the necessary material from the previous workstation. Each output container holds 25 squidgets. The factory currently...
-
other departments, compute the amount of maintenance cost allocated to the Cutting Department. ( Do not round your intermediate computations. ) \ table [ [ Department , Direct Expenses,Square...
-
You are now going to do a simple breakeven point for number of passengers on a flight for the years 20x4 to 20x6. Go to the worksheet that says Template for DB 3.2. Complete the breakeven analysis...
-
The negative (deficit) balance in a partner's capital account is closed to zero Multiple choice question. only if the partner makes a contribution to the partnership to offset the deficit capital...
-
The surface area of an adult human is about 1.8 m^2. Suppose aperson with a skin temperature of 34C is standing nude in a roomwhere the air is 25C but the walls are 17C. There is a \"dead-air\"layer...
-
Base on the California High-Speed Rail, craft a public finance dilemma to the governor. Including the following: Executive Summary Analysis of Expenditure: What are expenditures? What programs are...
-
discuss the ecological consequences of organismal movement and dispersal, including the effects on population dynamics, community structure, and spatial patterns of biodiversity, as well as the...
-
To reduce their firm's carbon footprint, the ACME company implements a policy where each employee who passes an online environmental literacy test receives a 1% salary increase. Why might this policy...
-
examine the internal environment of Blue Nile Inc., by reviewing the current situation in terms of current performance and strategic posture; as well as the corporate governance by understanding the...
-
((x - 1)y" + y' + y = ex Consider the initial-value problem y(1) = 1 y' (1)=-1 Does the Existence and Uniqueness Theorem guarantee the existence of a unique solution to this initial-v problem?...
-
Explain the circumstances that could result in a long-term bank loan being shown in a statement of financial position as a current liability.
-
Tree, Inc. has held a 10percent interest in the stock of Limb Company for several years. Because of the level of ownership, this investment has been accounted for using the fair-value method. At the...
-
On October 2, 2010, The Coca-Cola Company acquired the 67 percent of CCEs North American business that was not already owned by the company for consideration of $6.84 billion that included: The...
-
A partnership has the following capital balances: Carpenter (40% of gains and losses) . . . . . . . . . . . $140,000 Dane (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280,000...
-
Discuss the ethical choices in the situations below. In each instance, describe the ethical dilemma, determine the alternative courses of action, and tell what you would do. 1. You are the payroll...
-
The summer after finishing her junior year in college, Beth Murphy started a lawn service business in her neighborhood. On June 1, she deposited $2,700 in a new bank account in the name of her...
-
H&R Block, Inc. is a well-known income tax services firm. Information for 2004 and 2003 from the companys annual report is presented below.16 (All numbers are in thousands.) Three students who were...
Study smarter with the SolutionInn App