Advanced Accounting, need solutions for problems attached below

Accounting 311 Practice Midterm Instructions: Complete the problems below on separate sheets of paper and bring them to my desk before the start of the review class. A maximum of 3 points will be added to your midterm grade. It is not necessary to re-write the questions or or to use Excel. Students arriving to class late will receive a maximum of 1 point added to their midterm grade when they show me at the end of class (unless done in excel), Use the following information for problems 1-4. On January 1, 2012, Adams acquires 100% of Baker in a transaction accounted for using the acquisition method. Adams will use equity accounting for its investment in Baker. Baker will remain a wholly owned subsidiary of Adams. The following is information about this acquisition. To pay for this purchase, Adams issues 20,000 shares of common stock with a $5 par and $20 market value. Legal and accounting costs were $50,000. Stock issuance costs were $20,000. If Baker has net income of $50,000 in 2012, Adams will pay an additional $100,000. At acquisition date there is a 40% probability of this occurring. The book value of net assets acquired of Baker was $200,000 at acquisition date. Adams was willing to pay in excess of book value to acquire Baker because Baker had a building (10 year life) with a book value of $300,000 and a fair value of $340,000. Baker has $40,000 in net income in 2012 and pays a dividend of $30,000. Adams has $100,000 of net income in 2012 and pays a dividend of $70,000. 1. Prepare an investment analysis at date of acquisition, including the following: a. Calculate the amount debited to the investment b. Calculate the premium over book value c. Determine the amount of goodwill or if it is a bargain purchase. d. How much is the excess depreciation that will be reflected as consolidation entry E in 2012 ? 2. How much are consolidated dividends in 2012 ? 3. At December 31, 2014 assume Adams has Buildings with a book value of $500,000 and fair value of $600,000 and Baker has Buildings with a book value of $400,000 and a fair value of $450,000. a. What is the CONSOLIDATED total for buildings at that date ? b. Prepare journal entry \"A\" that will show up on the consolidated worksheet as of December 31, 2014. 4. How much is consolidated Equity Income in 2012. 5. Fred owns 25% of Eaton and at January 1, 2013 has a balance in its Investment account of $40,000. In 2013 Eaton reports a net loss of $200,000. a. What is balance of Fred's Investment in Eaton at December 31, 2013 b. How much will Eaton need to earn in 2014 before Fred can return to using the equity method 6. Regency owns 5% of Marriott. On October 1, 2012 Regency acquires an additional 25% of Marriott bringing its ownership percentage up to 30%. From January 1 - September 30, 2012 Marriott earns $100,000. From October 1, December 31 2012 Marriott earns $40,000. What is the total income reported by Regency in 2012. 7. Roberts owns 40% of Simpson. On April 1, 2012 Roberts reduces its ownership of Simpson to 10%. From January 1-March 31 Simpson earns $80,000 and pays dividends of $30,000. From April 1- December 31 Simpson earns $300,000 and pays dividends of $100,000. What is the total income reported by Roberts in 2012 8. On January 1, 2012 Hand acquires 40% ownership of Foot. At acquisition date, Foot had equipment with a book value of $100,000 and a fair value of $160,000. The remaining useful life is 4 years. What is the amount of amortization (debit to equity earnings) that will be recognized in 2012 ? 9. Pez owns 30% of Rollo. In 2012, Pez sells inventory costing $100,000 to Rollo for $150,000. At December 31, 2012 $60,000 of this inventory was still held by Rollo and is sold in 2013. In 2013, Pez sells inventory costing $200,000 to Rollo for $250,000. At December 31, 2013 $60,000 of this inventory is still held by Rollo. In 2013, Rollo reports net income of $80,000. How much equity income is reported by Pez in 2013 ? 10. Harry owns 25% of David. On January 1, 2012 Harry's investment account has a balance of $500,000. On that date, Harry sells 30% of its investment for $200,000. a. What is the balance in the investment account after sale b. What is the gain or loss on sale recorded by Harry. 11. On January 1, 2012 Roberts purchases 100% of Smith for $800,000 cash. At acquisition date, Roberts had book value of net assets of $600,000 and Smith had a book value of net assets of $700,000. Roberts owned a building with a book value of $200,000 and a fair value of $300,000 and Smith owned a building with a book value of $100,000 and a fair value of $300,000. How much is consolidated goodwill or if it is a bargain purchase, how much is the bargain amount. 12. a. Fast owns 100% of Slow and had recorded $700,000 of goodwill from acquiring Slow many years ago. It is now 3 years later and the fair value of Slow is $1,300,000 and the book value of Slow inclusive of goodwill is $1,100,000. The implied value of goodwill is $650,000 and the book value of goodwill continues to be $700,000. What is the amount of goodwill impairment, if any. B. Assume same facts as part a. except that the fair value of Slow is $900,000 instead of $1,300,000. What is the amount of goodwill impairment, if any