Consolidation at End fo First Year

QUESTION 1 Incorrect 0.00 points out of 1.00P Flag question On January 1, 2014, Portland Company acquired all of Salem Company's voting stock for $18,000,000 in cash. Some of Salem's assets and liabilities at the date of purchase had fair values that differed from reported values, as follows: Book value Fair value $12,000,000 $3,000,000 0 12,500,000 Buildings and equipment, net (20 years, straight-line) Identifi able intangibles (5 years, straight-line) Salem's total stockholders' equity at january 1, 2014, was $5,000,000. It is now December 31,2017 (four years later). Salem's retained earnings reflect the accumulation of net income less dividends; there have been no other changes in its retained earnings. Salem does not report any other comprehensive income. Cumulative goodwill impairment to the beginning of 2017 is $1,500,000. Goodwill impairment for 2017 is $500,000. Portland uses the complete equity method to account for its investment. The December 31, 2017, trial balance for Salem appears below. Salem Dr (Cr) $3,500,000 27,000,000 (11,500,000) (2,000,000) (14,000,000) (15,000,000) 7,500,000 4,500,000 Current assets Plant assets, net Liabilities Capital stock Retained earnings, January 1 Sales revenue Cost of goods sold Operating expenses What is 2017 equity in net income of Salem, reported on Portland's books using the complete equity method? $ 450,000 950,000 $500,000 $3,000,000x QUESTION 1 Incorrect 0.00 points out of 1.00P Flag question On January 1, 2014, Portland Company acquired all of Salem Company's voting stock for $18,000,000 in cash. Some of Salem's assets and liabilities at the date of purchase had fair values that differed from reported values, as follows: Book value Fair value $12,000,000 $3,000,000 0 12,500,000 Buildings and equipment, net (20 years, straight-line) Identifi able intangibles (5 years, straight-line) Salem's total stockholders' equity at january 1, 2014, was $5,000,000. It is now December 31,2017 (four years later). Salem's retained earnings reflect the accumulation of net income less dividends; there have been no other changes in its retained earnings. Salem does not report any other comprehensive income. Cumulative goodwill impairment to the beginning of 2017 is $1,500,000. Goodwill impairment for 2017 is $500,000. Portland uses the complete equity method to account for its investment. The December 31, 2017, trial balance for Salem appears below. Salem Dr (Cr) $3,500,000 27,000,000 (11,500,000) (2,000,000) (14,000,000) (15,000,000) 7,500,000 4,500,000 Current assets Plant assets, net Liabilities Capital stock Retained earnings, January 1 Sales revenue Cost of goods sold Operating expenses What is 2017 equity in net income of Salem, reported on Portland's books using the complete equity method? $ 450,000 950,000 $500,000 $3,000,000x