Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Investment in Common Stock-Fair Value Less than Book Value JJJ Inc. purchased 35% of ABC Co. on January 4, 2,013, for $280,000 when ABCs book

Investment in Common Stock-Fair Value Less than Book Value

JJJ Inc. purchased 35% of ABC Co. on January 4, 2,013, for $280,000 when ABCs book value was $810,000. On that day, the fair value of the net assets of ABC equaled their book values with the following exceptions:

Book Fair Value
Equipment $175,000 $140,000
Buildings $40,000 $65,000

The equipment has a remaining useful life of 10 years, and the building has a remaining useful life of 20 years. ABC reported the following related to operations for 2,013 and 2,014:

Net income (loss) Dividends
2013 $80,000 $15,000
2014 ($10,000)

$8,000

Provide the entries made by JJJ Inc. relating to its investment in ABC for the year 2,013. Round to the nearest dollar.

To record the initial purchase of 35% of

the stock of ABC.

To record 35% of the reported net income of

ABC.

To record the receipt of the dividends from ABC.

To record the amortization of excess book value.

Provide the entries made by JJJ Inc. relating to its investment in ABC for the year 2,014. Round to the nearest dollar.

To record 35% of the reported net loss of ABC.

To record the receipt of the dividends from ABC.

To record the amortization of excess book value.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Auditing Note Book Journal Notes Checklist Questions Observations Evidence Log

Authors: Just Visualize It, The Quality Guy

1st Edition

1726688402, 978-1726688406

More Books

Students also viewed these Accounting questions