Question
On January 1, 2018, Jackie Corp. purchased 40% of the voting common stock of Rob Co., paying $3,000,000. Jackie properly accounts for this investment using
On January 1, 2018, Jackie Corp. purchased 40% of the voting common stock of Rob Co., paying $3,000,000. Jackie properly accounts for this investment using the equity method. At the time of the investment, Rob's total stockholders' equity was $5,000,000. Jackie gathered the following information about Rob's assets and liabilities whose book values and fair values differed: Buildings - 20 year life Book Value $1,000,000 Fair Value $1,800,000 Equipment - 5 years life Book Value $1,500,000 Fair Value $2,000,000 Franchises 10 year life Book Value $0 Fair Value $ 700,000 Any excess of cost over fair value was attributed to goodwill, which has not been impaired. Rob Co. reported net income of $400,000 for 2008, and paid dividends of $200,000 during that year.
1. What is the amount of excess amortization expense for Jackie Corp's investment in Rob Co. for the first year??? $0. $30,000. $40,000. $55,000. $60,000.
2. How much goodwill is assosiated with this investment????? $500000 $0 $650000 $1000000 (need calculation)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started