On January 1, 2020, Random Company acquired 30 percent of the voting shares of Adam, Inc.,...
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On January 1, 2020, Random Company acquired 30 percent of the voting shares of Adam, Inc., for $4,400,000 in cash. Equity method is applied to account for investment. The January 1, 2020, carrying amounts and corresponding fair values for Adam's assets and liabilities follow. Any consideration transferred over the fair value of identifiable net assets are allocated to goodwill. Carrying Amount $195,000 5,765,000 Cash and receivables Computing equipment Patented technology Trademark Liabilities. Goodwill has indefinite useful life. 2020 $ 2021 185,000 235,000 (270,000) Req A During the following two years, Adam reported net income and dividends as follows: Net Income Dividends Declared 1,970,000 $ 2,155,000 Req B and C Fair Value $195,000 7,060,000 4,170,000 2,170,000 (270,000) How much is attributable to goodwill? Goodwill $ 402,500 Required: a. How much of Random's $4,400,000 payment for Adam is attributable to goodwill? b. What amount should Random report for its Equity in Investee's Income on its income statements for 2020 and 2021? c. What amount should Random report for its Investment in Investee on its balance sheets at the end of 2020 and 2021? Complete this question by entering your answers in the tabs below. 235,000 245,000 Useful life 7 years 3 years infinite < Req A Req B and C > On January 1, 2020, Random Company acquired 30 percent of the voting shares of Adam, Inc., for $4,400,000 in cash. Equity method is applied to account for investment. The January 1, 2020, carrying amounts and corresponding fair values for Adam's assets and liabilities follow. Any consideration transferred over the fair value of identifiable net assets are allocated to goodwill. Carrying Amount $195,000 5,765,000 Cash and receivables Computing equipment Patented technology Trademark Liabilities. Goodwill has indefinite useful life. 2020 $ 2021 185,000 235,000 (270,000) Req A During the following two years, Adam reported net income and dividends as follows: Net Income Dividends Declared 1,970,000 $ 2,155,000 Req B and C Fair Value $195,000 7,060,000 4,170,000 2,170,000 (270,000) How much is attributable to goodwill? Goodwill $ 402,500 Required: a. How much of Random's $4,400,000 payment for Adam is attributable to goodwill? b. What amount should Random report for its Equity in Investee's Income on its income statements for 2020 and 2021? c. What amount should Random report for its Investment in Investee on its balance sheets at the end of 2020 and 2021? Complete this question by entering your answers in the tabs below. 235,000 245,000 Useful life 7 years 3 years infinite < Req A Req B and C >
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Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
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