On January 1, 2020, Sylvestor, Inc., paid $400,000 for a 20% interest in Happiness Corporation. This investee had assets with a book value of $1,500,000 and liabilities of $700,000. A patent held by Happiness was undervalued by $150,000. The patent had a ten year remaining life. Any goodwill associated with this acquisition is considered to have an indefinite life. During 2020, Happiness reported income of $200,000 and paid dividends of $80,000 while in 2021 it reported income of $230,000 and dividends of $100,000. What is the balance in Equity Investment at December 31, 2021? Select one: A. $444,000 B. $459,000 C. $450,000 D. $420,000

Renner Company sold land to Bethany Enterprises, its parent, on June 1, 2020. The sale price was $218,000. The land originally cost Renner $239,000. Renner reported net income of $400,000 and $496,000 for 2020 and 2021, respectively. Bethany sold the land it purchased from Renner for $228,000 in 2022. What is the consolidated amount of gain or loss on sale of land for 2022? Select one: A. $10,000 loss B. $21,000 loss C. $10,000 gain D. $11,000 loss

The main difference between a "basket purchase" of net assets and an acquisition of net assets that qualifies as a business is that: Select one: A. In an acquisition of net assets that qualifies as a business, the assets are not actually recorded on the investor's books. B. In an acquisition of net assets that qualifies as a business, all assets are valued at full fair value regardless of purchase price; while in a "basket purchase" of net assets the purchase price is allocated to the various assets. C. There is no difference in the accounting for the two types of transactions. D. In a "basket purchase" of net assets, the assets are valued at fair value while in an acquisition of net assets that qualifies as a business, assets are recorded at book values.

Bond Company sells inventory to its subsidiary, Esquivel Company, at a profit during 2020. If Bond uses the equity method to account for its equity investment in Esquivel, which of the following would be credited in the consolidated worksheet for 2021? Select one: A. Cost of goods sold B. Equity investment C. Inventory D. Sales

Faith Company acquired 100% of Installed Components by issuing 200,000 shares of its $2 par value stock. The market value of the stock is $20 per share. Faith also paid $20,000 in consulting fees related to the acquisition. Faith's journal entry to record the acquisition would include: Select one: A. A credit to common stock, $4,000,000 B. A debit to Equity Investment, $4,020,000 C. A credit to cash, $4,020,000 D. A credit to additional paid-in-capital, $3,600,000