Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1 , Year 7 , the the Vine Company purchased 60 060 of the 50 609 ordinary shares of the Devine Company hares

image text in transcribed
image text in transcribed
On January 1 , Year 7 , the the Vine Company purchased 60 060 of the 50 609 ordinary shares of the Devine Company hares of 53 410,090 , and retained earnings of $2 170 000 When acquired Devine had inventories with fair values $301 090 less than carrying amount , a parcel of land with a When acquired , Devin had inventories with fair values 530 fair value $270 050 greater than the c arrving amount , and equipment with a fair value 5270,000 less than carrying amount . There were also internally generated patents with an estimated market value of $470 090 $470 090 and a five - year remaining life . A long-term liability had a market value S1 70 000 greater than carrying amount , this liability was paid off December 31 Year 10 All other identifiable assets and liabilities of Devine had fair val had fair values equal to their carving amounts . Devine's accum ulated depreciation on the plant and equipment was $570 090 at the date of acquisition . At the acquisition date , the equipment had an expected remaining useful life of ten years . Both companies use the straight - line method for all depreciation and amortization calculations and the FIFO inventory cost flow assumption . Assume a 409 income tax rate on all applicable Items and that there were no impairment losses for goodwill . On September 1 Year 1 , D evine sold a parcel of land to Vine and recorded a total non- operating gain of 5470 090 Sales of finished goods from Vine to Devine totalled 51 070 000 in Year 10 and 52 070.000 in Year 11 . These sales were priced to provide a gross profit margin on selling price of 337 390 to the Vine Company . D 3 . Devine's December 31 Year 10 inventory contained 5321 5321 00 of these sales , December 31 Year 11 inventory contained $62 1090 of these Page 384 Sales of finished goods from Devine to Vine were $970 000 in Year 10 and S1 270 0 10 in Year 11 These sales were priced to provide a gross profit margin on selling price of 4096 to the Devine Company . Vine's December 31 . Year 10 inventory contained 5170 000 of these sales the December 31 Year 11 inventory contained 5570 000 of these Vine's investment in Devine's account is carried in accordance with the cost method and includes advances to Devine of 5270 000 which are also included in current liabilities There are no intercompany amounts other than those noted , except for the di Vidends of $500 0 0 ( total amount ) declared and paid by Devine COME STATEMENT For year ending December 31 , Year It ( in thousands of dollars ) Vine Devine $13000 54 400 Dividends , investment income , and gains 1.800 2400 Total income 14, 800 Cost of goods sold 10.100 Other expenses Income taxes Total expenses 10.800 3600 5 40001 1 53.200 TATEMENTS OF FINANCIAL POSITION December 31 Year 11 ( in thousands of dollars )

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Auditing Cases An Active Learning Approach

Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt

2nd Edition

0130674842, 978-0130674845

Students also viewed these Accounting questions