Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer part A and B. Petra Corporation paid $500,000 for 80% of the outstanding voting common stock of Sizable Corporation on January 2, 2022

Please answer part A and B.

Petra Corporation paid $500,000 for 80% of the outstanding voting common stock of Sizable Corporation on January 2, 2022 when the book value of Sizable's net assets was $460,000. The fair values of Sizable's identifiable net assets were equal to their book values except as indicated below.

Book Value Fair Value
Inventories (sold in 2022) $80,000 $112,000
Buildings-net (15-year life) 200,000 170,000
Note Payable (paid in 2022) 20,000 21,250

Requirement:

Sizable reported net income of $75,000 during 2022; dividends of $35,000 were declared and paid during the year.

Part A) Determine Petra's income from Sizable for 2022.

a. 39,000

b. 38,000

c. 37,000

d. 36,000

Part B) Determine the correct balance in the Investment in Sizable account as of December 31, 2022.

a. 500,000

b. 503,000

c. 506,000

d. 509,000

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

Internal Audit Leadership Elevating The Internal Audit Function To Accelerate Value

Authors: Patricia Kaim

1st Edition

1032557168, 978-1032557168

More Books

Students also viewed these Accounting questions