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QUESTION 4 Partially correct 8.00 points out of 13.00 Flag question Equity Method Investment Several Years after Acquisition On January 2, 2011, Best Beverages acquired
QUESTION 4 Partially correct 8.00 points out of 13.00 Flag question Equity Method Investment Several Years after Acquisition On January 2, 2011, Best Beverages acquired 27 percent of the stock of Better Bottlers for $18 million in cash. Best Beverages accounts for its investment using the equity method. At the time of acquisition, Better Bottlers' balance sheet was as follows (in millions): Better Bottlers Balance Sheet, January 2, 2011 in millions) Assets Current assets Property and equipment, net 249 Patents and trademarks Total assets Liabilities and equity Current liabilities Long-term debt Total liabilities Capital stock Retained earnings Total equity Total liabilities and equity $351 $12 90 351 25.2 310.8 336 7.8 15 Valuation of Better Bottlers' assets and liabilities revealed that its reported patents and trademarks (12-year life) had a fair value of $96 million and it had unrecognized brand names (18-year life) worth $5.4 million. Better Bottlers' December 31, 2014, retained earnings balance is $15 million. For 2014, it reported net income of $1.5 million and paid $390,000 in dividends. For all answers below, enter the complete figures using all zeros. For example, $1 million should be entered as 1,000,000. QUESTION 4 Partially correct 8.00 points out of 13.00 Flag question Equity Method Investment Several Years after Acquisition On January 2, 2011, Best Beverages acquired 27 percent of the stock of Better Bottlers for $18 million in cash. Best Beverages accounts for its investment using the equity method. At the time of acquisition, Better Bottlers' balance sheet was as follows (in millions): Better Bottlers Balance Sheet, January 2, 2011 in millions) Assets Current assets Property and equipment, net 249 Patents and trademarks Total assets Liabilities and equity Current liabilities Long-term debt Total liabilities Capital stock Retained earnings Total equity Total liabilities and equity $351 $12 90 351 25.2 310.8 336 7.8 15 Valuation of Better Bottlers' assets and liabilities revealed that its reported patents and trademarks (12-year life) had a fair value of $96 million and it had unrecognized brand names (18-year life) worth $5.4 million. Better Bottlers' December 31, 2014, retained earnings balance is $15 million. For 2014, it reported net income of $1.5 million and paid $390,000 in dividends. For all answers below, enter the complete figures using all zeros. For example, $1 million should be entered as 1,000,000
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