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Session 7 Chapter Test StudentVersion.docx-Word View DVMO Label Tell me what you want to do ACROBAT -- Normal 1 No Spac... Heading 1 Heading 2
Session 7 Chapter Test StudentVersion.docx-Word View DVMO Label Tell me what you want to do ACROBAT -- Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtie Em... Emphasis Intense E. . Strong Quot Paragraph Styles 25, Purch aser Corporation acquires 30% of the outstanding voting common shares of the Investee Corporation for $600,000. Purchaser Corporation acquires the investment buying previously issued shares of Investee Corporation from other investors. When Corporation acquired 30% of Investee Corporation's common shares for $600,000. Investee Corporation's total shareholders" carrying value of the net assets acquired by $150,000 [ $600,000 (0.30 x S in Investee Corporation by Purchaser equity was $1.5 million. Purchaser Corporation's cost exceeds the 1,500.000)). Purchaser Corporation attributes the $150,000 ex cess purchase price as follows: $100,000 to remeasure buildings and equipment to fair value and $50,000 to goodwill. Which of the following is/are true? a. Purchaser Corporation does not reclassify this excess out of its Investment in Stock of Investee Corporation account to Buildings and Equipment and to Goodwill. b. Purc haser Corporation must amortize (or depreciate) any amount attributed to assets with limited lives. c. Purchaser Corporation must depreciate the $100,000 attributed to buildings and equipment over their remaining useful lives d. U.S. GAAP and IFRS do not permit the investor to amortize the excess purchase price attributed to goodwill and other assets with indefinite lives. Instead, the investor must test the investment account annually for possible impairment. e. all of the above Pagou Corporation acquires 30% of the outstanding voting common shares of the Inform Corporation for $600,000. Pagoli Corporation acquires the investment in Inform Corporation by buying previously issued shares of Inform Corporation from other investors Between the time of the acquisition and the end of Pagoli Corporation's next accounting period, Inform Corporation reports earnings of $80,000; and pays a dividend of S30,000 to holders of its common stock. 20. Inform Corporation reports earnings of s100,000 and pays dividends of $40,000 during the subsequent accounting period. Pagoli Corporation's Investment in Stock of Inform Corporation account now has a balance of a. S609,000 b. $621,000 c. $633,000 d. $642,000 e. $657,000
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