Question
The following information applies to the following 3 Questions: On January 1, 2020, Coldspring Corp. paid $770,000 to acquire Whitt Co. Coldspring used the equity
The following information applies to the following 3 Questions:
On January 1, 2020, Coldspring Corp. paid $770,000 to acquire Whitt Co. Coldspring used the equity method to account for the investment. The following information is available for the assets, liabilities, and stockholders' equity accounts of Whitt:
| Book Value | Fair Value | |
| Current assets | $95,000 | $95,000 |
| Land | 95,000 | 120,000 |
| Building (twenty year life) | 255,000 | 310,000 |
| Equipment (five year life) | 185,000 | 190,000 |
| Current liabilities | 40,000 | 40,000 |
| Long-term liabilities | 65,000 | 65,000 |
| Common stock | 140,000 | |
| Additional paid-in capital | 300,000 | |
| Retained earnings | 210,000 |
Whitt earned net income for 2020 of $125,000 and paid dividends of $18,000 during the year.
11. What is the AAP amortization expense for 2020?
a. $3,750 Debit
b. $1,750 Debit
c. $3,750 Credit
d. $1,750 Credit
12. For 2020, what is the balance in Equity Income on Coldspring’s books?
a. $121,250
b. $125,000
c. $128,750
d. $143,000
13. What is the balance in Equity Investment at the end of 2020?
a. $873,250
b. $877,000
c. $891,250
d. $895,000
Step by Step Solution
3.39 Rating (152 Votes )
There are 3 Steps involved in it
Step: 1
To answer the questions we need to calculate the amortization expense using the equity method and determine the balances in Equity Income and Equity I...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
8th Edition
1285190904, 978-1305176348, 1305176340, 978-1285190907
