Question
Tyler Company acquired all of Jasmine Companys outstanding stock on January 1, 2016, for $328,100 in cash. Jasmine had a book value of only $256,100
Tyler Company acquired all of Jasmine Companys outstanding stock on January 1, 2016, for $328,100 in cash. Jasmine had a book value of only $256,100 on that date. However, equipment (having an eight-year remaining life) was undervalued by $68,800 on Jasmines financial records. A building with a 20-year remaining life was overvalued by $17,900. Subsequent to the acquisition, Jasmine reported the following:
| Net Income | Dividends Declared | |||||
| 2016 | $ | 53,500 | $ | 10,000 | ||
| 2017 | 63,500 | 40,000 | ||||
| 2018 | 34,500 | 20,000 | ||||
In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:
| Tyler Company | Jasmine Company | ||||||
| Revenuesoperating | $ | (385,000 | ) | $ | (163,000 | ) | |
| Expenses | 260,000 | 128,500 | |||||
| Equipment (net) | 414,000 | 85,500 | |||||
| Buildings (net) | 250,000 | 94,500 | |||||
| Common stock | (290,000 | ) | (67,500 | ) | |||
| Retained earnings, 12/31/18 | (480,000 | ) | (259,000 | ) | |||
Determine the following account balances as of December 31, 2018:
Tyler Company acquired all of Jasmine Companys outstanding stock on January 1, 2016, for $328,100 in cash. Jasmine had a book value of only $256,100 on that date. However, equipment (having an eight-year remaining life) was undervalued by $68,800 on Jasmines financial records. A building with a 20-year remaining life was overvalued by $17,900. Subsequent to the acquisition, Jasmine reported the following:
| Net Income | Dividends Declared | |||||
| 2016 | $ | 53,500 | $ | 10,000 | ||
| 2017 | 63,500 | 40,000 | ||||
| 2018 | 34,500 | 20,000 | ||||
In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:
| Tyler Company | Jasmine Company | ||||||
| Revenuesoperating | $ | (385,000 | ) | $ | (163,000 | ) | |
| Expenses | 260,000 | 128,500 | |||||
| Equipment (net) | 414,000 | 85,500 | |||||
| Buildings (net) | 250,000 | 94,500 | |||||
| Common stock | (290,000 | ) | (67,500 | ) | |||
| Retained earnings, 12/31/18 | (480,000 | ) | (259,000 | ) | |||
Determine the following account balances as of December 31, 2018:
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Using Accounting & Financial InformationAnalyzing, Forecasting, And Decision Making
Authors: Mark S. Bettner
2nd Edition
1947098683, 9781947098688
