Champos Corporation is a foreign corporation that was formed on June 30, 2015. On July 1, 2016,
Question:
Monetary net assets ............. 200,000 FC
Inventory ................. 150,000
Depreciable assets (net) ........... 950,000
Land .................. 500,000
Total ................. 1,800,000
For the 6-month period ending December 31, 2016, Champos reported the following condensed income statement:
Selected exchange rates are as follows:
June 30, 2015.. .. .. ... .... .. . . .. . .. .... .. .. .. . .. . . . . .. . . 1 FC = $1.05
December 31, 2015. .. . .. .. .. . . . . . .. .... .. .... . .. . . . . .. . . 1 FC = 1.10
July 1, 2016 . . ... .. ... .. .. . . . . .. . .. .. .. .... .. . .. . . .. . . . . 1 FC = 1.15
Second quarter 2016 average .. .. . . . .. .. .... .. ... . . .. . . . . .. 1 FC = 1.14
Third quarter 2016 average .... .. . . . .. .. .... .. ... . . .. . . . . .. 1 FC = 1.18
Fourth quarter 2016 average ... .. . . . .. .. .... .. ... . . .. . . . . .. 1 FC = 1.20
Last six months of 2016 average. .. . . . .. .. .... .. ... . . .. . . . . 1 FC = 1.19
December 31, 2016. .. . .. .. .. . . . . . .. .... .. .... . .. . . . . .. . . 1 FC = 1.23
Campos employs the FIFO inventory method, and inventory layers during the second half of 2016 consisted of the following: 150,000 FC, 220,000 FC, and 210,000 FC, acquired during the second through fourth quarters of 2016, respectively. All depreciable assets were acquired on June 30, 2015. Of the excess over book value paid by Magnum Ventures, $54,000 is to be allocated to depreciable assets with a remaining useful life of nine years, and the balance is traceable to goodwill. Determine the amount that Magnum Ventures should report for its investment in Champos Corporation as of December 31, 2016, under the sophisticated equity method.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng