Big Guy Inc. purchased 80% of the outstanding voting shares of Humble Corp. for $360,000 on...

         

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Big Guy Inc. purchased 80% of the outstanding voting shares of Humble Corp. for $360,000 on July 1, 2017. On that date, Humble Corp. had common shares and retained earnings worth $180,000 and $90,000, respectively. The equipment had a remaining useful life of 5 years from the date of acquisition. Humble's bonds mature on July 1, 2027. Both companies use straight line amortization, and no salvage value is assumed for assets. The trademark is assumed to have an indefinite useful life. Goodwill is tested annually for impairment. The balance sheets of both companies, as well as Humble's fair market values on the date of acquisition are disclosed below. Big Guy Humble Humble acquisition are disclosed below: Cash Accounts Receivable Inventory Equipment (net) Trademark Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Big Guy (carrying value) $800,000 $240,000 $60,000 $900,000 $2,000,000 $200,000 $260.000 $900,000 $640,000 $2,000,000 Humble (carrying value) $245,000 $40,000 $45,000 $80,000 $90,000 $500,000 $160,000 $70,000 $180,000 $90,000 $500,000 Humble (fair value) $245,000 $40,000 $50,000 $72,000 $193,000 $160,000 $40,000 The following are the financial statements for both companies for the fiscal year ended The following are the financial statements for both companies for the fiscal year ended June 30, 2020: Income Statements: Sales Investment Revenue Less: Expenses: Cost of Goods Sold Depreciation Interest Expense Other Expenses Net Income Big Guy $640,000 $8,480 $300.000 $81,000 $34,000 $5,000 $228,480 Humble $240,000 $160,000 $34.000 $26,000 $8.000 $12,000 Retained Earnings Statements Balance, July 1, 2019 Net Income Dividends Balance, June 30, 2020 Big Guy $960,560 $228,480 $20.000 $1,169,040 Humble $48,000 $12,000 $2.000 $58,000 Balance Sheets Cash Accounts Receivable Investment in Humble Inventory Equipment (net) Trademark Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Big Guy $1,200,000 $270,000 $319,040 $70,000 $820,000 $2.679,040 $350,000 $260,000 $900,000 $1.169,040 $2.679.040 Humble $365,000 $55,000 $70,000 $65,000 $85.000 $640,000 $332,000 $70,000 $180,000 $58,000 $640,000 An impairment test conducted in September 2018 on Big Guy's goodwill resulted in an impairment loss of $10,000 being recorded. Both companies use a FIFO system, and Humble's entire inventory on the date of acquisition was sold during the following year. During 2020. Humble Inc. borrowed $20,000 in cash from Big Guy Inc. interest free to finance its operations. Big Guy uses the Equity Method to account for its investment in Humble Corp. Assume that the fair value enterprise (FVE) method applies. www Naud The amount of depreciation expense appearing on Big Guy's June 30, 2020 consolidated income statement would be Multiple Choice $113,400 $113.720 $15,000 $116.280 < Prev 3 of 8 Next > What amount would appear as Big Guy's investment in Humble Corp. on its June 30, 2020 consolidated balance sheet? Multiple Choice $9,600. $12,000. $360,000. The Investment in Humble Account would not appear on the consolidated balance sheet What amount of dividends would appear on Big Guy's consolidated statement of retained earnings as at June 30, 2020? Multiple Choice O $2,000. O $20,000 $21,600 $22.000 The amount of Current Liabilities appearing on Big Guy's consolidated balance sheet as at June 30, 2020 would be: Multiple Choice O $350,000 O $630,000 $662,000. O $682,000. Big Guy Inc. purchased 80% of the outstanding voting shares of Humble Corp. for $360,000 on July 1, 2017. On that date, Humble Corp. had common shares and retained earnings worth $180,000 and $90,000, respectively. The equipment had a remaining useful life of 5 years from the date of acquisition. Humble's bonds mature on July 1, 2027. Both companies use straight line amortization, and no salvage value is assumed for assets. The trademark is assumed to have an indefinite useful life. Goodwill is tested annually for impairment. The balance sheets of both companies, as well as Humble's fair market values on the date of acquisition are disclosed below. Big Guy Humble Humble acquisition are disclosed below: Cash Accounts Receivable Inventory Equipment (net) Trademark Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Big Guy (carrying value) $800,000 $240,000 $60,000 $900,000 $2,000,000 $200,000 $260.000 $900,000 $640,000 $2,000,000 Humble (carrying value) $245,000 $40,000 $45,000 $80,000 $90,000 $500,000 $160,000 $70,000 $180,000 $90,000 $500,000 Humble (fair value) $245,000 $40,000 $50,000 $72,000 $193,000 $160,000 $40,000 The following are the financial statements for both companies for the fiscal year ended The following are the financial statements for both companies for the fiscal year ended June 30, 2020: Income Statements: Sales Investment Revenue Less: Expenses: Cost of Goods Sold Depreciation Interest Expense Other Expenses Net Income Big Guy $640,000 $8,480 $300.000 $81,000 $34,000 $5,000 $228,480 Humble $240,000 $160,000 $34.000 $26,000 $8.000 $12,000 Retained Earnings Statements Balance, July 1, 2019 Net Income Dividends Balance, June 30, 2020 Big Guy $960,560 $228,480 $20.000 $1,169,040 Humble $48,000 $12,000 $2.000 $58,000 Balance Sheets Cash Accounts Receivable Investment in Humble Inventory Equipment (net) Trademark Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Big Guy $1,200,000 $270,000 $319,040 $70,000 $820,000 $2.679,040 $350,000 $260,000 $900,000 $1.169,040 $2.679.040 Humble $365,000 $55,000 $70,000 $65,000 $85.000 $640,000 $332,000 $70,000 $180,000 $58,000 $640,000 An impairment test conducted in September 2018 on Big Guy's goodwill resulted in an impairment loss of $10,000 being recorded. Both companies use a FIFO system, and Humble's entire inventory on the date of acquisition was sold during the following year. During 2020. Humble Inc. borrowed $20,000 in cash from Big Guy Inc. interest free to finance its operations. Big Guy uses the Equity Method to account for its investment in Humble Corp. Assume that the fair value enterprise (FVE) method applies. www Naud The amount of depreciation expense appearing on Big Guy's June 30, 2020 consolidated income statement would be Multiple Choice $113,400 $113.720 $15,000 $116.280 < Prev 3 of 8 Next > What amount would appear as Big Guy's investment in Humble Corp. on its June 30, 2020 consolidated balance sheet? Multiple Choice $9,600. $12,000. $360,000. The Investment in Humble Account would not appear on the consolidated balance sheet What amount of dividends would appear on Big Guy's consolidated statement of retained earnings as at June 30, 2020? Multiple Choice O $2,000. O $20,000 $21,600 $22.000 The amount of Current Liabilities appearing on Big Guy's consolidated balance sheet as at June 30, 2020 would be: Multiple Choice O $350,000 O $630,000 $662,000. O $682,000.