Rit Corporation paid $1,372,000 for a 30 percent interest in Tel Corporations outstanding voting stock on April
Question:
Income before extraordinary item $480,000
Extraordinary gain, December 2011 160,000
Net income $640,000
REQUIRED: Determine the following items for Rit:
1. Goodwill from the investment in Tel
2. Income from Tel for 2011
3. Investment in Tel account balance at December 31, 2011
4. Rit’s equity in Tel’s net assets at December 31, 2011
5. The amount of extraordinary gain that Rit will show on its 2011 income statement
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
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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Related Book For
Advanced Accounting
ISBN: 9780132568968
11th Edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
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