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modern advanced accounting
Advanced Accounting 3rd Edition Susan S. Hamlen - Solutions
On the 2017 consolidated income statement, the noncontrolling interest in net income of Starfruit is On January 1, 2015, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for \($91,700,000\) in cash. The fair value of the noncontrolling interest in Starfruit at the date of
If Pomegranate follows IFRS and uses the alternative method of valuing the noncontrolling interest, at the date of acquisition the noncontrolling interest in Starfruit appears in the equity section of the consolidated balance sheet in the amount of On January 1, 2015, Pomegranate Company acquired
If Pomegranate follows IFRS and uses the alternative method of valuing the noncontrolling interest, the 2017 noncontrolling interest in comprehensive income of Starfruit is On January 1, 2015, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for \($91,700,000\) in cash. The
At the date of acquisition, consolidation eliminating entry (R) credits the noncontrolling interest in Starfruit in the amount of Now assume Pomegranate paid only \($20,000,000\) to acquire 90% of Starfruit. The fair value of the noncontrolling interest at the date of acquisition was $2,000,000.On
On the 2017 consolidation working paper, eliminating entry (R) debits goodwill in the amount of Now assume Pomegranate paid only \($20,000,000\) to acquire 90% of Starfruit. The fair value of the noncontrolling interest at the date of acquisition was $2,000,000.On January 1, 2015, Pomegranate
Ponon Corporation acquired all of the stock of Santo Corporation on January 2, 2017, for \($25,000,000\) cash and debt. The book value of Santo's stockholders' equity was \($10,000,000\) and the resulting \($15,000,000\) excess of acquisition cost over book value was allocated as follows:The
Puffin Industries acquired all of Sunset Coast Digital’s stock on January 1, 2014, for \($3,500,000\), \($2,100,000\) in excess of book value. At that time, Sunset Coast’s inventory (LIFO) was overvalued by \($500,000\) and its plant assets (10-year life) were overvalued by \($1,000,000\). The
On January 2, 2016, Perkins Company acquired all of Sanders Corporation's stock for \($4,000,000\) cash, when the book value of Sanders' stockholders' equity was \($2,200,000\). Sanders reported \($500,000\) of net income and declared and paid appear below: dividends of \($150,000\) in 2016. Data
On January 1, 2016, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for \($1.8\) billion cash. Paxon uses the complete equity method to report its investment. The trial balances of Paxon and Saxon at December 31, 2016, are shown below:Several of Saxon’s assets and
Porter Corporation acquired Stewart Corporation on January 1, 2016, at a cost of \($160\) million. Stewart has three reporting units, Networks, Global Ser- vices, and Mobile Broadband. In addition, one of Porter's reporting units, U.S. Cellular, benefitted from the acquisition. Relevant data are as
In early 2015, Bowen Company acquired a new business unit in a merger. Allocation of the acquisition cost resulted in fair values assigned as follows:Impairment reviews at the end of 2015 and 2016 did not identify any impairment losses. After the business suffered a downturn during 2017, the
On January 1, 2014, Perth Company acquired all of Sharbot Company’s voting stock for \($16\) million in cash. Some of Sharbot’s identifiable assets at the date of acquisition had fair values that were different from reported values, as follows:Sharbot’s total stockholders’ equity at January
Following IFRS, Nokia Corporation allocates its goodwill to the cash-generating units that benefit from the business combinations generating the goodwill. In its 2013 Form 20-F, filed with the SEC, Nokia discloses the CGUs and the goodwill allocated to each (in millions):Nokia uses value-in-use to
On January 1,2015, Peerless Network acquired all of the stock of Sound Telecom for \($400\) million in cash. At the date of acquisition, Sound Telecom’s stockholders’ equity was as follows (in millions):An evaluation of Sound Telecom’s balance sheet at January 1, 2015, revealed that its plant
BT Group ple is a global British telecommunications services company headquartered in London. Its financial statements are prepared using IFRS. For the year ended 31 March 2014, BT Group reports the following identifiable intangible assets:Requireda. Of the four types of identifiable intangibles
In 2013, AB InBev acquired the remainder of the stock of Grupo Modelo, and began consolidating it as a wholly-owned subsidiary. Acquisition cost was \($34,008\) million. Grupo Modelo’s equity balances at the date of acquisition were as follows (in millions):Below is a summary of the
George Corporation acquired all of the stock of Johnson Corporation on January 2, 2016. The book value of the net assets of Johnson on that date was \($200\) million and the fair values of Johnson’s identifiable net assets equaled the book values, except for previously unreported developed
On July 1, 2016, Prestige Communications acquired all of the voting stock of Southern Light Technologies for \($300\) million in cash. At the date of acquisition, Southern Light's stockholders' equity accounts were as follows (in millions):At the date of acquisition, Southern Light’s inventories
Peak Entertainment acquires its 100-percent-owned subsidiary Saddlestone Inc. on January 1, 2016. In preparing to consolidate Peak and Saddlestone at December 31, 2016, you assemble the following information: Value of stock given up to acquire Saddlestone: \($10,000,000\). Direct merger costs:
During 2017, Peerless Company's wholly- owned subsidiary, Safeco Inc. reported net income of \($1,600,000\) and declared and paid dividends of \($600,000\). Peerless acquired Safeco on January 2, 2017, at a cash cost of \($8,000,000\), which was \($1,000,000\) in excess of the book value of net
Data for Planet Two Communications and its wholly-owned subsidiary, Stage 4 Networks, are given below. PlanetTwo acquired Stage 4 on January 1, 2009. PlanetTwo uses the complete equity method to report its investment in Stage 4, and its accounting year ends December 31.Requireda. Calculate the
On December 31, 2009, Adams Corporation acquired all of the stock of Baker Company. The fair value of Adams' shares used in the exchange was \($7,500,000\). At the time of acquisition, the book value of Baker's stockholders' equity was \($5,000,000\), and the fair value of Baker's building (25-year
In 2014, Time Warner, Inc. spun off its wholly owned unit, Time Inc., as an independent, publicly traded company. The spin-off was achieved by distributing new Time Inc. shares to the holders of Time Warner stock. The transaction was not taxable to Time Warner shareholders. Time Inc. is primarily
An acquisition takes place on January 1,2015. At December 31, 2015, you observe the following consolidation eliminating entries:Property and equipment and identifiable intangibles revaluations are written off on a straight-line basis, no residual value. Additional goodwill impairment losses of
International Foods, a U.S. company, acquired two companies in 2016. As a result, its consolidated financial statements include the following acquired intangibles:Goodwill was assigned to the following reporting units:It is now December 31, 2017, the end of International Foods’ accounting year.
When Parson Company acquired all of Soaper Company’s stock on July 1, 2016, Soaper’s inventory was undervalued by \($160,000,000\), plant assets with a 10-year life were overvalued by \($200,000,000\), and long-term debt which matures in five years was overvalued by \($100,000,000\). No
During the year ended July 27, 2013, Cisco Systems, Inc. acquired the following identifiable intangible assets through its purchase of two companies:Cisco acquired NDS Group at the beginning of fiscal 2013, and Meraki, Inc. at the end of the second quarter of fiscal 2013. Assume that Cisco
Pace acquired Saber on January 1, 2016, attributing its \($200\) million excess of acquisition cost over book value to identifiable intangible assets valued at \($40\) million, with a 5-year life, and to goodwill. At that time Saber's stockholders' equity was \($2,000\) million. It is now December
Pendragon Corporation acquired all of the stock of Sherwood, Inc. for \($400\) million in cash. Sherwood’s stockholders’ equity accounts at the date of acquisition were as follows:The following previously unreported assets of Sherwood were reported in the acquisition (in millions):Assume
International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2015. Amounts paid are as follows (in millions):The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following
On January 1, 2016, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for \($1.8\) billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, are shown below:Several of Saxon’s assets and liabilities had fair values that were different
Progressive Corporation acquired all of the outstanding stock of Static Company on June 30, 2016, by issuing 200,000 shares of its \($1\) par value common stock valued at \($75\) per share. Direct cash costs associated with the acquisition were \($60,000,\) and the cost of registering and issuing
During the period 2011-2013, Yahoo! Inc. made several acquisitions. Following is a summary of information from the footnotes to Yahoo's 2013 10-K report on the largest of these acquisitions. All numbers are in thousands.Assume that each acquiree's preacquisition balance sheet reports only tangible
Proha Company acquired all of Sonara Company's voting stock for \($40\) million cash. The book value of Sonara's net assets on that date was \($8\) million. The book values of Sonara's individual assets and liabilities approximated fair value, except for inventory, which was undervalued by \($2\)
In 2013, AB InBev acquired the remainder of the stock of Grupo Modelo that it did not previously own. AB InBev had previously reported its investment in Grupo Modelo using the equity method. All numbers below are in millions. Acquisition cost information is as follows:The following table summarizes
GM Financial, General Motors Company's financing segment, has special purpose entities that are consolidated in GM's financial statements. GM Financial transfers receivables and lease-related assets to these SPES, the SPEs issue notes, and use the cash collected from their transferred assets to pay
Piedmont Corporation acquired all of the voting stock of Stearns Company. Below is information on acquisition costs, and the separate balance sheets of Piedmont and Stearns, as well as the consolidated balance sheet, immediately after the acquisition. All amounts are in thousands.Requireda. Prepare
International Auto (IA) acquires all of the stock of Genuine Parts (GP) and reports the acquisition as a stock investment on its own books. The acquisition involves the following payments. All amounts are in thousands.The earnings contingency, if paid, will occur three years subsequent to the
Packard Industries acquires all of the stock of Steamobile Company for \($20\) million in cash, and reports the acquisition as a stock acquisition on its own books. The balance sheet accounts of Packard and Steamobile, immediately prior to the acquisition, are as follows (in thousands):Steamobile
On the 2017 consolidated working paper, eliminating entry (R) reduces Investment in Salem bya. \($3,100,000\)b. \($5,200,000 \)c. \($6,400,000 \) d. \($8,000,000 \)On January 1, 2014, Portland Company acquired all of Salem Company’s voting stock for \($16,000,000in\) cash. Some of
On the 2017 consolidation working paper, eliminating entry (O) increases consolidated operating expense.a. \($1,600,000 \)b. \($2,100,000\) c. \($2,900,000\)d. \($3,200,000 \)On January 1, 2014, Portland Company acquired all of Salem Company’s voting stock for \($16,000,000in\)
What is 2017 equity in net income of Salem, reported on Portland's books using the complete equity method?a. \($400,000\)b. \($900,000\)c. \($1,200,000\)d. \($2,500,000 \)On January 1, 2014, Portland Company acquired all of Salem Company’s voting stock for \($16,000,000in\) cash. Some of
On Portland’s December 31, 2017, trial balance, what is the balance in its Investment in Salem account, using the complete equity method?a. \($22,800,000\)b. \($23,200,000 \)c. \($23,600,000\)d. \($27,600,000 \)On January 1, 2014, Portland Company acquired all of Salem Company’s
Impairment loss for 2016 for the customer lists and brand names, following U.S. GAAP, isa. \($0 \)b. \($300,000\)c. \($1,800,000\)d. \($2,100,000\)A company reports the following intangibles at December 31, 2016, prior to impairment testing:The customer lists have a limited life, and amortization
Goodwill impairment loss for 2016, following U.S. GAAP, isa. \($6,000,000\)b. \($5,600,000\) c. \($2,200,000\)d. \($600,000 \)A company reports the following intangibles at December 31, 2016, prior to impairment testing:The customer lists have a limited life, and amortization expense
Goodwill impairment loss for 2016, following IFRS, isa. \($600,000 \)b. \($2,200,000\)c. \($5,600,000 \)d. \($6,000,000 \)A company reports the following intangibles at December 31, 2016, prior to impairment testing:The customer lists have a limited life, and amortization expense has
Impairment loss for 2016 for the customer lists and brand names, following IFRS, isa. \($0\)b. \($300,000\)c. \($1,800,000\)d. \($2,100,000 \)A company reports the following intangibles at December 31, 2016, prior to impairment testing:The customer lists have a limited life, and
Companies that invest in other companies often prefer using the equity method instead of consolidating their investments, because consolidating woulda. reduce their stockholders’ equity.b. reduce their reported net income and earnings per share.c. reduce their assets.d. increase their leverage
AUS. company consolidates a VIE with which it has a contractual relationship, but no equity investment. If the company and the entity were not previously under common control, at the date the company identifies the entity as a VIE that meets the requirements for consolidation, the U.S. company’s
The consolidation working paper at the date of acquisition takes the book value balances of a parent and subsidiary anda. eliminates the parent’s equity accounts and revalues the parent’s assets and liabilities to fair value.b. eliminates the subsidiary’s equity accounts and revalues the
Total acquisition cost reported by PR (the debit to Investment on PR’s books) isa. \($50,000\)b. \($50,200\)c. \($50,400\)d. \($50,600 \)PR Company pays \($10,000\) in cash and issues stock with a fair value of \($40,000\) to acquire all of SX Corporation’s stock. SX will be a
Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2015. Steel's condensed balance sheet on that date appears below (in millions):Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following
Presented below are the book values and fair values of the assets and liabilities of Axtel, Inc. and Barcel, Inc. on October 4, 2016, immediately prior to a business combination.Previously unreported identifiable intangibles, capitalized per GAAP, are: Axtel, Inc. \($25,000 \)Barcel, Inc.
In December 2013, FireEye, Inc. acquired all of the outstanding shares of privately held Mandiant Corporation, a provider of computer security products, for \($106,538,000\) in cash and 16,921,000 shares of FireEye common stock with a fair value of \($704,414,000\) and a par value of
All amounts are in millions. Invensus Corporation, headquartered in Germany, acquired Clearline Systems on January 1, 2016. Total acquisition cost was 60,000. Clearline's book value at the date of acquisition was 5,000. Clearline's reported assets and liabilities are on its books at amounts
Lisa Corporation made an offer to acquire the assets and assume the liabilities of Toga Corpo- ration. Toga's balance sheet as of December 31, 2016, appears below. Toga has no unrecorded identifiable intangible assets, liabilities or contingent liabilities. The market values of Toga's current
On January 2, 2017, Fisher Corporation acquired all of the voting common stock of Grant Corporation for its own stock worth \($10,000,000,\) in a merger Grant's condensed balance sheet on January 2, 2017, appears below: Requireda. Prepare the journal entry made by Fisher to record the acquisition
On January 2, 2015, Fiser, Inc. acquired Vixen Pharmaceuticals for \($1.25\) billion cash, in a merger. Vixen had two promising products for treating common infections under review by the U.S. Food and Drug Administration. The balance sheets of Fiser and Vixen reflect data immediately prior to the
In fiscal 2013, Avnet, Inc. acquired several companies. The following table summarizes the date-of-acquisition fair values of the net assets acquired (in thousands).Avnet incurred \($116,382\) thousand in out-of-pocket costs related to these acquisitions. Requireda. Avnet's disclosure of its
In mid-2013, Salesforce.com, Inc., a global leader in CRM (customer relationship management) services, acquired all of the outstanding stock of ExactTarget, a global provider of digital marketing technology. Acquisition cost consisted of the following (in thousands):Salesforce.com assumed
In 2013, the online travel company priceline.com, Inc. acquired KAYAK Corporation, a travel meta-search website. Amounts paid related to the acquisition were as follows (dollars in thousands):The fair values of identifiable assets acquired and liabilities assumed are listed below.Requireda.
PR recognizes previously unrecorded intangibles ofa. \($1,000\)b . \($5,000\) c. \($13,000\)d. \($15,000\) PR Company pays \($10,000\) in cash and issues no-par stock with a fair value of \($40,000\) to acquire all of SX Corporation’s net assets. SX’s balance sheet at the date of
PR credits capital stock in the amount ofa. \($40,000\)b. \($50,000\)c. \($39,600\)d. \($39,200\) PR Company pays \($10,000\) in cash and issues no-par stock with a fair value of \($40,000\) to acquire all of SX Corporation’s net assets. SX’s balance sheet at the date of acquisition is
PR records expenses ofa. \($0\)b. \($200\)c. \($400\)d. \($600\) PR Company pays \($10,000\) in cash and issues no-par stock with a fair value of \($40,000\) to acquire all of SX Corporation’s net assets. SX’s balance sheet at the date of acquisition is as follows:PR’s consultants
Three months after the acquisition, a fire damages SX’s equipment, reducing its fair value from \($6,000\) to \($4,000\). How does PR report this event?a. Loss of \($2,000\), reported on the income statementb. \($2,000\) increase in goodwillc. \($2,000\) increase in goodwilld. Not reported PR
Now assume the acquisition cost to PR is \($60,000\) (not the right answer). Other facts are the same as originally reported. Goodwill reported on this acquisition isa. \($35,600\) b. \($35,800\)c. \($44,400\)d. \($49,400\) PR Company pays \($10,000\) in cash and issues no-par stock
Now assume PR paid \($8,000\) in cash for SX’s net assets. There are no consultant fees, and no shares are issued. Assume that SX’s previously unrecorded intangible assets, capitalizable per GAAP, have a fair value of \($500\). PR records a bargain gain ofa. \($0\)b. \($3,100\)c.
Which one of the following is most likely to be reported as part of goodwill?a. Brand namesb. Broadcast rights c. Non-competition agreementsd. Favorable location
What is the current standard for reporting acquired in-process R&D?a. Not reported; becomes part of goodwillb. Capitalized as an asset only if it is more likely than not that the outcome will be a viable projectc. Capitalized as an asset only if it has a future alternative used. Capitalized as an
Which of the following items related to an acquired company is most likely to be recorded by the acquirer?a. Warranty liabilityb. Pending lawsuit, where the acquired company is the defendantc. Pending lawsuit, where the acquired company is the plaintiffd. Fines that might be assessed by
Values In 2016, Plummer Corporation acquired the net assets of Singer Company. The purchase price was \($85\) million. Plummer’s annual reports for 2016 and 2017 provide the following information (in millions):The change in acquisition cost is a reduction in the fair value of an earnings
Potluck Corp. acquired all of the net assets of Sauers Corp. on June 30, 2016, in an acquisition reported as a merger. The fair values of Sauers Corp.’s identifiable net assets at the date of acquisition are as follows:Potluck pays \($100\) million in cash and issues 1,500,000 shares of stock to
On January 3, 2015, Prance Corporation purchased all of the business operations of Step Corporation for \($10\) million cash. The acquisition is recorded as a merger. Step’s identifiable assets and liabilities are listed below at their fair values:The \($400,000\) estimated liability represented
As part of its acquisition of Broadvision Inc., Aircastle Corporation enters into the following agreements:1. After four years, Aircastle will pay the former shareholders of Broadvision an amount equal to 25% of the amount by which Broadvision’s total EBITDA over the four years exceeds \($100\)
In 2013, Flowers Foods, Inc. acquired certain assets of Hostess Brands, Inc., including the Wonder and Butternut bread brands and related assets. Flowers incurred \($16\) million in out-of-pocket acquisition costs for this acquisition, paid in cash. These costs were reported in selling,
On January 1, 2016, Asure Corporation acquires the net assets of BlueBox Inc. and records the acquisition as a merger. Asure’s acquisition entry looks like this (amounts in thousands):Brand names and customer lists comprise the identifiable intangibles.Required For each of the following
Airmedia Corporation acquires Bridgeline Inc. for cash and stock on January 1, 2015. One of Bridgeline’s previously unreported identifiable intangible assets is developed technology, which Airmedia can use to produce unique media services demanded by customers, thereby increasing revenues.
A company has the following investment activity during 2016 and 2017:Security E is impaired in 2017, but is not impaired in 2016. Security F is not impaired in 2017. Requireda. Prepare the journal entries to record the above information for 2016 and 2017, assuming the company's reporting year ends
On January 2, 2016, a U.S. company invests in the following corporate debt securities, classified as held-to-maturity per ASC Topic 320: 1. 5-year \($1,000,000\) face value corporate bond paying 6 percent interest annually on December 31. The bond is priced to yield 5 percent to maturity. 2.
Monster Beverage Corporation is a public U.S. company that produces and distributes "alternative" energy drinks. Its 2013 balance sheet includes \($396\) million in held-to-maturity bonds. Monster reports its HTM securities as follows:Assume that the HTM bonds on Monster’s 2013 balance sheet have
On January 2, 2014, Best Beverages acquired 45 percent of the stock of Better Bottlers for \($30\) million in cash. Best Beverages accounts for its investment using the equity method. At the time of acquisition, Better Bottlers’ balance sheet was as follows (in millions):Valuation of Better
Rance Corporation paid \($10\) mil- lion in cash to acquire 30 percent of the voting stock of Seaway Company on January 2, 2015. Rance uses the equity method to report its investment. Seaway's book value at date of acquisition was \($25\) million. Analysis of Seaway's assets and liabilities reveals
Bristol Corporation acquired 40 percent of the voting stock of Manchester Corporation on January 2, 2016, for \($3.2\) million in cash. Manchester's balance sheet and estimated fair values of its assets and liabilities on January 2, 2016, are as follows:In addition to its reported assets,
Harcker Corporation acquires 40 percent of Jackson Corporation's voting stock on January 3, 2017, for \($40\) million in cash. Jackson's net assets were fairly reported at \($100\) million at the date of acquisition. During 2017, Harcker sells \($130\) million in merchandise to Jackson at a markup
On January 2, 2016, Parker Corporation in- vests in the stock of Quarry Corporation. Quarry's book value is \($4\) million and its assets and liabilities are reported at amounts approximating fair value. Quarry reports income of \($3\) million in 2016. Parker's December 31, 2016, balance sheet and
On January 3, 2016, Allen Corporation and Barkely Corporation invested \($5\) million each in cash to form Albar Enterprises, a joint venture that develops new products benefitting both corporations. Each corporation holds an equal ownership interest in Albar Enterprises. Albar Enterprises' balance
Nestlé is a Swiss multinational food and beverage company. Its financial statement balances are reported in Swiss francs (CHF). In late 2012 Nestlé acquired Wyeth Nutrition, an infant nutrition business focusing on emerging markets. The total purchase price consisted of CHF 11,078 million in cash
On its January 1, 2016, balance sheet, Ericsson Corporation reports the following balances related to its investments:During 2016, Ericsson sold for \($43,000\) trading securities carried at \($40,000\) on its beginning balance sheet. It sold the remaining trading securities held at the beginning
The Coca-Cola Company's 2013 annual report discloses the fol- lowing information regarding its investments in AFS securities: 2013 net loss on AFS securities, from the 2013 statement of comprehensive income: \($80\) million Investment in AFS securities balances at December 31, 2013 and 2012, from
In 2013, The Coca-Cola Company acquired the remaining outstanding shares of Fresh Trading Ltd. Coca-Cola had previously reported its investment using the equity method. Assume the following information: Coca-Cola paid \($350\) million in cash for Fresh Trading's remaining shares, and reports the
In 2013, AB InBev completed its acquisition of Grupo Modelo. AB InBev had previously held a significant interest in Grupo Modelo. Although AB InBev is headquartered in Belgium, its financial statements are reported in U.S. dollars. The footnotes to AB InBev's 2013 annual report reveal the following
The total gain on trading securities reported on the 2016 income statement isa. $20,000b. $25,000e. $45,000d. \($60,000\) On January 1, 2016, a company’s balance sheet reports its investments in financial instruments as follows:Additional information:a. The HTM securities are \($200,000\)
The gain on AFS securities reported on the 2016 income statement isa. $ 3,000b. $ 4,000c. $ 9,000d. \($10,000\) On January 1, 2016, a company’s balance sheet reports its investments in financial instruments as follows:Additional information:a. The HTM securities are \($200,000\) face value
Investment in HTM securities reported on the December 31, 2016 balance sheet isa. $203,846b. $204,938c. $207,544d. \($207,997\) On January 1, 2016, a company’s balance sheet reports its investments in financial instruments as follows:Additional information:a. The HTM securities are
What is the amount of the net gain related to AFS securities reported on the 2016 EEN & Comprehensive Income?a. $1,000b. $5,000c. $6,000d. \($7,000\) On January 1, 2016, a company’s balance sheet reports its investments in financial instruments as follows:Additional information:a. The HTM
Under current standards, when is an impairment loss reported on a significant influence investment in the stock of another company, following U.S. GAAP and IFRS? U.S. GAAP Book value > higher of market value or value-in-use Other than temporary impairment a. C. If a "loss event" occurs d. Other
Fizzy Cola acquired 35% of the voting stock of National Bottlers on January 1, 2017, at a cost of \($50,000,000\), an amount equal to 35% of National’s book value. Fizzy reports its investment using the equity method. In 2017, National reported net income of \($7,000,000\) and declared and paid
Following both U.S. GAAP and IFRS, when should a company use the equity method to report an intercorporate investment?a. The company significantly influences the decisions of the investee.b. The investee is the company’s major supplier.c. The company owns 20-50% of the investee’s voting
The Coca-Cola Company’s December 31, 2013, balance sheet reports investments in trading securities at \($372\) million, with net unrealized gains of \($12\) million.Requireda. How much did Coca-Cola pay for the trading securities reported on its 2013 balance sheet?b. Where are unrealized gains
On January 1, 2016, a company pays \($5,222,591\) for a 5-year corporate bond with a face value of \($5\) million. The bond pays interest at 5 percent on December 31 of each year, and the principal is due on December 31, 2020. The investment yields a 4 percent compound annual return to maturity.
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