Bob has acquired 40% equity interests in Gary, a company with several gasoline station. Assets, liabilities,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Bob has acquired 40% equity interests in Gary, a company with several gasoline station. Assets, liabilities, revenue and costs of Gary are apportioned on the basis of shareholding with other shareholders. Gary's financial information sets out as follows: 1. The gasoline station costing $15 million to construct was completed on 1 July 2019 and would be dismantled at the end of its life of 10 years. 2. The present value of this dismantling cost at 1 July 2019, using a discount rate of 5%, was $2 million. 3. During the year, Gary's operation with a direct cost of $16 million was sold for $20 million. 4. During the year, Gary also incurred operating costs of $1 million. 5. Bob has contributed and accounted for its share of the construction cost of $6 million. 6. The revenue and costs are receivable and payable from Gary, which settled amounts outstanding with Bob after year end. Required Explain and determine the financial reporting implication of the acquisition of Gary in Bob's financial statements for the year ended 30 June 2020 and suggest the relevant journal entries. Bob has acquired 40% equity interests in Gary, a company with several gasoline station. Assets, liabilities, revenue and costs of Gary are apportioned on the basis of shareholding with other shareholders. Gary's financial information sets out as follows: 1. The gasoline station costing $15 million to construct was completed on 1 July 2019 and would be dismantled at the end of its life of 10 years. 2. The present value of this dismantling cost at 1 July 2019, using a discount rate of 5%, was $2 million. 3. During the year, Gary's operation with a direct cost of $16 million was sold for $20 million. 4. During the year, Gary also incurred operating costs of $1 million. 5. Bob has contributed and accounted for its share of the construction cost of $6 million. 6. The revenue and costs are receivable and payable from Gary, which settled amounts outstanding with Bob after year end. Required Explain and determine the financial reporting implication of the acquisition of Gary in Bob's financial statements for the year ended 30 June 2020 and suggest the relevant journal entries.
Expert Answer:
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
Posted Date:
Students also viewed these accounting questions
-
3- Two flocks of equipment, each costing 10,000 dinars, the sum of their sale and the cost of operating them one thousand dinars) within five years are shown in the table the children of the required...
-
A company has only 4 shareholders each contributed $10,000 and wereissued 8000 shares of stock. One stockholder reported to the company that500 shares of his stock had been sold and transferred to...
-
Several years ago, RJR Nabisco incurred $ 2 million in costs for package design the physical construction of a package and its graphic design. Nabisco wanted to deduct the entire $ 2 million in the...
-
Uniform current sheets are located in free space as follows: 8a z A/m at y = 0, 4a z A/m at y = 1, and 4a z A/m at y = 1. Find the vector force per meter length exerted on a current filament carrying...
-
The data in Table 1.4.5 are a breakdown of 18,930 workers in a town according to the type of work. Construct a pie chart and bar graph for these data and interpret. Table 1.4.5 Distribution of...
-
The parameter a in the van der Waals equation is greater for H 2 O than for He. What does this say about the difference in the form of the potential function in Figure 1.10 for the two gases? Figure...
-
An office worker has his lunch on the 53rd floor of an office building. In which case is the gravitational potential energy of the lunch-Earth system greatest: \((a)\) the worker carried the lunch up...
-
On January 1, 2010, Alison, Inc., paid $60,000 for a 40 percent interest in Holister Corporations common stock. This investee had assets with a book value of $200,000 and liabilities of $75,000. A...
-
Current Yield-to-Maturity on an American corporate 5 year Euro bond is 3%. This pays interestannually, at 5%.You've read it looks interesting. It will maturity at par, equal to USD $1,000. Calculate...
-
The Scottish firm of Cullen and MacNeil produces a single product and uses a standard costing system to help control costs. Manufacturing overhead is applied to production on the basis of standard...
-
During his apology to their customers, Domino's Pizza president, Patrick Doyle, specified all of the wonderful things that Domino's provided customers--great pizza, convenient eating, large numbers...
-
In socialist countries ______. a) most industry is privately owned. b) most people are government employees c) the government provides cradle-to-grave security d) tax rates are usually low
-
Which statement is the most accurate? a) There is no such thing as government failure. b) There is no such thing as market failure. c) Neither government failure nor market failure ever occur. d)...
-
Which statement is true? a) The huge federal budget deficit was caused by market failure. b) Market failure is the main reason that we need public goods and services. c) Public goods and services are...
-
Goods and services that are nonexcludable and nonrivalrous, and tend to be indivisible are ______. a) public b) private c) both public and private d) neither public nor private.
-
It is sometimes suggested that the Federal Reserve should try to achieve zero inflation. If we assume that velocity is constant, does this zero-inflation goal require that the rate of money growth...
-
Examine the law and relevant literature to develop an argument about how China's land contracting system can be improved in the future. What are success and challenges in implementing rural land use...
-
The nitrogen atoms in N2 participate in multiple bonding, whereas those in hydrazine, N2H4, do not. (a) Draw Lewis structures for both molecules. (b) What is the hybridization of the nitrogen atoms...
-
Reconsider the example illustrating the use of robust optimization that was presented in Sec. 7.4. Wyndor management now feels that the analysis described in this example was overly conservative for...
-
When a tennis player serves, he gets two chances to serve in bounds. If he fails to do so twice, he loses the point. If he attempts to serve an ace, he serves in bounds with probability 3/8. If he...
-
Consider the expressions in matrix notation given in Sec. 13.7 for the general form of the KKT conditions for the quadratic programming problem. Show that the problem of finding a feasible solution...
-
How would payments for taxes be classified? (a) Operating outflow. (b) Operating inflow. (c) Investing outflow. (d) Financing outflow
-
How would the repayment of debt principal be classified? (a) Operating outflow. (b) Operating inflow. (c) Investing outflow. (d) Financing outflow
-
What type of accounts are accounts receivable and inventory? (a) Cash accounts. (b) Operating accounts. (c) Financing accounts. (d) Investing accounts.
Study smarter with the SolutionInn App