On January 1 of Year 1, Randolph Real Estate Ventures acquired a 40% of the Norton...

  

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On January 1" of Year 1, Randolph Real Estate Ventures acquired a 40% of the Norton Company for $3,000.000. On the date of acquisition, the book value of Norton's net assets was reported at 56,500.000. Appraisal of Norton's net assets reflected the following: • Plant and equipment is undervalued by $412,500. • Inventory is undervalued by $375,000 • Land is undervalued by $100.000 All of Norton's long-term operating assets are depreciated or amortized uning the straight-line method over a 15 year life. Norton uses the FIFO method to account for inventory The following information is provided on December 31" of Year 1: Norton's net income is $51,825,000 • Norton declared and paid dividends of $400,000 The fair value of Norton's shares is $3,450.000 REQUIRED: Prepare all journal entries necessary if Randolph uses the equity method to account for its investment in Norton. Be sure to include the amount of goodwill on the acquisition. Part il:(Independent of your answer to Part I) Randolph elected the fair value option to account for investment in Norton (or another investor now holds 60% of Norton). REQUIRED: Prepare all journal entries necessary if Randolph uses the fair value method to account for its investment in Norton. This is the only equity security held by Randolph. On January 1" of Year 1, Randolph Real Estate Ventures acquired a 40% of the Norton Company for $3,000.000. On the date of acquisition, the book value of Norton's net assets was reported at 56,500.000. Appraisal of Norton's net assets reflected the following: • Plant and equipment is undervalued by $412,500. • Inventory is undervalued by $375,000 • Land is undervalued by $100.000 All of Norton's long-term operating assets are depreciated or amortized uning the straight-line method over a 15 year life. Norton uses the FIFO method to account for inventory The following information is provided on December 31" of Year 1: Norton's net income is $51,825,000 • Norton declared and paid dividends of $400,000 The fair value of Norton's shares is $3,450.000 REQUIRED: Prepare all journal entries necessary if Randolph uses the equity method to account for its investment in Norton. Be sure to include the amount of goodwill on the acquisition. Part il:(Independent of your answer to Part I) Randolph elected the fair value option to account for investment in Norton (or another investor now holds 60% of Norton). REQUIRED: Prepare all journal entries necessary if Randolph uses the fair value method to account for its investment in Norton. This is the only equity security held by Randolph. On January 1" of Year 1, Randolph Real Estate Ventures acquired a 40% of the Norton Company for $3,000.000. On the date of acquisition, the book value of Norton's net assets was reported at 56,500.000. Appraisal of Norton's net assets reflected the following: • Plant and equipment is undervalued by $412,500. • Inventory is undervalued by $375,000 • Land is undervalued by $100.000 All of Norton's long-term operating assets are depreciated or amortized uning the straight-line method over a 15 year life. Norton uses the FIFO method to account for inventory The following information is provided on December 31" of Year 1: Norton's net income is $51,825,000 • Norton declared and paid dividends of $400,000 The fair value of Norton's shares is $3,450.000 REQUIRED: Prepare all journal entries necessary if Randolph uses the equity method to account for its investment in Norton. Be sure to include the amount of goodwill on the acquisition. Part il:(Independent of your answer to Part I) Randolph elected the fair value option to account for investment in Norton (or another investor now holds 60% of Norton). REQUIRED: Prepare all journal entries necessary if Randolph uses the fair value method to account for its investment in Norton. This is the only equity security held by Randolph. On January 1" of Year 1, Randolph Real Estate Ventures acquired a 40% of the Norton Company for $3,000.000. On the date of acquisition, the book value of Norton's net assets was reported at 56,500.000. Appraisal of Norton's net assets reflected the following: • Plant and equipment is undervalued by $412,500. • Inventory is undervalued by $375,000 • Land is undervalued by $100.000 All of Norton's long-term operating assets are depreciated or amortized uning the straight-line method over a 15 year life. Norton uses the FIFO method to account for inventory The following information is provided on December 31" of Year 1: Norton's net income is $51,825,000 • Norton declared and paid dividends of $400,000 The fair value of Norton's shares is $3,450.000 REQUIRED: Prepare all journal entries necessary if Randolph uses the equity method to account for its investment in Norton. Be sure to include the amount of goodwill on the acquisition. Part il:(Independent of your answer to Part I) Randolph elected the fair value option to account for investment in Norton (or another investor now holds 60% of Norton). REQUIRED: Prepare all journal entries necessary if Randolph uses the fair value method to account for its investment in Norton. This is the only equity security held by Randolph. On January 1" of Year 1, Randolph Real Estate Ventures acquired a 40% of the Norton Company for $3,000.000. On the date of acquisition, the book value of Norton's net assets was reported at 56,500.000. Appraisal of Norton's net assets reflected the following: • Plant and equipment is undervalued by $412,500. • Inventory is undervalued by $375,000 • Land is undervalued by $100.000 All of Norton's long-term operating assets are depreciated or amortized uning the straight-line method over a 15 year life. Norton uses the FIFO method to account for inventory The following information is provided on December 31" of Year 1: Norton's net income is $51,825,000 • Norton declared and paid dividends of $400,000 The fair value of Norton's shares is $3,450.000 REQUIRED: Prepare all journal entries necessary if Randolph uses the equity method to account for its investment in Norton. Be sure to include the amount of goodwill on the acquisition. Part il:(Independent of your answer to Part I) Randolph elected the fair value option to account for investment in Norton (or another investor now holds 60% of Norton). REQUIRED: Prepare all journal entries necessary if Randolph uses the fair value method to account for its investment in Norton. This is the only equity security held by Randolph. On January 1" of Year 1, Randolph Real Estate Ventures acquired a 40% of the Norton Company for $3,000.000. On the date of acquisition, the book value of Norton's net assets was reported at 56,500.000. Appraisal of Norton's net assets reflected the following: • Plant and equipment is undervalued by $412,500. • Inventory is undervalued by $375,000 • Land is undervalued by $100.000 All of Norton's long-term operating assets are depreciated or amortized uning the straight-line method over a 15 year life. Norton uses the FIFO method to account for inventory The following information is provided on December 31" of Year 1: Norton's net income is $51,825,000 • Norton declared and paid dividends of $400,000 The fair value of Norton's shares is $3,450.000 REQUIRED: Prepare all journal entries necessary if Randolph uses the equity method to account for its investment in Norton. Be sure to include the amount of goodwill on the acquisition. Part il:(Independent of your answer to Part I) Randolph elected the fair value option to account for investment in Norton (or another investor now holds 60% of Norton). REQUIRED: Prepare all journal entries necessary if Randolph uses the fair value method to account for its investment in Norton. This is the only equity security held by Randolph.

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On January 1st of Year 1 Randolph Real estate ventures acquired 40 of Norton company shares for 3000... View the full answer