Puffin Industries acquired all of Sunset Coast Digital's stock on January 1, 2014, for $8,750,000, $5,250,000...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Puffin Industries acquired all of Sunset Coast Digital's stock on January 1, 2014, for $8,750,000, $5,250,000 in excess of book value. At that time, Sunset Coast's inventory (LIFO) was overvalued by $1,250,000 and its plant assets (10- year life) were overvalued by $2,500,000. The remaining excess of cost over book value is attributed to undervalued identifiable intangible assets being amortized over 20 years. Sunset Coast depreciates plant assets and amortizes intangibles by the straight-line method. During 2014 and 2015, Sunset Coast reported total net income of $1,625,000 and paid out 50 percent in dividends. Puffin carries its investment in Sunset Coast using the complete equity method. Sunset Coast's inventory increased each year since it was acquired by Puffin, and Sunset Coast's reported net income for 2016 was $500,000, and dividends totaled 50 percent of reported income. a. Compute Puffin's 2016 equity in net income of Sunset Coast. $ 300,000 b. Compute the balance in the Investment in Sunset Coast account at December 31, 2016, after all equity method entries have been booked. $ 11,337,500 c. Prepare the working paper eliminating entries needed in consolidation at December 31, 2016. Ref. Description (C) Equity in net income of Sunset Coast O Dividends-Sunset Coast Investment in Sunset Coast (E) Stockholders' equity-Sunset Coast. 1/1 Investment in Sunset Coast Consolidation Journal (R) Identifiable intangibles Inventory Plant assets, net Investment in Sunset Coast (0) Plant assets, net Amortization expense Depreciation expense Identifiable intangibles # ✓ ✔ 43 ✓ Debit 300,000 0✓ 0✔ 2.687,500 x 0✔ 8,100,000 ✓ 0✓ 0✔ 0✔ 250,000 ✓ 450,000 ✓ 0v Credit 250,000 50,000 0 2.687,500 x 1,250,000 2,000,000 4,850,000 0 0 250,000 450,000 d. If Puffin reports $1,500,000 net income from its own operations in 2016, what is consolidated net income for 2016? $ 1,800,000 Puffin Industries acquired all of Sunset Coast Digital's stock on January 1, 2014, for $8,750,000, $5,250,000 in excess of book value. At that time, Sunset Coast's inventory (LIFO) was overvalued by $1,250,000 and its plant assets (10- year life) were overvalued by $2,500,000. The remaining excess of cost over book value is attributed to undervalued identifiable intangible assets being amortized over 20 years. Sunset Coast depreciates plant assets and amortizes intangibles by the straight-line method. During 2014 and 2015, Sunset Coast reported total net income of $1,625,000 and paid out 50 percent in dividends. Puffin carries its investment in Sunset Coast using the complete equity method. Sunset Coast's inventory increased each year since it was acquired by Puffin, and Sunset Coast's reported net income for 2016 was $500,000, and dividends totaled 50 percent of reported income. a. Compute Puffin's 2016 equity in net income of Sunset Coast. $ 300,000 b. Compute the balance in the Investment in Sunset Coast account at December 31, 2016, after all equity method entries have been booked. $ 11,337,500 c. Prepare the working paper eliminating entries needed in consolidation at December 31, 2016. Ref. Description (C) Equity in net income of Sunset Coast O Dividends-Sunset Coast Investment in Sunset Coast (E) Stockholders' equity-Sunset Coast. 1/1 Investment in Sunset Coast Consolidation Journal (R) Identifiable intangibles Inventory Plant assets, net Investment in Sunset Coast (0) Plant assets, net Amortization expense Depreciation expense Identifiable intangibles # ✓ ✔ 43 ✓ Debit 300,000 0✓ 0✔ 2.687,500 x 0✔ 8,100,000 ✓ 0✓ 0✔ 0✔ 250,000 ✓ 450,000 ✓ 0v Credit 250,000 50,000 0 2.687,500 x 1,250,000 2,000,000 4,850,000 0 0 250,000 450,000 d. If Puffin reports $1,500,000 net income from its own operations in 2016, what is consolidated net income for 2016? $ 1,800,000
Expert Answer:
Answer rating: 100% (QA)
b Calculation of Balance in the Investment in Sunset coast ... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date:
Students also viewed these accounting questions
-
Puffin Industries acquired all of Sunset Coast Digital's stock on December 31,2011, for $3,500,000, $2,100,000 in excess of book value. At that time, Sunset Coast's inventory (LIFO) was overvalued by...
-
On January 2, 2018, Peer Industries acquired all of Star Corporations voting stock for $10,000. Stars book value at the date of acquisition was $6,500. Total goodwill of $2,500 was recognized at the...
-
On January 1 2014 Flop Co purchased a patent for $714,000. The patent is being amortized over its remaining legal life of fifteen year's expiring on December 31 2028. During 2016 Flop determined that...
-
Air flows through the fine mesh gauze shown in the figure below with an average velocity of 1.50 m/s in the pipe. Determine the loss coefficient for the gauze. KL= i 8.1mm V = 1.5 m/s Water Gauze...
-
Great West States (GWS) is a railroad company operating in the Western United States. Juanita Salazar is risk manager of GWS. At the direction of the company's chief executive officer, she is...
-
The following table summarizes the yields to maturity on several one-year, zero-coupon securities: a. What is the price (expressed as a percentage of the face value) of a one-year, zerocoupon...
-
James Lewis, a resident of Kentucky, sustained an injury while operating a Caterpillar bulldozer. He filed suit against Caterpillar, a company incorporated in Delaware but with its principal place of...
-
1. List IKEAs external and internal challenges. Looking at IKEAs challenges, which ones do you think pose the greatest threat? Why? How would you address the challenges? 2. Walmart entered a period...
-
This table lists the gross property tax distribution applicable to a local homeowner. Property Tax Distribution. Taxing Authority 2017 2018 Airport $45.88 $46.71 Citilink - PTC $63.69 $66.18 City...
-
GoGo Juice is a combination gas station and convenience store located at a busy intersection. Recently a national chain opened a similar store only a block away; consequently, sales have decreased...
-
Sergio and three friends went golfing. Two of the friends rented clubs for $6 each. The total cost of the rented clubs and the green fees was $76. What was the cost of the green fees for each person?
-
Find the length of the x and y components of this vector on your own, mathematically. Given the hypotenuse R and the angle theta , write a general equation to find x and y ( the components of the...
-
Al Shams Capital group is planning to invest its 1.1 million dirhams in one or more of the following projects. The proposed initial investment and expected net cash flows for each alternative...
-
You own 4 bonds, each with a face value of $1000. These are namely, a 5 year zero coupon bond, a 4 year zero coupon bond, a 4 year bond with a 5% p.a. annual coupon and finally a 5 year bond with a...
-
3. Use this list of Treasury bond prices as of February 15, 2001 to answer the following questions. Coupo n Maturi ty Quote 8s Os 6s 8/15/01 8/15/02 8/15/02 101 91.5 100 10s 2/15/02 ? (a) Derive the...
-
A heat pump delivers 8 kJ thermal energy to the high temperature reservoir at the temperature of 22C (the inside of the house). The outside ambient temperature is -10C. Determine the coefficient of...
-
Working in groups, students will create a mock organization. Groups will name and discuss the organization, analyze the industry in which the company operates, perform a SWOT analysis, evaluate the...
-
At 31 December 20X9, the end of the annual reporting period, the accounts of Huron Company showed the following: a. Sales revenue for 20X9, $ 2,950,000, of which one- quarter was on credit. b....
-
On February 9, 2005, Adolph Coors Company merged with Molson, Inc., in a transaction valued at approximately $3,556.5 million (the Merger). As the accounting acquirer, Adolph Coors Company became the...
-
Buena Vista University is a small private liberal arts university in Iowa. Below are transactions and events for 2013. 1. $180,000,000 in tuition was charged to students. 2. $24,000,000 in...
-
Below are the July l, 2012, balances for the general fund of Montana County. The county's fiscal year ends June 30. Montana County uses the purchases method for inventories, and the GAAP budgetary...
-
Which of Parks statements regarding the asset allocation approaches is correct? A. Only Statement 3 B. Only Statement 4 C. Both Statement 3 and Statement 4 Kevin Kroll is the chair of the investment...
-
The suitability concern discussed by Kroll and Park most likely deals with: A. governance. B. transparency. C. investment horizon. Kevin Kroll is the chair of the investment committee responsible for...
-
Based on the forecasted environment, liquidity planning should take into account that general partners may: A. call capital at a slower pace. B. make distributions at a faster pace. C. exercise an...
Study smarter with the SolutionInn App