Satori Inc. acquired all of the outstanding common stock of Zen Corp. on January 1, 2017,...

 

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Satori Inc. acquired all of the outstanding common stock of Zen Corp. on January 1, 2017, for $545,000. Equipment with a two-year life and building with a ten-year life were undervalued on Zen's financial records by $34,000 and $110,000, respectively. Zen also owned an unrecorded customer list with an assessed fair value of $60,000 and an estimated remaining life of five years. Zen earned reported net income of $181,000 in 2017 and $215,000 in 2018. Dividends of $65,000 were paid in each of these two years. Selected account balances as of December 31, 2019, for the two companies follow. Satori Inc. 1,106,000 769,000 Revenues Expenses Investment income Not given 840,000 132,000 Zen Corp. 812,000 625,000 0 600,000 94,000 Retained earnings, 01.01.19 Dividends paid a.) If the partial equity method had been applied, what was 2019 consolidated net income? [5 points] b.) If the equity method had been applied, what would be the Investment in Zen account balance be at 12.31.2019? [5 points] Satori Inc. acquired all of the outstanding common stock of Zen Corp. on January 1, 2017, for $545,000. Equipment with a two-year life and building with a ten-year life were undervalued on Zen's financial records by $34,000 and $110,000, respectively. Zen also owned an unrecorded customer list with an assessed fair value of $60,000 and an estimated remaining life of five years. Zen earned reported net income of $181,000 in 2017 and $215,000 in 2018. Dividends of $65,000 were paid in each of these two years. Selected account balances as of December 31, 2019, for the two companies follow. Satori Inc. 1,106,000 769,000 Revenues Expenses Investment income Not given 840,000 132,000 Zen Corp. 812,000 625,000 0 600,000 94,000 Retained earnings, 01.01.19 Dividends paid a.) If the partial equity method had been applied, what was 2019 consolidated net income? [5 points] b.) If the equity method had been applied, what would be the Investment in Zen account balance be at 12.31.2019? [5 points]

Answer rating: 100% (QA)

Solutions a The consolidated net income for 2019 under partial equity method as follows Particulars ... View the full answer