N2 Wilco acquires a 80% interest in Seminole Corporation on January 1, 2022, for $1,600,000. Thebook value of Seminole's identifiable net assets at that date was $1,800,000. One depreciable asset(4-year life) had a fair value that exceeded its book value by $80,000. Seminole reports $200,000 ofnet income in 2022 and paid $80,000 in dividends. What is the noncontrolling interest in net incomefor 2022?O $32,000O $40,000O $36,000O $24,000

Noncontrolling interest refers to the ownership position in the company showing in the form of a…

Answered: Wilco acquires a 80% interest in…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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Matrix, Incorporated, acquired 25% of Neo Enterprises for $2,000,000 on January 1, 2024. The fair value and book value of 25% of Neo's identifiable net assets was $2,000,000 and $1,600,000 on that date, and the difference was attributable to assets that would be depreciated over 10 years. During 2024 Neo recognized net income of $500,000 and paid dividends of $400,000. Neo had a total fair value of $10,000,000 as of December 31, 2024. Required: 1. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix accounts for that investment as an equity-method investment. 2. Prepare the journal entries necessary to account for the Neo investment, assuming that Matrix elects the fair value option.
Twilight Co. paid $2,800,000 to acquire all of the common stock of Aurna Corp. on January 1, 2022. Aurna's reported earnings for 2022 totaled $512,000, and it paid $160,000 in dividends during the year. The amortization of allocations related to the investment was $28,000. Twilight's net income, not including any income from this investment, was $3,310,000, and it paid dividends of $930,000. On the consolidated financial statements for 2022, what amount should be shown for consolidated dividends? OL $160,000 O. $902,000 O.$930,000 OV.$950,000 OV. $1,090,000
On January 1, 2022, Green Corporation purchased 25% of the outstanding voting common stock of Gold Company for $500,000. The book value of Gold Company as a whole was $1,700,000. The excess of cost over book value is attributable to a license (intangible asset) to be amortized over fifteen years. For the year ended December 31, 2022, Gold reported net income of $300,000 and paid cash dividends of $12,000. What is the carrying value of Green's investment in Gold at December 31, 2022? O $417,000. O $567,000. O $572,000. O $550,000.
Mill Corporation acquired 100 percent ownership of Roller Company on January 1, 2018. At that date, the net assets of Roller Company had a book value of $80,000. Also, on the date of acquisition, the fair value of Roller's buildings and equipment was $20,000 more than the book value. Buildings and equipment are depreciated on a 10-year basis. In 2018, Roller reported net income of $50,000 and declared dividends and paid dividends of $22,000. Roller did not issue any new stock since the acquisition. Although goodwill is not amortized, Mill's management concluded at December 31, 2019, before the preparation of the consolidated financial statements, that goodwill involved in its acquisition of Roller shares had been impaired and the correct carrying value was $2,500. Mill uses the equity method to account for the investment in Roller. During 2019, Roller had $12,000 outstanding accounts payable owed to Mill. The unadjusted trial balance data for Mill and Roller on December 31, 2019, are…
Hope Company bought 30% of Faith Corporation in the beginning of 2024. Hope's purchase price of $3,000,000 equaled 30% of the book value of Faith's net identifiable assets, which also equaled 30% of the fair value of Faith. During 2024, Faith reported net income in the amount of $4,000,000 and declared and paid dividends in the amount of $300,000. At the end of 2024, Faith's fair value was $12,000,000. Hope mistakenly accounted for the investment using the fair value through net income method instead of using the equity method. What effect would this error have on the investment account and net income, respectively, for 2024? Multiple Choice Overstated by $510,000; overstated by $510,000 Understated by $600,000; understated by $510,000 Understated by $510,000; understated by $510,000 Understated by $1,010,000; understated by $1,010,000
On January 1, 2024, Alamar Corporation acquired a 40 percent interest in Burks, Incorporated, for $210,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $360,000. During 2024, Burks reported net income of $80,000 and declared and paid cash dividends of $25,000. Alamar sold inventory costing $30,000 to Burks during 2024 for $40,000. Burks used all of this merchandise in its operations during 2024. Required: Prepare all of Alamar's 2024 journal entries to apply the equity method to this investment. Record the acquisition of a 40 percent interest in Burks. Record the accrual of 40 percent of the reported earnings of the investee. Record the investee dividend declaration Record the collection of dividend from investee. Record the income on intra-entity sale.
On January 2, 2020, Kent Corp. paid 1,600,000 for the purchase of 40% of the ordinary shares of Kara Company. The statement of financial position of Kara at the date of acquisition shows the following information:Assets subject to depreciation (remaining useful life is 8 years) 2,400,000Assets not subject to depreciation 800,000Liabilties 400,000Both book value and fair value are the same for assets not subject to depreciation and liabilities. The fair market value of Karas assets subject to depreciation is 2,720,000. Kara depreciates its assets using the straight-line method. Karas intangibles are amortized over a 20-year period. Net income for the year ended December 31, 2020, is 640,000. It declares and pays dividends of 500,000 in 2020.What amount of the investment cost is attributable to goodwill? a. 480,000 b. 352,000 c. 608,000 d. 128,000

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