acct450 ch3
1. award: 0 out of
0.00 points
Willkom Corporation bought 100 percent of Szabo, Inc., on January 1, 2011. On that date, Willkom’s equipment (10-year life) has a book value of $472,500 but a fair value of $629,500. Szabo has equipment (10-year life) with a book value of $283,000 but a fair value of $440,000. Willkom uses the equity method to record its investment in Szabo. On December 31, 2013, Willkom has equipment with a book value of $330,750 but a fair value of $530,250. Szabo has equipment with a book value of $198,100 but a fair value of $409,100. What is the consolidated balance for the Equipment account as of December 31, 2013?
rev: 10_01_2012
$685,850.
$528,850.
$939,350.
→
$638,750.
Willkom’s equipment book value—12/31/13
$330,750
Szabo’s equipment book value—12/31/13
198,100
Original purchase price allocation to Szabo's equipment ($440,000 – $283,000)
157,000
Amortization of allocation ($157,000 ÷ 10 years for 3 years)
(47,100)
Consolidated equipment
$638,750
2. award: 0 out of
0.00 points
On January 1, 2011, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona, Inc. for $862,900 cash. At January 1, 2011, Sedona’s net assets had a total carrying amount of $622,500. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $107,200. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has paid a $30,000 dividend. Sedona recorded income of $84,000 in 2011 and $102,500 in 2012. Selected account balances from the two companies’ individual records were as follows:
Phoenix Sedona 2013 Revenues
$558,000
$328,000 2013 Expenses
368,000
255,000 2013 Income from Sedona
26,300
Retained earnings 12/31/13
316,000
0.00 points
Willkom Corporation bought 100 percent of Szabo, Inc., on January 1, 2011. On that date, Willkom’s equipment (10-year life) has a book value of $472,500 but a fair value of $629,500. Szabo has equipment (10-year life) with a book value of $283,000 but a fair value of $440,000. Willkom uses the equity method to record its investment in Szabo. On December 31, 2013, Willkom has equipment with a book value of $330,750 but a fair value of $530,250. Szabo has equipment with a book value of $198,100 but a fair value of $409,100. What is the consolidated balance for the Equipment account as of December 31, 2013?
rev: 10_01_2012
$685,850.
$528,850.
$939,350.
→
$638,750.
Willkom’s equipment book value—12/31/13
$330,750
Szabo’s equipment book value—12/31/13
198,100
Original purchase price allocation to Szabo's equipment ($440,000 – $283,000)
157,000
Amortization of allocation ($157,000 ÷ 10 years for 3 years)
(47,100)
Consolidated equipment
$638,750
2. award: 0 out of
0.00 points
On January 1, 2011, Phoenix Co. acquired 100 percent of the outstanding voting shares of Sedona, Inc. for $862,900 cash. At January 1, 2011, Sedona’s net assets had a total carrying amount of $622,500. Equipment (eight-year remaining life) was undervalued on Sedona’s financial records by $107,200. Any remaining excess fair over book value was attributed to a customer list developed by Sedona (four-year remaining life), but not recorded on its books. Phoenix applies the equity method to account for its investment in Sedona. Each year since the acquisition, Sedona has paid a $30,000 dividend. Sedona recorded income of $84,000 in 2011 and $102,500 in 2012. Selected account balances from the two companies’ individual records were as follows:
Phoenix Sedona 2013 Revenues
$558,000
$328,000 2013 Expenses
368,000
255,000 2013 Income from Sedona
26,300
Retained earnings 12/31/13
316,000