Advanced Accounting exam with verified solutions

Advanced Accounting exam with verified solutions Jabiru Corporation purchased a 20% interest in Fish Company common stock on January 1, 2013 for $300,000. This investment was accounted for using the complete equity method and the correct balance in the Investment in Fish account on December 31, 2015 was $440,000. The original excess purchase transaction included $60,000 for a patent amortized at a rate of $6,000 per year. In 2016, Fish Corporation had net income of $4,000 per month earned uniformly throughout the year and paid $20,000 of dividends in May. If Jabiru sold one-half of its investment in Fish on August 1, 2016 for $500,000, how much gain was recognized on this transaction? - answerC) $280,950 Dec 31, 2010 investment balance $440,000 Jabiru's interest in Fish's income from Jan 1-July 31: ($4,000 × 7 months × 20%) = 5,600 Less: Dividends ($20,000 × 20%) = (4,000) Less: Seven months of patent amortization: $500 × 7 = (3,500) Investment account balance at July 31, 2011 $438,100 Amount received from sale: $500,000 Book value of one-Half interest (219,050) Gain on sale $280,950 A business merger differs from a business consolidation because - answera merger dissolves all but one of the prior entities, but a consolidation dissolves all of the prior entities and forms a new corporation Pigeon Corporation acquired an 80% interest in Statue Company on January 1, 2014, for $90,000 cash when Statue had Capital Stock of $60,000 and Retained Earnings of $40,000. The fair value/book value differential was attributable to equipment with a 10-year (straight-line) life. Statue suffered a $10,000 net loss in 2014 and paid no dividends. At year-end 2014, Statue owed Pigeon $18,000 on account. Pigeon's separate income for 2011 was $150,000. Controlling interest share of consolidated net income for 2014 was - answerPigeon's separate income $150,000 Less:80% of Statue's $10,000 loss (8,000) Less: Equipment depreciation ($12,500 × 80%)/ 10 years = (1,000) Controlling Interest Share of Consolidated net income $141,000 2 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Use the following information to answer question(s) below. On January 1, 2011, Punch Corporation purchased 80% of the common stock of Soopy Co. Separate balance sheet data for the companies at the acquisition date(after the acquisition) are given below: Punch Soopy Cash $34,000 $206,000 Accounts Receivable 144,000 26,000 Inventory 132,000 38,000 Land 68,000 32,000 Plant assets 700,000 300,000 Accum. Depreciation (240,000) (60,000) Investment in Soopy 392,000 Total assets $ 1,230,000 $ 542,000 Accounts payable $206,000 $142,000 Capital stock 800,000 300,000 Retained earnings 224,000 100,000 Total liabilities & equities $ 1,230,000 $ 542,000 At the date of the acquisition, the book values of Soopy's net assets were equal to the fair value except for Soopy's inventory, which had a fair value of $60,000. Determine below what the consolid - answerCombined inventory of $132,000 plus $38,000 plus the excess of the fair value over the book value of $22,000 (19200