ADVANCED ACCOUNTING NEWEST UPDATED
FINAL EXAM 15TH EDITION COMPLETE QUESTIONS
AND CORRECT ANSWERS ALREADY A+ GRADED
On January 4, 2012, Harley, Inc. acquired 40% of the
outstanding common stock of Bike Co. for $2,400,000.
This investment gave Harley the ability to exercise
significant influence over Bike. Bike's assets on that date
were recorded at $10,500,000 with liabilities of
$4,500,000. There were no other differences between
book and fair values.
During 2012, Bike reported net income of $500,000. For
2013, Bike reported net income of $800,000. Dividends
of $300,000 were paid in each of these two years.
What was the reported balance of Harley's Investment in
Bike Co. at December 31, 2013?
$2,400,000.
,$2,600,000.
$2,680,000.
$2,480,000.
$2,500,000. - ANSWER-$2,680,000.
$2,480,000 + $320,000 - $120,000 = $2,680,000
On January 1, 2013, Deuce Inc. acquired 15% of Wiz Co.'s
outstanding common stock for $62,400 and categorized
the investment as an available-for-sale security. Wiz
earned net income of $96,000 in 2013 and paid dividends
of $36,000. On January 1, 2014, Deuce bought an
additional 10% of Wiz for $54,000. This second purchase
gave Deuce the ability to significantly influence the
decision making of Wiz. During 2014, Wiz earned
$120,000 and paid $48,000 in dividends. As of December
31, 2014, Wiz reported a net book value of $468,000. For
, both purchases, Deuce concluded that Wiz Co.'s book
values approximated fair values and attributed any
excess cost to goodwill.
What amount of equity income should Deuce have
reported for 2014?
$16,420.
$38,340.
$30,000.
$32,840.
$18,000 - ANSWER-$30,000.
2014 Income = ($120,000 × 25%) = $30,000
FINAL EXAM 15TH EDITION COMPLETE QUESTIONS
AND CORRECT ANSWERS ALREADY A+ GRADED
On January 4, 2012, Harley, Inc. acquired 40% of the
outstanding common stock of Bike Co. for $2,400,000.
This investment gave Harley the ability to exercise
significant influence over Bike. Bike's assets on that date
were recorded at $10,500,000 with liabilities of
$4,500,000. There were no other differences between
book and fair values.
During 2012, Bike reported net income of $500,000. For
2013, Bike reported net income of $800,000. Dividends
of $300,000 were paid in each of these two years.
What was the reported balance of Harley's Investment in
Bike Co. at December 31, 2013?
$2,400,000.
,$2,600,000.
$2,680,000.
$2,480,000.
$2,500,000. - ANSWER-$2,680,000.
$2,480,000 + $320,000 - $120,000 = $2,680,000
On January 1, 2013, Deuce Inc. acquired 15% of Wiz Co.'s
outstanding common stock for $62,400 and categorized
the investment as an available-for-sale security. Wiz
earned net income of $96,000 in 2013 and paid dividends
of $36,000. On January 1, 2014, Deuce bought an
additional 10% of Wiz for $54,000. This second purchase
gave Deuce the ability to significantly influence the
decision making of Wiz. During 2014, Wiz earned
$120,000 and paid $48,000 in dividends. As of December
31, 2014, Wiz reported a net book value of $468,000. For
, both purchases, Deuce concluded that Wiz Co.'s book
values approximated fair values and attributed any
excess cost to goodwill.
What amount of equity income should Deuce have
reported for 2014?
$16,420.
$38,340.
$30,000.
$32,840.
$18,000 - ANSWER-$30,000.
2014 Income = ($120,000 × 25%) = $30,000
