Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $210,000 in cash. The book value of Kinman’s net assets on that date was $400,000, although one of the company’s buildings, with a $60,000 carrying amount, was actually worth $100,000. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $85,000. Kinman sold inventory with an original cost of $60,000 to Harper during 2017 at a price of $90,000. Harper still held $15,000 (transfer price) of this amount in inventory as of December 31, 2017. These goods are to be sold to outside parties during 2018. Kinman reported a $40,000 net loss and a $20,000 other comprehensive loss for 2017. The company still manages to declare and pay a $10,000 cash dividend during the year. During 2018, Kinman reported a $40,000 net income and declared and paid a cash dividend of $12,000. It made additional inventory sales of $80,000 to Harper during the period. The original cost of the merchandise was $50,000. All but 30 percent of this inventory had been resold to outside parties by the end of the 2018 fiscal year. Prepare all journal entries for Harper for 2017 and 2018 in connection with this investment. Assume that the equity method is applied.
Answers
Answer:
Harper investment 160,000
building over fair value 16,000
royalty over fair value 34,000
cash 200,000
----
2017 entries:
loss on Harper Investment 32,000
Harper investment 32,000
---
Cash 4,000
Harper investment 4,000
----
Unrealized gain 2,000
Harper Investment 2,000
---
royalty over fair value 1,700
bulding over fair value 1,600
harper investment 3,300
---
2018 entries:
Harper Investment 16,000
Gain on Harper Investent 16,000
----
Cash 4800
Harper investment 4800
----
Unrealized gain 1,600
Harper Investment 1,600
---
royalty over fair value 1,700
bulding over fair value 1,600
harper investment 3,300
Explanation:
400,000 x 40% = 160,000
40,000 increase infair value of building x 40% = 16,000
royalty 85,000 x 40% = 34,000
total equity value 200,000
payment of 200,000
no goodwill.
amortization:
building: 16,000 / 10 = 1,600
royalty: 34,000 / 20 = 1,700
2017
loss: 60,000 x 40% = (32,000)
dividends 10,000 x 40% = (4,000)
unrealized gain: it kept 15,000/90,000 = 0.1667 = 16.67%
90,000 - 30,000 = 30,000 gain x 16.67% = 5,000 unrealized gain
5,000 x 40% = 2,000
2018
income 40,000 x 40% = 16,000
dividends 12,000 x 40% = (4,800)
unrealized gain kept 30%
80,000 - 50,000 = 30,000 x 30% = 9,000
the company has 40% so 9,000 x 40% = 3,600 unrealized
as we recognize 2,000 before we adjust for the difference of 1,600
Related Questions
Wiley Consulting purchased $7,800 worth of supplies and paid cash immediately. Which of the following general journal entrie will Wiley Consulting make to record this transaction? Assume the company's policy is to Initially record prepaid and unearned Items In balance sheet accounts. Multiple Choice Accounts Accounts Payable 7,800 Supplies 7, 800
The price of a stock is $64. A trader buys 1 put option contract on the stock with a strike price of $60 when the option price is $10. The trader makes a profit when the stock price is below _______________
Paid $78,000 cash to replace a motor on equipment that extends its useful life by four years. Paid $390 cash per truck for the cost of their annual tune-ups. Paid $312 for the monthly cost of replacement filters on an air-conditioning system. Completed an addition to a building for $438,750 cash. 1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record transactions a and d.
Businesses exist in an environment shaped by: a. investors. b. GATT. c. culture. d. neighboring territories.
b. If there is $33,600 in earnings available to common stockholders, and Holtzman’s stock has a P/E of 22 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Current price $
c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Answers
Answer:
A. $10.71
B.$36.96
C. 3.45 times
Explanation:
The Holtzman Corporation
A.
Total assets $384,000
Less:current liabilities ($54,000)
long-term liabilities of ($79,000)
Stock holder equity $251,000
Less preferred stock( $36,800)
Net worth assigned to common $214,200
Common shares outstanding $20,000
Book value per share (Net worth) per share $10.71
Book value per share = $214,200/$20,000
= $10.71
B. Earnings per share = Earnings available to common stockholders /Numbers of shares
$33,600/$20,000
=$1.68
Price =P/E×EPS
22×$1.68
=$36.96
C. Market value per share to book value per share
$36.96/$10.71
3.45 times
Answers
Solution and Explanation:
Depreciation expense is calculated as follows:
Depreciation expense = Cost of machine minus residul value divide useful life of asset
= (159600 - 0) / 8 = 19950
Thus, annual depreciation expense is $19950
Partial year depreciation expense = Anuual depreciation multiply period
= 19950 mulitply 0.5 = $9975
Thus, partial depreciation expense for the 01st january 2023 to July 1, 2023 is $9975
the jorunal entry is as follows:
Depreciation account Dr. 9975 ($)
Accumulated depreciation Cr. 9975 ($)
1. if machine is sold for $79800 cash
Cash 79800
Accumulated depreciation 89775
gain on sale of machinery 9975
Machinery 159600
2. If machine is sold for $67032
Cash 67032
Accumulated depreciation 89775
loss on sale of machinery 2793
Machinery 159600
Answers
Answer:
6.5017%
Explanation:
Given that,
Total cost of a college education when your child enters college in 16 years, Future value = $200,000
Amount today to invest, present value = $73,000
Time period = 16 years
Therefore,
Annual rate of interest:
r = 6.5017%
Therefore, the annual rate of interest you must earn on your investment to cover the cost of your child’s college education is 6.5017%.
Answers
Answer:
See explaination and attachment
Explanation:
Stockholders' equity is the amount of assets remaining in a business after all liabilities have been settled. It is calculated as the capital given to a business by its shareholders, plus donated capital and earnings generated by the operation of the business, less any dividends issued.
Balance Sheet is a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.
See attachment for the step by step solution of the given problem.
Final answer:
The total stockholders' equity for Finishing Touches as of December 31, 2021, is calculated by adding the value of issued common and preferred stocks, and adjusting for treasury stocks and retained earnings. The total is $3,403,600.
Explanation:
The stockholders' equity section of Finishing Touches as of December 31, 2021, includes several items. These include the issuance of common stock, issuance of preferred stock, purchase and resale of treasury stock, the net income, and the payment of dividends. Let's break them down:
- Common Stock: 100,000 shares were issued at $35 per share, amounting to $3,500,000.
- Preferred Stock: 3,000 shares were issued at $11 per share, amounting to $33,000.
- Treasury Stock: The company bought 11,000 shares at $40 per share (creates a decrease in equity amounting to -$440,000) and sold 5,500 of these shares at $45 per share (creates an increase in equity of $247,500). The net decrease in equity due to treasury stock transactions is -$192,500.
- Retained Earnings: The company earned net income of $160,000 but paid out dividends ($94,500 to common stockholders and $2,400 to preferred stockholders), resulting in an increase in retained earnings of $63,100.
So, the total stockholders' equity for Finishing Touches as of December 31, 2021, would be $3,403,600 ($3,500,000 + $33,000 - $192,500 + $63,100).
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Answers
Answer:
inflation rate= 3.8%
Explanation:
Giving the following information:
Nominal return= 11.1 percent
Real return= 7.3 percent
The real return on investments is the difference between the nominal return and the inflation rate.
Real return= nominal return - inflation rate
inflation rate= nominal return - real return
inflation rate= 11.1 - 7.3
inflation rate= 3.8%
Final answer:
The inflation rate is determined by subtracting the real return on an investment from its nominal return. In this case, the inflation rate is 3.8 percent.
Explanation:
The inflation rate can be calculated by subtracting the real return from the nominal return. In this case, the nominal return is 11.1 percent and the real return is 7.3 percent.
To calculate the inflation rate, we use the formula: Inflation rate = Nominal return - Real return. So, the inflation rate would be: 11.1 - 7.3 = 3.8 percent.
This means that the value of money decreased by 3.8 percent over the course of the year due to inflation.
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beating the competition called a competitive
advantage. Competitive advantage comes from one
(or a combination) of all of the following factors
EXCEPT
a
quality
b
quantity
C
price
d
service
e
location
Answers
Answer:
e
Explanation:
i don't know but have a feeling that it's e because I like e eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee33333333333333e333333333333333333ee trust me it's e