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03 Investment in Associate Solutions Multiple Choice

The document contains 18 problems showing calculations for equity investments in subsidiary companies. It provides acquisition costs, net incomes, dividends, amortization of excess costs, and carrying values for the investments.

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22 views3 pages

03 Investment in Associate Solutions Multiple Choice

The document contains 18 problems showing calculations for equity investments in subsidiary companies. It provides acquisition costs, net incomes, dividends, amortization of excess costs, and carrying values for the investments.

Uploaded by

XjakafY
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Problem 17-8

Acquisition Cost 7,000,000


Net Income 1,800,000 x 40% 360,000
Cash Dividend (120,000)
Amortization of excess cost:
Intangible Asset 1,000,000/10 (100,000)
Carrying Value of Investment 7,140,000 C

Acquisition Cost 7,000,000


Net Asset Acquired 9,000,000 x 40% (6,000,000)
Excess of Cost over book value 1,000,000

Problem 17-9
Net Income 1,600,000
% share 20%
Year-end Income 320,000 B

Problem 17-10
Share in Net Income 5,000,000 x 9/12 x 30% 1,125,000 C

Problem 17-11
Acquisition Cost 4,000,000
Net Income 5,000,000 x 10% 500,000
Cash Dividend 1,500,000 x 10% (150,000)
Carrying Value of Investment 4,350,000 A

Problem 17-12
Acquisition Cost 1,870,000 C
Net Income 1,200,000 x 6/12 x 25% 150,000
Cash Dividend 480,000 x 25% (120,000)
Carrying Value of Investment 1,900,000

Problem 17-13
Acquisition Cost 4,000,000
Net Income 1,200,000 x 40% 480,000
Cash Dividend (80,000)
Amortization of excess cost:
Depreciation Plant 360,000/18 (20,000)
Inventory (totally sold) (40,000)
Carrying Value of Investment 4,340,000 C

Acquisition Cost 4,000,000


Net Asset Acquired 9,000,000 x 40% (3,600,000)
Excess of Cost over book value 400,000

Understatement of Plant 900,000 x 40% 360,000


Understatement of Inventory 100,000 x 40% 40,000
400,000
Problem 17-14
Acquisition Cost 9,500,000
Net Income 10,000,000 x 40% 4,000,000
Cash Dividend (1,600,000)
Amortization of excess cost:
Land (1,000,000)
Equpment 2,000,000/4 (500,000)
Inventory (400,000)
Carrying Value of Investment 10,000,000 A

Acquisition Cost 9,500,000


Net Asset Acquired 15,000,000 x 40% (6,000,000)
Excess of Cost over book value 3,500,000

Understatement of Land 2,500,000 x 40% 1,000,000


Understatement of Equipment 5,000,000 x 40% 2,000,000
Understatement of Inventory 2,000,000 x 40% 800,000
3,800,000

Problem 17-15
Acquisition Cost 2,560,000
Net Income 1,600,000 x 40% 640,000
Cash Dividend (400,000)
Amortization of excess cost:
Equpment 800,000/4 (200,000)
Building 600,000/12 (50,000)
Carrying Value of Investment 2,550,000 A

Acquisition Cost 2,560,000


Net Asset Acquired 5,000,000 x 40% (2,000,000)
Excess of Cost over book value 560,000

Understatement of Equipment 800,000 x 40% 320,000


Understatement of Building 600,000 x 40% 240,000
560,000

Problem 17-16
Net Income 5,000,000
Cumulative Dividend - Pref (200,000)
Net Income 4,800,000
% share 50%
Investment Income 2,400,000 A

Problem 17-17
Acquisition Cost 5,000,000
Net Income 6,000,000 x 30% 1,800,000
Cash Dividend 1,500,000 x 30% (450,000)
Amortization of excess cost:
Attributable to Land (300,000)
Carrying Value of Investment 6,050,000 B

Acquisition Cost 5,000,000


Net Asset Acquired 12,000,000 x 30% (3,600,000)
Excess of Cost over book value 1,400,000
Attributable to Land 1,000,000 x 30% (300,000)
Implied Goodwill 1,100,000

Problem 17-18
Acquisition Cost 2,560,000
Net Income 1,600,000 x 40% 640,000
Cash Dividend (400,000)
Amortization of excess cost:
Equipment 320,000/4 (80,000)
Building 240,000/12 (20,000)
Carrying Value of Investment 2,700,000 B

Acquisition Cost 2,560,000


Net Asset Acquired 5,000,000 x 40% (2,000,000)
Excess of Cost over book value 560,000

Understatement of Plant 800,000 x 40% 320,000


Understatement of Inventory 600,000 x 40% 240,000
560,000

Problem 17-19
Acquisition Cost 15,000,000 Cash 1,000,000
Net Asset Acquired 25,500,000 x 40% (10,200,000) Accounts receivable 4,000,000
Excess of Cost over book value 4,800,000 Inventory-FIFO 8,000,000
Land 5,500,000
Understatement of Inventory (9,000,000 - 8,000,000) x 40% 400,000 Plant and equipment- net 14,000,000
Understatement of Plant and Equipment (22,000,000 - 14,000,000) x 40% 3,200,000 Liabilities -7,000,000
Understatement of Land (7,000,000 - 5,500,000) x 40% 600,000 Net Asset at Carrying Amount 25,500,000
4,200,000

Share in Net Income for 2022 3,000,000 x 40% 1,200,000


Amortization of excess cost:
Inventory (400,000)
Plant and Equipment 3,200,000 / 10 (320,000)
Investment Income 2022 480,000 B

Share in Net Income for 2023 5,000,000 x 40% 2,000,000


Amortization of excess cost:
Plant and Equipment 3,200,000 / 10 (320,000)
Land (600,000)
Investment Income 2023 1,080,000 A

Acquisition Cost 15,000,000


Investment Income 2022 480,000
Cash Dividend 2022 1,000,000 x 40% (400,000)
Investment Income 2023 1,080,000
Cash Dividend 2023 2,000,000 x 40% (800,000)
Carrying Value of Investment 15,360,000 C

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