HOYLE高级会计(第8版)习题答案(第一章).docVIP

Chapter 1 the equity method of accounting for investments Answers to Problems D B C A Acquisition price $1,600,000 Equity income ($560,000 × 40%) 224,000 Dividends (50,000 shares × $2.00) (100,000) Investment in Harrison Corporation as of December 31 $1,724,000 5. A Acquisition price $700,000 Income accruals: 2008—$170,000 × 20% 34,000 2009—$210,000 × 20% 42,000 Amortization (below): 2008 (10,000) Amortization: 2009 (10,000) Dividends: 2008—$70,000 × 20% (14,000) 2009—$70,000 × 20% (14,000) Investment in Bremm, December 31, 2009 $728,000 Acquisition price $700,000 Bremm’s net assets acquired ($3,000,000 × 20%) (600,000) Patent $100,000 Annual amortization (10 year life) $10,000 6. B Purchase Price of Baskett Stock $500,000 Book Value of Baskett ($900,000 × 40%) (360,000) Cost in Excess of Book Value $140,000 Life Annual Payment identified with undervalued Amortization Building ($140,000 × 40%) 56,000 7 yrs. $8,000 Trademark ($210,000 × 40%) 84,000 10 yrs. 8,400 Total $ -0- $16,400 Cost of Purchase $500,000 Income Accrued ($90,000 × 40%) 36,000 Amortization (above) (16,400) Dividend Collected ($30,000 × 40%) (12,000) Investment in Baskett $507,600 7. D The 2008 purchase must be reported using the equity method. Purchase Price of Goldman Stock $600,000 Book Value of Goldman Stock ($1,200,000 × 40%) (480,000) Goodwill $120,000 Life of Goodwill indefinite Annual Amortization (-0-) Cost on January 1, 2008 $600,000 2008 Income Accrued ($140,000 x 40%) 56,000 2008 Dividend Collected ($50,000 × 40%) (20,000) 2009 Income Accrued ($140,000 × 40%) 56,000 2009 Dividend Collected ($50,000 × 40%) (20,000) 2010 Income Accrued ($140,000 × 40%) 56,000 2010 Dividend Collected ($50,000 × 40%) (20,000) Investment in Goldman, 12/31/10 $7