Advance Accounting help needed. Please

SoccerBoss
Category:
Accounting

Question description

On January 1, 2012, Uncle Company purchased 80 percent of Nephew Company’s capital stock for $500,000 in cash and other assets. Nephew had a book value of $600,000 and the 20 percent noncontrolling interest fair value was $125,000 on that date. On January 1, 2011, Nephew had acquired 30 percent of Uncle for $280,000. Uncle’s appropriately adjusted book value as of that date was $900,000.

 Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $20,000 in dividends to shareholders each year and Nephew distributes $5,000 annually. Any excess fair-value allocations are amortized over a 10-year period.

 YearUncle
Company
Nephew
Company
 2012$90,00030,000 

 2013120,000 40,000  
 2014140,000 50,000  
a.

Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary’s income recognized by Uncle in 2014?

b.

What is the noncontrolling interest’s share of 2014 consolidated net income

The Walston Company is to be liquidated and has the following liabilities:
 Income taxes$8000 
 Notes payable (secured by land)120,000  
 Accounts payable85,000  
 Salaries payable (evenly divided between two employees)6,000  
 Bonds payable70,000  
 Administrative expenses for liquidation20,000  
The company has the following assets:
Book ValueFair Value
 Current assets$80,000  $35,000  
 Land100,000  90,000  
 Buildings and equipment100,000  110,000  
How much money will the holders of the notes payable collect following liquidation?
A.  Total amount collected? 

Tutor Answer

(Top Tutor) Daniel C.
(997)
School: UT Austin
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