Valix Finacc vol 1 Problem 11-15

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 11-15

1.  Share in 2008 net income                                                                                    900,000

    Amortization of excess (400,000 / 20)                                                                 (   20,000)

    Investment income for 2008                                                                                 880,000

    Acquisition cost (20,000 x 120)                                                                           2,400,000

    Net assets acquired (25% x 8,000,000)                                                                2,000,000

    Excess of cost                                                                                                       400,000

                                                                                                          

2.  Share in 2008 net income                                                                                    975,000

    Amortization of excess                                                                                       (   20,000)

     Investment income for 2009                                                                                955,000

3.  Acquisition cost                                                                                                2,400,000

     Share in net income:

            2008 (25% x 3,600,000)                                                                                   900,000

            2009 (25% x 3,900,000)                                                                                   975,000

     Share in cash dividend:

            2008 (20,000 x 16)                                                                                     (   320,000)

            2009 (20,000 x 20)                                                                                     (   400,000)

     Amortization of excess:

            2008 (400,000 / 20)                                                                                   (     20,000)

            2009                                                                                                         (     20,000)

     Investment balance – 12/31/2009                                                                   3,515,000