Chapter 1 Problem 11-10
Requirement a
1. Investment in associate 3,500,000
Cash 3,500,000
2. Investment in associate 1,600,000
Investment income (40% x 4,000,000) 1,600,000
3. Cash (40% x 1,000,000) 400,000
Investment in associate 400,000
4. Investment income 150,000
Investment in associate (600,000 / 4) 150,000
Cost 3,500,000
Book value of interest acquired (40% x 7,000,000) 2,800,000
Excess of cost over book value 700,000
Excess attributable to equipment (40% x 1,500,000) ( 600,000)
Excess attributable to inventory (40% x 500,000) ( 200,000)
Excess net fair value over cost ( 100,000)
5. Investment income 200,000
Investment in associate 200,000
6. Investment in associate 100,000
Investment income 100,000
Requirement b
Share in net income 1,600,000
Amortization of excess attributable to equipment ( 150,000)
Amortization of excess attributable to inventory ( 200,000)
Excess net fair value over cost 100,000
Net investment income 1,350,000
Problem 11-11
1. Investment in associate 1,700,000
Cash 1,700,000
2. Investment in associate 260,000
Investment income (40% x 650,000) 260,000
3. Cash (40% x 150,000) 60,000
Investment in associate 60,000
4. Investment in associate 520,000
Revaluation surplus – investee (40% x 1,300,000) 520,000
Note:
1. Cost 1,700,000
Interest acquired (40% x 4,000,000) 1,600,000
Goodwill – not amortized 100,000
2. There is no need to adjust for the difference in depreciation method. If both entities
a method that best reflects the flow of benefits as the assets are consumed, then
there is no policy difference.
No comments:
Post a Comment