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Sunday, November 14, 2010

Valix Finacc vol 1 Problem 11-31 to 35

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 11-31 to 35


Problem 11-31  Answer  A


Acquisition cost                                                                                                         5,160,000
Net assets acquired (30% x 11,800,000)                                                                      3,540,000
Excess of cost                                                                                                            1,620,000
Attributable to depreciable assets (30% x 2,600,000)                                                    780,000
Attributable to goodwill                                                                                              840,000

Acquisition cost                                                                                                         5,160,000
Share in net income (30% x 3,600,000)                                                           1,080,000
Share in dividends (30% x 400,000)                                                                             (  120,000)
Amortization (780,000/4)                                                                                           (  195,000)
Investment balance – December 31                                                                         5,925,000           

Problem 11-32  Answer  B


Acquisition cost                                                                                                         2,560,000
Net assets acquired (40% x 5,000,000)                                                                        2,000,000
Excess of cost                                                                                                               560,000



                                                                                                              150        
Attributable to equipment (40% x 800,000)                                                                 320,000
Attributable to building (40% x 600,000)                                                                      240,000
                                                                                                                                    560,000

Acquisition cost                                                                                                         2,560,000
Net income (40% x 1,600,000)                                                                                      640,000
Cash dividend (40% x 1,000,000)                                                                              (   400,000)
Amortization of excess:
      Equipment (320,000 / 4)                                                                                     (     80,000)
      Building (240,000 / 12)                                                                                        (     20,000)
Carrying value of investment – 12/31/2008                                                               2,700,000

                                                           
Problem 11-33  Answer  A

Net income                                                                                                               5,000,000
Less: Preference dividend (10% x 2,000,000)                                                                  200,000
Net income to ordinary shares                                                                                  4,800,000
Investment income (50% x 4,800,000)                                                                        2,400,000


Problem 11-34


Question 1 – Answer  B

            Share in 2008 net income (30% x 800,000)                                                        240,000

Question 2 – Answer  B

            Acquisition cost                                                                                             2,000,000
            Share in net income – 2008                                                                             240,000
            Cash dividends – 2008 (30% x 500,000)                                                        (   150,000)
            Book value – December 31, 2008                                                                  2,090,000

Question 3 – Answer  B

            Book value – December 31, 2008                                                                  2,090,000
            Share in net income up to June 30, 2009 (30% x 1,000,000)                              300,000
            Book value – June 30, 2009                                                                           2,390,000

            Sales price                                                                                                     1,500,000
            Book value sold (2,390,000 x ½)                                                                     1,195,000
            Gain on sale                                                                                                     305,000




                                                                                                             151

Problem 11-35  Answer  C

Acquisition cost (30,000 x 120)                                                                                   3,600,000
Deficit on January 1, 2008 (30% x 500,000)                                                               (   150,000)
Carrying value of investment – 1/1/2008                                                                  3,450,000
Net income for 2008 (30% x 700,000)                                                                            210,000
Net income for 2009 (30% x 800,000)                                                                            240,000
Cash dividend on 12/31/2009 (30% x 400,000)                                             (   120,000)
Carrying value of investment – 12/31/2009                                                               3,780,000                       
Another approach

Acquisition cost                                                                                                        3,600,000
Share in retained earnings – 12/31/2009 (30% x 600,000)                                             180,000
Carrying value of investment – 12/31/2009                                                              3,780,000

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