Questions from Advanced Accounting

Q: BuyCo, Inc. holds 25 percent of the outstanding shares of

BuyCo, Inc. holds 25 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with thi...

Q: On January 1, 2016, Halstead, Inc., purchased 75

On January 1, 2016, Halstead, Inc., purchased 75,000 shares of Sedgwick Company common stock for $1,480,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Se...

Q: Echo, Inc., purchased 10 percent of ProForm Corporation on January

Echo, Inc., purchased 10 percent of ProForm Corporation on January 1, 2017, for $345,000 and accounted for the investment using the fair-value method. Echo acquires an additional 15 percent of ProForm...

Q: Parrot Corporation holds a 42 percent ownership of Sunrise, Inc.,

Parrot Corporation holds a 42 percent ownership of Sunrise, Inc., and applies the equity method to account for its investment. Parrot assigned the entire original excess purchase price over book value...

Q: Several years ago, Einstein, Inc., bought 40 percent of

Several years ago, Einstein, Inc., bought 40 percent of the outstanding voting stock of Brooks Company. The equity method is appropriately applied. On August 1 of the current year, Einstein sold a por...

Q: Matthew, Inc. owns 30 percent of the outstanding stock of

Matthew, Inc. owns 30 percent of the outstanding stock of Lindman Company and has the ability to significantly influence the investee’s operations and decision making. On January 1, 2018, the balance...

Q: On December 31, 2016, Akron, Inc. purchased 5

On December 31, 2016, Akron, Inc. purchased 5 Percent of Zip Company’s common shares on the open market in exchange for $16,000. On December 31, 2017, Akron, Inc., acquires an additi...

Q: Belden, Inc. acquires 30 percent of the outstanding voting shares

Belden, Inc. acquires 30 percent of the outstanding voting shares of Sheffield, Inc. on January 1, 2017, for $312,000, which gives Belden the ability to significantly influence Sheffield. Sheffield ha...

Q: Harper, Inc. acquires 40 percent of the outstanding voting stock

Harper, Inc. acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2017, for $210,000 in cash. The book value of Kinman’s net assets on that date was $400,000, although o...

Q: On January 1, 2018, Pine Company owns 40 percent (

On January 1, 2018, Pine Company owns 40 percent (40,000 shares) of Seacrest, Inc., which it purchased several years ago for $182,000. Since the date of acquisition, the equity method has been properl...