Questions from Advanced Accounting

Q: What indicates an investor’s ability to significantly influence the decision-making

What indicates an investor’s ability to significantly influence the decision-making process of an investee?

Q: On July 1, 2016, Killearn Company acquired 88,000

On July 1, 2016, Killearn Company acquired 88,000 of the outstanding shares of Shaun Company for $13 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to s...

Q: On January 1, 2017, Fisher Corporation purchased 40 percent (

On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of Bowden, Inc., for $982,000 in cash and began to use the equity method for the investment. The price p...

Q: On January 1, 2017, Stream Company acquired 30 percent of

On January 1, 2017, Stream Company acquired 30 percent of the outstanding voting shares of Q-Video, Inc., for $770,000. Q-Video manufactures specialty cables for computer monitors. On that date, Q-Vid...

Q: On January 1, Puckett Company paid $1.6 million

On January 1, Puckett Company paid $1.6 million for 50,000 shares of Harrison’s voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was m...

Q: In January 2017, Domingo, Inc., acquired 20 percent of

In January 2017, Domingo, Inc., acquired 20 percent of the outstanding common stock of Martes, Inc., for $700,000. This investment gave Domingo the ability to exercise significant influence over Marte...

Q: Franklin purchases 40 percent of Johnson Company on January 1 for $

Franklin purchases 40 percent of Johnson Company on January 1 for $500,000. Although Franklin did not use it, this acquisition gave Franklin the ability to apply significant influence to Johnson’s ope...

Q: Evan Company reports net income of $140,000 each year

Evan Company reports net income of $140,000 each year and declares an annual cash dividend of $50,000. The company holds net assets of $1,200,000 on January 1, 2017. On that date, Shalina purchases 40...

Q: Panner, Inc., owns 30 percent of Watkins and applies the

Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $54,000 and then sells it to Watkins for $90,000. At the end of the year,...

Q: Alex, Inc., buys 40 percent of Steinbart Company on January

Alex, Inc., buys 40 percent of Steinbart Company on January 1, 2017, for $530,000. The equity method of accounting is to be used. Steinbart’s net assets on that date were $1.2 millio...