Calculate and compare the following ratios for fort bend

Reference no: EM13608255

Fort Bend Company contributes cash of $250,000 and Costal Bend Company contributes net assets of $250,000 to create Victoria Company on January 2011. Fort Bend and Costal Bend each received a 50% equity interest in Victoria. Victoria's financial statements for the first year of operations are as follows. Victoria Company Income Statement 2011 Revenues $170,000 Expenses 100,000 Income before tax 70,000 Tax expense 10,000 Net income $60,000 Victoria Company Balance Sheet December 31, 2011 Cash $100,000 Liabilities $190,000 Inventory 130,000 Common stock 500,000 PPE (net) 520,000 Retained earnings 60,000 Total $750,000 Total $750,000 Before making any accounting entries related to its investment in Victoria, Fort Bend Company's financial statement for the year ended December 31, 2011 are as follows: Fort Bend Company Income Statement 2011 Revenues $900,000 Expenses (500,000) Income before tax 400,000 Tax expense (100,000) Net income $300,000 Fort Bend Company Balance Sheet December 31, 2011 Cash $150,000 Liabilities $100,000 Inventory 200,000 Common stock 850,000 PPE (net) 750,000 Retained earnings 400,000 Invest in Victoria 250,000 Total $1,350,000 Total $1350,000

Required:

(1) Restate Fort Bend's 2011 financial statements to properly account for its investment in Victoria Company under 1) the proportionate consolidation method, and 2) the equity method.

(2) Calculate and compare the following ratios for Fort Bend Company under the two different methods for accounting for its investment in Victoria Company: 1)profit margin (net income/revenues), and 2) debt to equity (total liabilities / total stockholders' equity)

Reference no: EM13608255

Questions Cloud

Ritchie company sold some fixed assets for a gain of : ritchie company sold some fixed assets for a gain of 100000. the firms tax rate is 25. how would ritchie company report

Byters on call provides computer repairs on-site and has a : byters on call provides computer repairs on-site and has a contribution margin ratio of 32 a contribution margin per

A proton and an electron are moving due east in a constant : a proton and an electron are moving due east in a constant electric field that also points due east. the electric field

The mile time of all potential runners in this region are : a regional track championship has decided that they will invite the fastest 15 of runners in their region runners with

Calculate and compare the following ratios for fort bend : fort bend company contributes cash of 250000 and costal bend company contributes net assets of 250000 to create

Current assets for kearney company are 120000 and total : current assets for kearney company are 120000 and total assets are 600000. current liabilities are 80000 and total

At cruising altitude a commercial jet engine consumes an : at cruising altitude a commercial jet engine consumes an average of 850 gallons of fuel per hour with a standard

The particles are evenly spaced with 00758 m between : suppose that a particle accelerator is used to move two beams of particles in opposite directions. in a particular

Suppose a firm had an extraordinary loss of 300000 if the : suppose a firm had an extraordinary loss of 300000. if the firms tax rate is 35 how will the loss be shown in the

User Account

All Pages