Reference no: EM131361364

Exercise 1: Asset Purchase v Stock Purchase

Frylock Inc. is thinking about undertaking vertical integration by taking over the functions performed by one of their suppliers, Meat Wad Inc. Frylock can either buy the assets of, or 100% of the outstanding stock of Meat Wad for $600,000 plus $10,000 in direct aquisition costs. Below is financial information for Meat Wad as of 12/31/17:

Meat Wad, Inc.
Balance Sheet as of 12/31/17
Assets	Book	FMV	Liabilities	Book	FMV
Cash	$ -	$ -	A/P	$ 25,000	$ 25,000
A/R	150,000	125,000	Notes Payable	75,000	75,000
Inventory	175,000	200,000	Bonds Payable	150,000	150,000
Trademark	-	10,000
Net Fixed Assets	200,000	250,000	Equity	275,000
Total Assets	$ 525,000		Total Liabilities & O.E.	$ 525,000

A) Complete the journal entry made by Frylock to account for an asset purchase of Meat Wad on 12/31/17 by entering the required amounts into the gray shaded cells. When correct, the cells will change color:

B) Complete the journal entry made by Meat Wad to account for the asset purchase by Frylock on 12/31/17 by entering the required amounts into the gray shaded cells. When correct, the cells will change color:

C) Complete the journal entry made by Frylock to account for a 100% stock purchase of Meat Wad on 12/31/17 by entering the required amounts into the gray shaded cells. When correct, the cells will change color:

Exercise 2: Accounting for the Income of a Subsidiary

Meat Wad Inc., 100% owned by Frylock Inc., reports the following income and dividend results for 2017:

Net Income; 1st Quarter (3/31)	$150,000	Net Income; 3rd Quarter (9/30)	$45,000
Dividend Declared (6/15/17)	$10,000	Dividend Declared (12/15/17)	$15,000
Net Income; 2nd Quarter (6/30)	$75,000	Net Income; 4th Quarter (12/31)	$50,000

A) Record the 2017 journal entries made by Frylock to account for the income / dividends of Meat Wad using the Cost Method of accounting for the income of a subsidiary by entering the required amounts in the gray shaded cells. When correct, the cells will change color:

B) Record the 2012 journal entries made by Frylock to account for the income / dividends of Meat Wad using the Equity Method of accounting for the income of a subsidiary by entering the required amounts in the gray shaded cells. When correct, the cells will change color:

Exercise 3: Rodgers CPA Review "Interactive Practice Quiz"

As part of your registration for this course, each student is given access to the Rodgers CPA Review website, a great resource for both lecture material and review / expectation of the actual CPA exam. For our course, we're going to be utilizing Rodgers' "Interactive Practice Quizzes". The "Interactive Practice Quizzes" are a great resource for developing an understanding of the material at hand - they are not intended to be assessments. When taking an "Interactive Practice Quiz" you have the ability to draw from resources on the website to develop an understanding of the material in order to answer the questions.

In certain sections of our class, you're going to be asked to answer the multiple choice questions within specific sections of Rodgers CPA Review "Interactive Practice Quizzes". Below will be specific instructions on which area to work on, and what you need to complete and post up on this page to demonstrate your participation in these activities.

For the first three weeks of this class we'll be covering business combinations and consolidations, which align to the FAR 31 section in Rodgers CPA Review. There is an "Interactive Practice Quiz" for FAR 31 which contains approximately 60 questions. For weeks #1 through #3 of this class, you'll be working through this "Interactive Practice Quiz".

For week #2, you will be required to have attempted at least 40 of the multiple choice questions in the FAR 31 Business Combinations & Consolidations "Interactive Practice Quiz" and successfully answer at least 30 of those (20/15 should have already been done in week #1). You're more than welcome to do more if you'd like! Week #3 will be the remaining ~ additional 20 questions / 15 correct.

To complete this week's requirement, attempt at least 20 more questions with at least 15 correct responses, and then take a screen shot of your completion summary. Insert the screen shot below and simply submit with this file when uploaded this completed homework assignment.

Attachment:- Exercises.xlsx