Reference no: EM131997444
Question - On July 1, 2013, 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 significantly influence the investee's decisions.
As of July 1, 2013, the investee had assets with a book value of $3 million and liabilities of $74,400. At the time, Shaun held equipment appraised at $364,000 above book value; it was considered to have a 7-year remaining life with no salvage value. Shaun also held a copyright with a 5-year remaining life on its books that was undervalued by $972,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.
Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income , earned evenly throughout each year, was $598,000 in 2013, $639,000 in 2014, and $692,400 in 2015.
In addition, Killearn sold inventory costing $91,200 to Shaun for $152,000 during 2014.
Shaun resold $92,000 of this inventory during 2014 and the remaining $60,000 during 2015.
a. Determine the equity income to be recognized by killearn during each of these years.
b. Compute Killearn's investment in Shaun Company's balance as of December 31, 2015.
|
What does the sotu say about the state of security in the us
: What signals are sent about the ideas we have covered so far like deterrence, the balance of power, state sovereignty, and terrorism?
|
|
Akkadian still matter has a valid point
: Does the author Aviya Kushner in his article why dead languages like akkadian Still Matter has a valid point? should we be actively preserving languages?
|
|
Calculate the investment in coca-cola femsa balance
: Calculate the Investment in Coca-Cola FEMSA balance, reported on Coca-Cola' December 31, 2014 Show all your calculations
|
|
What is the objective of accounting standards
: A sound foundation is necessary for success in any task from building a house to putting on make-up. What is the objective of accounting standards
|
|
Determine the equity income to be recognized by killearn
: Shaun resold $92,000 of this inventory during 2014 and the remaining $60,000 during 2015. Determine the equity income to be recognized by killearn
|
|
What is the arithmetic return for the stock
: A stock had returns of 18 percent, 12 percent, 19 percent, 14 percent, 13 percent, and -7 percent over the last six years.
|
|
Will the options have the same premium
: The stock price of XYZ Co. is currently $40. There exists both a put and a call option on this stock, and both options expire 6 months from now.
|
|
What are the basic functions of a state
: What are the basic functions of a state? What connection do you see between the basic functions a state performs and major ideologies?
|
|
What tax issues should georgia corporation consider
: George Corporation acquires a business automobile for $30,000 on December, What tax issues should Georgia Corporation consider
|