User Account

All Pages

Discuss the strengths and weaknesses of the income statement

Assignment Help Financial Accounting
Reference no: EM132980612

Question - IBM acquires 80% of ABC, Inc. for $40 million on January 1, 2013. At the time of acquisition, ABC has total net assets with a fair value of $25 million. For the years ending December 31, 2013, and December 31, 2014, ABC, Inc. reports net income (loss) and pays dividends as shown here:

Net Income (loss) $2,000,000

Dividends Paid $1,000,000 (2014)

Net Income (Loss) $(600,000)

Dividends Paid $800,000 (2013)

The excess of the acquisition price over the fair value of net assets acquired is assigned to goodwill. Since goodwill has an indefinite life, it is not amortized.

Discuss the strengths and weaknesses of the income statement and balance sheet in reflecting the economic substance of this transaction and subsequent business activities using the equity method.

Reference no: EM132980612

Questions Cloud

Compute the amount of deposit : Bravo Bank offers 2 percent compounded annually. Compute the amount of deposit after being kept 10 years at each bank
Effective hr strategic business partner : Explain what it means to be an effective HR strategic business partner. Why is it important for HR to be involved in all aspects of the strategic planning proce
What amount should be reported in the statement : Ducky Company reported the following information at the end of reporting period: What amount should be reported in the statement position
Differentiate between primary and secondary markets : Differentiate between primary and secondary markets in the stock market. Define and describe the supply and demand curves for bonds
Discuss the strengths and weaknesses of the income statement : Discuss the strengths and weaknesses of the income statement and balance sheet in reflecting the economic substance of this transaction
At what value will be closing inventory of the company : At what value will be closing inventory of the company be reported in its statement of financial position as at 30 September 2021
Calculate the amount of application money : Calculate the amount of application money that would be applied to application and calls (including allotment). Prepare journal entries
What would be the effective annual rate of interest : You were asked to pay an annual road fund tax. What would be effective annual rate of interest that would make you indifferent between these two payment plans
Critically evaluate application of responsibility accounting : In relation to the above statement, critically evaluate the application of responsibility accounting in today's business environment

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the unadjusted balance per ledger

What the unadjusted balance per ledger is? A deposit made by Raphael's customer was erroneously credited to Rafael Company 3,000

  What firm equity value per shares is

If cost of equity is 12%, WACC of capital is 8%, and firm has 100 million shares outstanding in 2020, then firm's equity value per shares as of 2020 is?

  Amount for the business and personal portion of the trip

Kim works for a clothing manufacturer as a dress designer. She travels to New York City to attend five days of fashion shows and then spends three days sightseeing. presuming no reimbursement, how much can kim deduct as to the trip? Assume that lodgi..

  What the employer total fica payroll tax for the employee

What the employer's total FICA payroll tax for this employee is? An employee earned $42,400 working for an employer in the current year.

  How much net income should be distributed to emerson

Emerson and Dakota had $25,000 and $140,000 respectively in their January 1 capital balances. Net income for the year was $220,000. How much net income should be distributed to Emerson?

  Negotiated the purchase of a new piece of equipment

On July 1, 2016, Alpha Company negotiated the purchase of a new piece of equipment with the seller Zulu Company. The equipment was list for $200,000. Smooth talking Alpha was able to negotiate the purchase price and acquired the equipment at $180,000..

  Determine what is the effective yield to maturity

What is the effective yield to maturity if we assume the bond is currently priced at $896.64 and additionally informed that coupons are paid semi-annually?

  What is the bond default risk premium

A Corporation's 20-year bonds have an equilibrium rate of return is 10.00 percent. What is the bond default risk premium

  What are the journal entry to record payroll tax expense

Assume earnings subject to state and federal unemployment compensation taxes are $5,250 at the federal rate of 0.8% and state rate of 5.4%. What are the journal entry to record the payroll tax expense for the period.

  Find the financial break-even quantity

Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your answer to 2 decimal places)

  When will the balance of construction in progress computed

When will the balance of construction in progress computed under cost recovery method be higher than the balance of construction in progress

  Will there be any dilution in eps of sun pharma

If Sun Pharma accepts an exchange ratio of 0.4 and synergy benefits are not realized, will there be any dilution in EPS of Sun Pharma?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd