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On April 1, 2011, BigBen Company acquired 30% of the shares of LittleTick, Inc. BigBen paid $100,000 for the investment, which is $40,000 more than 30% of the book value of LittleTick's identifiable net assets. BigBen attributed $15,000 of the $40,000 difference to inventory that will be sold in the remainder of 2011, and the rest to goodwill. LittleTick recognized a total of $20,000 of net income for 2011, and paid a total of $10,000 of dividends to shareholders. BigBen's investment in LittleTick will affect BigBen's 2011 net income by:
A. a loss of $10,500.
B. earnings of $4,500.
C. earnings of $1,125.
D. earnings of $3,450.
Cindy Lore, his accountant, says that more information is needed to determine the firm's financial well being. Analyze the situation and determine who is correct and support your position.
A machine is purchased by making payments of $5,000 at the beginning of each of the next five years. The interest rate was 10%. The future value of an ordinary annuity of 1 for five periods is 6.10510. The present value of an ordinary annuity of 1 fo..
A CPA firm was purchased by a public company. The acquirer performs other professional services and has banking, insurance, and brokerage subsidiaries.
On January 1, 2010, Kentwood Company issued bonds with a face value of $800,000. The bonds carry a stated interest of 7% payable each January 1 and July 1. Prepare the journal entry for the issuance assuming the bonds are issued at 97.
Karen, in forming a new corporation, transfers land to the corporation in exchange for the 100 percent of the stock of the corporation. Karen's basis in the land is $275,000, and the corporation assumes a liability on the property in the amount of..
Determine the tax consequences of the redemption to Tammy and to Broadbill under the following independent circumstances.
Quail issued $200,000 of its 10-year 12% bonds for $224,924 on October 1, 2010. The effective rate on the bonds was 10% and interest is paid each October 1 and April 1. Assuming Quail uses the effective interest method, the adjusting entry on Dece..
Cash flow does not rely on which of the following: A) the payment patterns of customers. B) the monetary policy of the Federal Reserve. C) the speed at which suppliers and creditors process checks. D) the efficiency of the banking system.
What are the major classifications of inventory? Why would someone choose to use a perpetual over a period inventory system, or vice versa?
Given the quantity and total fixed and variable costs, compute the remaining costs the complete the following table.
Scott Company's variable expenses are 70% of sales. The company's break-even point in dollar sales is $2,420,000. If sales are $53,000 below the break-even point, the company would report a:
Explain why a firm like Grate Care might decide to use both residual income and return on investment as measures of performance.
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