Reference no: EM133207282
Assignment - Pass Journal Entries in Books of X Corporation Using Cost Method Questions
Q1. Assume X Corp creates a subsidiary, Y Corp, and invests $500,000 cash in exchange for all of the $1 par common stock (2,000 shares). What would journal entries X and Y make at the time of the investment?
Q2. X Corporation created Y Corporation with a transfer of $1,000 cash. During Y Corp.'s first year of operations, it generated a net loss of $50 and paid no dividends. During Y Corp.'s second year of operations, it generated net income of $100 and paid cash dividends of $30.
A. Pass journal entries in the books of X corp. in year 1 and year 2 using equity method.
B. What is the balance of investment account at the end of year 2 using equity method?
C. Pass journal entries in the books of X corp. in year 1 and year 2 using cost Method.
D. What is the balance of investment account at the end of year 2 using cost method?
Q3. X Corp. Acquired 100% of common stock of Y Corp. Paying $ 2 Million in return for 50 Thousand common stock with $ 1 par value. Y Corp. realized $100 Thousand net income and paid $30 Thousand cash dividends.
Required - Pass basic elimination entries in consolidation work sheet.
Q4. X Corp. Acquired 100% of common stock of Y Corp. X Corp. assumed acquisition expenses as follows (amounts in $)
Legal fees 50,000
Accounting fees 30,000
Travel expenses 10,000
Legal fees (stock issue) 20,000
Accounting fees (stock) 15,000
SEC filing fees (stock) 10,000
Prior to the acquisition date, $90,000 have been paid and capitalized to a deferred charges account on the balance sheet. The remaining $45,000 has not been paid or accrued.
Required - Prepare the journal entry to record the acquisition expenses.