Reference no: EM132470042
Problem - Huge Corporation acquires 5% of the outstanding voting shares of Tiny Corporation on January 1, 2016, for $100,000 when Tiny Corporation has a book value of $1,500,000. Despite the low percentage of ownership, Huge Corporation is able to exercise significant influence over Tiny, and therefore uses the equity method to account for the investment. An additional 30% of the stock is purchased on January 1, 2017, for $651,000.
The following information is available for Tiny Corporation:
|
|
2016
|
2017
|
2018
|
|
Net Income
|
700,000
|
750,000
|
900,000
|
|
Dividends
|
150,000
|
100,000
|
100,000
|
The Fair Value of Tiny Corporation's stock at December 31, 2016 was $2,170,000.
The book values of Tiny Corporation's asset and liability accounts are considered as equal to fair values except for a Customer List whose value accounted for Huge Corporation's excess cost in each purchase. The Customer List had a remaining life of 10 years at January 1, 2016.
Required -
1. If Huge Corporation sells its entire investment in Tiny Corporation on January 1, 2019, for $1,300,000 cash, what is the impact on Huge Corporation's income? Show all your calculations.
|
What was the amount of stockholders equity at December
: The owner's equity at December 31, 2011, amounted to $50,000. What was the amount of stockholders' equity at December 31, 2012
|
|
How long will eic be prohibited if a taxpayer is denied eic
: Prove he had the right to claim his children, and the EIC was denied on Rick's return. How long will EIC be prohibited if a taxpayer is denied EIC due to fraud?
|
|
Compute the current ratio based on Shamrock balance sheet
: Freight-in of $3,200 was debited to advertising expense on December 28, 2016. Compute the current ratio based on Shamrock's balance sheet
|
|
Determine sales invoices to the customers process
: Determine and prepare the Sales Invoices to the customers , Bills from the Vendors, Purchase Orders and Credit Note process in detail
|
|
What is the impact on Huge Corporation income
: If Huge Corporation sells its entire investment in Tiny Corporation on January 1, 2019, for $1,300,000 cash, what is the impact on Huge Corporation's income
|
|
Calculate capricorns earnings per share
: Prepare a statement of retained earnings for the year ended December 31, 2023. Calculate Capricorn's earnings per share for 2023.
|
|
ETCS 600 Statistical Applications for Technology Assignment
: ETCS 600 Statistical Applications for Technology Assignment Help and Solution, University of Maryland Eastern Shore - Homework Help
|
|
What amount of equity income should Huge recognize
: Assume that Huge Corporation sells inventory to Tiny Corporation during 2017 and 2018. What amount of equity income should Huge recognize for the year 2018
|
|
Explaining the costing and financial data
: Determine and prepare a marginal costing cost statement for your product on a 'per unit' and 12 months sales/production basis.
|