Explore BrainMass

Explore BrainMass

    Prepare an allocate schedule, income and investment balance

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Earth-Q Corporation paid $1,680,000 for a 30 interest in Tremor Corporation's outstanding voting stock on January 1, 2006. The book values and fair values of Tremor's assets and liabilities on January 1, along with amortization data, are as follows:

    Book Value Fair Value
    Cash $400,000 $400,000
    AR-net 700,000 700,000
    Inventories (sold in 2006) 1,000,000 1,200,000
    Other current assets 200,000 200,000
    Land 900,000 1,700,000
    Buildings-net (10 yr remaining life) 1,500,000 2,000,000
    Equipment-net (7 yr remaining life) 1,200,000 500,000
    Total Assets 5,900,000 6,700,000

    AP 800,000 800,000
    Other current liabilities 200,000 200,000
    Bonds payable (due Jan. 1, 2013) 1,000,000 1,100,000
    Capital stock $10 par 3,000,000
    Retained earnings 900,000
    Total equities 5,900,000

    Tremor Corporation reported net income of $1,200,000 for 2006 and paid dividends of $600,000.

    1. Prepare a schedule to allocate the investment cost/book value differentials relating to Earth-Q's investment in Tremor.
    2. Calculate Earth-Q's income fom Tremor for 2006.
    3. Determine the balance of Earrth-Q investment of Tremor account at December 31, 2006.

    © BrainMass Inc. brainmass.com June 3, 2020, 11:55 pm ad1c9bdddf
    https://brainmass.com/business/accounting/prepare-allocate-schedule-income-investment-balance-308222

    Solution Summary

    The expert prepares an allocate schedule, income and investment balance.

    $2.19

    ADVERTISEMENT