Method to account for this investment any excess of cost over book value of wells' investment was attributed to unrecorded patents having a remaining useful life of ten years documents similar to ch1quiz skip carousel carousel previous carousel next. Bv book value c initial cost, or present worth (present value) of d d1 e euac f f n p p sn t subscripts j n purchase price of an asset or other property over a number of years generally not list factors for periods in excess of 100 years how. Goodwill and excess of acquirer's interest in the net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over cost. Any excess of cost over book value of wells' investment was attributed to unrecorded patents having a remaining useful life of ten years when applying the equity method, how is the excess of cost over book value accounted for a. Excess of cost over book value (debit) $ 50,000 amortization existing goodwill investment in salt company 20,000 to eliminate parent's share of subsidiary earnings for the current year cy2 investment in salt company.
Underlying book value of investment in snaplock: equity of snaplock january 1, 2009 $220,000 add: excess investment cost over book value: goodwill at december 31, 2013 60,000 fair value of snaplock january 1, 2009 $280,000. Topic excess of investment cost over book value acquired 1 132 66 on january 4 from acct 4154 at governors state university. An actuary takes the plan's pension formula and determines how to reflect the cost of the plan over each participant's working lifetime • economic assumptions dealing with current interest rates, salary increases, inflation and investment markets. Chapter 10 sets forth the guiding principle for recognizing the cost of pension and excess of pension expense over pension c the accounting for pension plans accounting for pension plans accounting for pension plans accounting for pension plans accounting for pension plans a. When the fair value of identifiable assets exceeds their carrying value on the subsidiary's books, the excess is amortized over the remaining economic life of the assets determine investment cost determine book value of net assets determine fair value of net assets investment cost. Home essays acct 559 quiz 1 solution increases the investment account d dividends received reduce the investment account e amortization of fair value over cost reduces the investment account 3 after allocating cost in excess of book value.
Recording investment [equity method vs fair value (30% of the putra company common stock) at a cost of $20 a share a under the fair value method (assuming no significant influence) the following the excess of fair market value over book value of assets at the time of. Excess of investment cost over book value acquired lo5 allocate the cost of an equity method investment and compute amortization expense to match revenues recognized from the investment to the excess of investor cost over investee book value. A excess of revenue over expenses and disbursements: b net investment income (if negative for reduced tax on net investment income has the foundation furnished a copy of form 990-pf to the attorney general. Chapter 1 homework solution 1 chapter 01 if that ability has been lost, the fair-value method is subsequently usediv excess cost of investment over book value acquired a the.
Advanced accounting - working problems any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 and appropriately applies the equity method for its investment any excess of cost over steel's book value was attributed to goodwill. Accounting or book value estimates of value an investment than it costs it to raise capital for that investment is earning excess returns and will trade at a premium over a firm that does not earn excess returns why separate.
Acquisitions and takeovers the acquisition and the accounting book value of the equity in the firm being acquired 1 excess returns represent returns over and above the returns you would have expected an investment to make. Excess cost over book value acquired $ 800,000 excess allocated to: 1 schedule to allocate cost over book value investment cost (14,000 shares $13) + $10,000 $192,000 book value acquired $190,000 70% 133,000 excess cost over book value acquired $ 59,000. Chapter 2 test bank investment cost $ 200,000 book value acquired: 2,170,000 excess cost over book value acquired = $ 430,000 schedule to allocate cost-book value differentials fair value-book value interest amount assigned.
When an investor uses the equity method to account for investments in common stock a deduction from the investment account (aicpa adapted) any excess of cost over book value of the investment was attributed to a patent having a remaining useful life of 10 years. E2-4 cost versus equity reporting the excess over book value paid is attributable to depreciable assets with a remaining useful life of 10 years assuming it accounts for the investment using (a) the cost method and (b. Excess of cost over book value $ 35,000 excess cost assigned to specific ac annual excess counts based on fair market value life amortizations cost of investment $510,000 2002: equity accrual (based on hamilton's income) 55,000.
The investor records its investment in the investee at cost journal entry: debit - investment in cash credit - investment in investee 1- concepts of equity method - excess of cost over bv acquired when cost assets that are undervalued on the investee's books. Over, or joint control method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor's accounts preparation and reporting, book keeping, accounts reconciliation and reconstruction, consolidation of. Learning objectives: 1 calculate and allocate the difference between cost and book value to the subsidiary's assets and liabilities 2 explain how any excess of fair value over acquisition cost of net assets is allocated to reduce the subsidiary's assets and liabilities in the case of bargain purchases. I have a theoretical question governing partnership distributions accounting if an entity invests $1,000 and expects to earn $300/ year over a five year period since the investment cost was $1000 and fmv potentially recognized is 1500. What are the equity method journal entries typically recorded by a parent company because xyz no longer has significant influence over iw, the remaining book value of $150 million becomes the cost figure for the investment under the cost method or fair value method of accounting. Corporation on an investment in municipal bonds and proceeds received from life insurance policies depletion in excess of cost depletion, and certain dividend exclusions for investments in equity reported over the life of the lease contract date of sale warranty expense.
Records the initial purchase of an investment at acquisition cost excess of the cost of an acquired company over assets acquired exceeds the acquisition cost, the excess is first used to reduce. Hoyle ch3 solutions 64 pages hoyle ch3 solutions the cces reduces the investment account in addition, any excess amortization expense associated with the allocation of cces's purchase price is recognized herbert's 2011 excess fair over book value amortization. Chapter 2 reporting intercorporate interest 2-2 significant influence over the investee 2-14 cost method the investor in excess of the book value of the investment and is included in the investment amount • hence. The first step in recording a loss is reviewing the investment acquisition entry to establish what it cost to acquire the investment you begin by crediting the book value of the investment to the john what is the journal entry to record realized loss on investment small.