Business, 03.03.2020 01:28 dameiranderson

Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $378,000 in cash. The subsidiary's stockholders' equity accounts totaled $362,000 and the noncontrolling interest had a fair value of $42,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $21,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life).
Brey reported net income from its own operations of $68,000 in 2016 and $84,000 in 2017. Brey declared dividends of $21,000 in 2016 and $25,000 in 2017.

Year Cost to Brey Transfer Price to Pitino Inventory Remaining at Year-
End (at transfer price)
2016 $73,000 $135,000 $29,000
2017 93,000 155,000 41,500
2018 108,000 180,000 55,000

At December 31, 2018, Pitino owes Brey $20,000 for inventory acquired during the period.
The following separate account balances are for these two companies for December 31, 2018, and the year then ended. Note: Parentheses indicate a credit balance.

Pitino Brey
Sales revenues $(870,000) $(386,000)
Cost of goods sold 519,000 213,000
Expenses 185,800 66,000
Equity in earnings of Brey (82,890) 0
Net income $(248,090) $(107,000)
Retained earnings, 1/1/18 $(496,000) $(286,000)
Net income (above) (248,090) (107,000)
Dividends declared 133,000 23,000
Retained earnings, 12/31/18 $(611,090) $(370,000)
Cash and receivables $150,000 $102,000
Inventory 275,000 156,000
Investment in Brey 503,550 0
Land, buildings, and-
equipment (net) 968,000 332,000
Total assets $1,896,550 $590,000
Liabilities $(750,46) $(38,000)
Common stock (535,000) (182,000)
Retained earnings, 12/31/18 (611,09) (370,000)
Total liabilities and equity $(1,896,550) $(590,000)

(a) What was the annual amortization resulting from the acquisition-date fair-value allocations?
(b) Were the intra-entity transfers upstream or downstream?
(c) What intra-entity gross profit in inventory existed as of January 1, 2018?
(d) What intra-entity gross profit in inventory existed as of December 31, 2018?

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 21:30

Ming chen began a professional practice on june 1 and plans to prepare financial statements at the end of each month. during june, ming chen (the owner) completed these transactions. a. owner invested $61,000 cash in the company along with equipment that had a $25,000 market value. b. the company paid $1,900 cash for rent of office space for the month. c. the company purchased $15,000 of additional equipment on credit (payment due within 30 days). d. the company completed work for a client and immediately collected the $2,100 cash earned. e. the company completed work for a client and sent a bill for $7,000 to be received within 30 days. f. the company purchased additional equipment for $5,500 cash. g. the company paid an assistant $3,000 cash as wages for the month. h. the company collected $5,200 cash as a partial payment for the amount owed by the client in transaction e. i. the company paid $15,000 cash to settle the liability created in transaction c. j. owner withdrew $1,500 cash from the company for personal use. required: enter the impact of each transaction on individual items of the accounting equation. (enter decreases to account balances with a minus sign.)

Answers: 2

Answer

Business, 22.06.2019 04:30

4. the condition requires that only one of the selected criteria be true for a record to be displayed.

Answers: 1

Answer

Business, 22.06.2019 08:00

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?

Answers: 1

Answer

Business, 22.06.2019 17:30

Aproject currently generates sales of $14 million, variable costs equal 50% of sales, and fixed costs are $2.8 million. the firm’s tax rate is 40%. assume all sales and expenses are cash items. (a). what are the effects on cash flow, if sales increase from $14 million to $15.4 million? (input the amount as positive value. enter your answer in dollars not in (b) what are the effects on cash flow, if variable costs increase to 60% of sales? (input the amount as positive value. enter your answers in dollars not in millions). cash flow (increase or decrease) by $

Answers: 2

Answer

You know the right answer?

Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $378,000...

Questions