Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on january 1, 2021, gooch company acquires 80% of

On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House...

90.2K

Verified Solution

Question

Accounting

On January 1, 2021, Gooch Company acquires 80% of the outstanding common stock of House Inc., for a purchase price of $12,400,000. It was determined that the fair value of the noncontrolling interest in the subsidiary is $3,100,000. The book value of the Houses stockholders equity on the date of acquisition is $10,000,000 and its fair value of identifiable net assets is $10,850,000. The acquisition-date acquisition accounting premium (AAP) is allocated $600,000 to equipment with a remaining useful life of 10 years, and $250,000 to a patent with a remaining useful life of 5 years. Assume that during the year ended December 31, 2021, House reports net income of $950,000 and pays dividends of $150,000. Gooch uses the equity method to account for its investment in House.

Determine the December 31, 2021 ending balance in Gooch Companys pre-consolidation equity investment account.

Select one:

A. $12,952,000

B. $12,400,000

C. $13,090,000

D. $13,040,000

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Economics
1.2K views

response must range from 300-400 words Which do you think will decrease consumption more: a 10...

Physics
1.2K views

xii In circuit shown in figure 5 149 if switches S and S are closed...

Physics
1.2K views

12 What are the relative humidity and dew point temperature of 1 kilogram of 25...

Physics
1.2K views

1 As shown in the figure a body of mass m moving vertically with speed...

Physics
1.2K views

A particle mass m moves on a rough horizontal ground with some initial velocity say...

Statistics
1.2K views

One card is randomly selected from a standard deck of 52 cards What is the...

Calculus
1.2K views

Given the function g x 4x 18x g x Notice that g x 0 when...

Algebra
1.2K views

Find the volume of the solid shown r 6 cos 0 z 2 y

Accounting
1.2K views

On January 1, 2000 Freddie Company purchased 100% of the voting...

Accounting
1.2K views

Dawson Toys, Limited, produces a toy called the Maze with the following standards: ...

Accounting
1.2K views

A corporation used $34,000 of direct materials and incurred $74,000 in direct labor cost, and...

Accounting
1.2K views

Marigold Corp. is about to issue $274,000 of 10-year bonds paying an 10% interest rate,...