Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on july 1, year $, big purchased 80% of the outsta

On July 1, Year $, Big purchased 80% of the outstanding common shares of Little...

60.1K

Verified Solution

Question

Accounting

On July 1, Year $, Big purchased 80% of the outstanding common shares of Little for $122,080. On that date, Little's equipment had a fair value that was $21,600 less than carrying amount. The equipment had accumulated depreciation of $20,000 and an estimated remaining useful life of 8 years. Also, at the date of acquisition, Little had an exclusive contract with the provincial government to perform periodic environmental audits of selected mining companies for the next five years. An independent business valuator indicated that a third party might pay up to $50,000 to take over this contract. All other assets and liabilities had earrying amounts equal to fair values. On June 30, Year 6, goodwill had a recoverable amount of $20,000.
On June 30, Year 6, the following financial statements were prepared. Big uses the cost method to account for its investment.
NCOME STATEMENTS
Big
Sales
Investment income
Cost of sales
Expenses (misc.)
Net income
$ 270,000
\table[[10.800],[280.800],[140.100],[31.050],[171.150],[109.620]]
Link
5162,000
162,000
96330
24300
127530
5.30.430
RETAINED EARNINGS STATEMENTS
s 459,000
5.32.400
image

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

Calculus
1.2K views

What is the solution to the system of equations?x - 0.2y = 2-10x + 2y...

Basic Math
1.2K views

Find the range for the group of data items 21 22 23 24 25 The...

Biology
1.2K views

Organisms that live in fresh water are almost hypertonic to their environment. In what way is...

Chemistry
1.2K views

What other organic compounds do you encounter in your everyday life that have a 1) positive...

Civil Engineering
1.2K views

Hello , i need an essay about 1500 words for course civil engineering construction and economy...

Biology
1.2K views

Section 5 Graded Questions Sickle Cell Alleles 1 1 ng passage to answer the next...

Physics
1.2K views

Two cells of unequal EMF E and E2 and internal resistances and 2 are joined...

Basic Math
1.2K views

work results of a survey of customers at a pet supply store showed that 37...

Accounting
1.2K views

Reed Corp. has set the following standard direct materials and direct labor costs per unit...

Accounting
1.2K views

The following information appeared in the books of 4U JJ Traders who are in the...

Accounting
1.2K views

IntemalRate of Return Method=Two Projects Munch N** Crunch Snack Company is considering two...

Accounting
1.2K views

I need detailed help with steps as to how to solve this problem, and why...