Chrome File Edit View History Bookmarks People Window Help 47% D Sat 5:06 PM V C

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Chrome File Edit View History Bookmarks People Window Help 47% D Sat 5:06 PM V Cute Dresses, Tops, shoes. 21 Women l Matching Two-piec 1. Chapter 12 xC Chegg Study | Guided Solutic x Ezgi Facebook × × CSecure https://newconnect.mheducation.com/flow/connect.html 1. Chapter 12 6 Help Save & Exit Submit Saved Check my work 5 Fizer Pharmaceutical paid $75 million on January 2, 2018, for 3 million shares of Carne Cosmetics common stock. The investment represents a 30% interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of $1 per share on December 21, 2018, and Carne reported net income of $40 million for the year ended December 31, 2018. The fair value of Carne's common stock at December 31, 2018, was $25.50 per share 20 points Skipped . The book value of Carne's net assets was $170 million The fair value of Carne's depreciable assets exceeded their book value by $40 million. These assets had an average remaining useful life of twelve years. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. eBook Print ReferencesRequired: Complete the table below and prepare the appropriate journal entries related to the investment during 2018. Complete this question by entering your answers in the tabs below General ourna Calculation Complete the table below. (Enter your answers in millions, (i.e., 10,000,000 should be entered as 10)) InvesteeOwnership Net Assets Nat Mc Graw Hill

Explanation / Answer

Answer to part 1 ($ in millions) Investee Net Assets x Ownership Interest Net Assets Purchased Difference Attributable To Purchase Price 75 Fair Value Carne's Assets 210 x 30% 63 12 Depreciable Asset Book Value Value Carne's Assets 170 x 30% 51 24 Goodwill Depreciation Adjustment Amount/ Years Adjustment Undervaluation of assets 40/ 12 3.33 Answer to part 2 Journal Entry ($ in millions) S.No Account Title Debit Credit 1 Investment in Carne Cosmetic Shares 75          Cash 75 2 Investment (40x 30%) 12               Income 12 3 Cash 3          Investment (3 x 1) 3 4 Depreciation 3.33          Accumulated depr 3.33 5 Equity in Carne Carne Cosmetic Income 1          Investment   1 W.Note = Excess of cost over fair value of net assets/ Remaining useful life =12/12 = 1

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