Advanced Accounting Question - Please answer in excel format

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1. In 2013, what amounts should Mega report as current year investment income, and as an adjustment, before income taxes, to 2012 investment income? Show all calculations. 2. Prepare the journal entry for the retroactive adjustment to the equity method of accounting on January 2, 2013. Document Preview: Please answer question in Microsoft Excel format. Thank you. On January 1, 2012, Mega Corp. acquired 10% of the outstanding voting stock of Penny Inc. On January 2, 2013, Mega gained the ability to exercise significant influence over financial an operating control of Penny by acquiring an additional 20% of Penny’s outstanding stock. The two purchases were made at prices proportionate to the value assigned to Penny’s net assets, which equaled their carrying values. (There is no differential between acquisition price and book value acquired). Mega does not elect the fair value option to report its investment in Penny. For the years ended December 31, 2012 and 2013, Penny reported the following: 2012 2013 Dividends paid $200,000 $300,000 Net income $600,000 $650,000 Required: In 2013, what amounts should Mega report as current year investment income, and as an adjustment, before income taxes, to 2012 investment income? Show all calculations. Prepare the journal entry for the retroactive adjustment to the equity method of accounting on January 2, 2013. (20 points) Attachments: PT-2-only-1--....docx

 

Solution ID:565826 | This paper was updated on 26-Nov-2015

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