On January 1, 20X6, Climber Corporation acquired 90 percent of Wisden Corporatio
ID: 2464499 • Letter: O
Question
On January 1, 20X6, Climber Corporation acquired 90 percent of Wisden Corporation for $180,000 cash. Wisden reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Wisden reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Wisden at the date of acquisition had a remaining economic life of five years. Climber uses the equity method in accounting for its investment in Wisden.
1.
Required information
Based on the preceding information, what balance would Climber report as its investment in Wisden at January 1, 20X8?
$230,400
$180,000
$234,000
$203,400
2.
Required information
Based on the preceding information, what balance would Climber report as its investment in Wisden at January 1, 20X9?
$251,100
$224,100
$215,100
$234,000
Explanation / Answer
1. Based on the preceding information, what balance would Climber report as its investment in Wisden at January 1, 20X8?
Based on the preceding information, Climber report as its investment in Wisden at January 1,20X8 is $180,000, because company investing said amount in Wisden.
2 . Based on the preceding information, what balance would Climber report as its investment in Wisden at January 1, 20X9?
Based on the preceding information, Climber report as its investment in wisden at January 1, 20X9 is $234,000.