question archive Mami SA contributes $170,000 cash and Nasrin Company brings in net assets valued at $170,000 to form Mazda Inc
Mami SA contributes $170,000 cash and Nasrin Company brings in net assets valued at $170,000 to form Mazda Inc
Subject:AccountingPrice: Bought3
Mami SA contributes $170,000 cash and Nasrin Company brings in net assets valued at $170,000 to form Mazda Inc. Mami, SA and Nasrin Company each receive 50 percent equity interest in Mazda Inc. The financial statements of Mazda Inc. for its first year of operations are as follows:
Mazda Inc.
Income Statement
YEAR 1
______________________________________________________________________________
Revenues $80,000
Expenses 50,000
________
Income before tax 30,000
Tax Expense 10,000
________
Net Income $20,000
________
Mazda Inc.
Balance Sheet
December 31, Year 1
______________________________________________________________________________
Cash $40,000 Liabilities $60,000
Inventory 60,000
Property, Plant, and Common Stock 340,000
Equipment (net) 320,000 Retained Earnings 20,000
_________ ________
Total Assets $420,000 $420,000
_________ ________
Mami SA’s financial statements for the year ended December 31, Year 1 and before making any accounting entries related to its investment in Mazda, Inc., are as follows:
Mami SA
Income Statement for Year 1
______________________________________________________________________________
Revenues $800,000
Expenses 450,000
_________
Income before tax 350,000
Tax Expense 100,000
_________
Net Income $250,000
_________
Mami SA
Balance Sheet for the year ended on December 31, Year 1
______________________________________________________________________________
Cash $130,000 Liabilities $250,000
Inventory 200,000
Property, Plant, and Common Stock 600,000
Equipment (net) 650,000 Retained Earnings 300,000
Investment in
Mazda Inc. (at cost) 170,000
___________ __________
Total Assets $1,150,000 $1,150,000
___________ __________
Restate Mami, SA’s Year 1 financial statements to properly account for its investment in Mazda Inc. under the proportionate consolidation method and equity method.
