question archive Venus Company acquired a 45% interest in the voting stock Zeus Company for $ 530,000
Venus Company acquired a 45% interest in the voting stock Zeus Company for $ 530,000
Subject:AccountingPrice:2.86 Bought6
Venus Company acquired a 45% interest in the voting stock Zeus Company for $ 530,000.
on January 1, 2009 when Zeus's stockholder's equity consisted of capital stock of $800,00 and retained earnings of $400,000. At the time of Venus investment, Zeus assets and
liabilities were recorded at their fair values, except for inventories that were undervalued
by $60,000 (subsequently sold COGS to be charged) and a building with a 10-year
remaining useful life that was overvalued by $100,000. Zeus has income for 2009
of $ 260,000 and pays dividends of $80,000.
Required:
1) What is the amount of goodwill if any that Venus is paying? (2 pts)
2) Provide all journal entries for Venus Company for the year including the purchase of the investment on January 1, 2009 using Equity method (6 pts)
3) What is the investment in Zeus account balance at December 31 on Venus books?
(2 pts)
4) What is the amount of Venus share of Zeus net assets at December 31, 2009? (2pts)
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
(1). value of interest bought :$ 530,000 which is the same as 45%.
100% value :(100%/45%)*$530,000=$1,177,777.
Total assets, balancing figure ($800,000+$400,000)=$1,200,000
Add stock. $60,000
less building. ($100,000)
Total fair value assets. $1,140,000
Goodwill :($1,777,777-$1,400,000). $377,777
Step-by-step explanation
(2). Journal entries for venus 2009
Particulars. Dr. Cr.
(i).Investment in Zeus. $530,000
Cash $530,000
(ii).Acc. depreciation $100,000
Building. $100,000
(iii).Inventory. $60,000
Capital. $60,000
(3)45%($260,000)=$117,000
45%(80) ($36,000)
Account balance: $86,000
(4). $530,000+$81,000
$611,000
