Solution-Compute vats income from zel for 2011

Compute vats income from zel for 2011

Reference no: EM13538544

Vat Company acquired a 30 percent interest in the voting stock of Zel Company for $331,000 on January 1, 2011, when Zel's stockholders' equity consisted of capital stock of $600,000 and retained earnings of $400,000. At the time of Vat's investment, Zel's assets and liabilities were recorded at their fair values, except for inventories that were undervalued by $30,000 and a building with a 10-year remaining useful life that was overvalued by $60,000. Zel has income for 2011 of $100,000 and pays dividends of $50,000. Assume undervalued inventories are sold in 2011.

REQUIRED

1. Compute Vat's income from Zel for 2011.

2. What is the balance of Vat's Investment in Zel account at December 31, 2011?

3. What is Vat's share of Zel's recorded net assets at December 31, 2011?

Reference no: EM13538544

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Compute vats income from zel for 2011

Reference no: EM13538544

Reference no: EM13538544

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