Reference no: EM131189782
On July 1, 2013, Killearn Company acquired 108,000 of the outstanding shares of Shaun Company for $18 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee’s decisions.
As of July 1, 2013, the investee had assets with a book value of $7 million and liabilities of $838,400. At the time, Shaun held equipment appraised at $369,600 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $988,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.
Shaun’s policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun’s income, earned evenly throughout each year, was $619,000 in 2013, $662,600 in 2014, and $726,400 in 2015.
In addition, Killearn sold inventory costing $120,000 to Shaun for $200,000 during 2014. Shaun resold $107,500 of this inventory during 2014 and the remaining $92,500 during 2015.
A) Determine the equity income to be recognized by Killearn during each of these years.
B) Compute Killearn’s investment in Shaun Company’s balance as of December 31, 2015.
|
Addition to retained earnings and dividend yield
: Polycom Systems earned $574 million last year and paid out 24 percent of earnings in dividends. By how much did the company’s retained earnings increase? With 100 million shares outstanding and a stock price of $117, what was the dividend yield?
|
|
What are the earnings per share and price-earnings ratio
: Walker Machine Tools has 6.6 million shares of common stock outstanding. The current market price of Walker common stock is $74 per share rights-on. The company’s net income this year is $23.00 million. What are the earnings per share and price-earni..
|
|
What is the percentage of the founder family votes to class
: Rust Pipe Co. was established in 1994. Four years later, the company went public. At that time, Robert Rust, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to eleven votes p..
|
|
Discuss the type of individual securities or mutual funds
: Discuss the type of individual securities or mutual funds that you believe are suitable for an aggressive investor whose primary investment goal is capital accumulation over the longer term (say 10 years or more) and why. Now think about an investor ..
|
|
Determine the equity income to be recognized
: On July 1, 2013, Killearn Company acquired 108,000 of the outstanding shares of Shaun Company for $18 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee’s decisions. ..
|
|
Long-term financing needed-long-term debt financing
: At year-end 2016, Wallace Landscaping’s total assets were $1.8 million and its accounts payable were $370,000. Sales, which in 2016 were $2.2 million, are expected to increase by 25% in 2017. Total assets and accounts payable are proportional to sale..
|
|
Data set on hospital admissions
: Using the following data set on hospital admissions, define the service area for Hospital A, based only on quantitative factors
|
|
Should the annual stickturn be for production or ssc
: What specific techniques will you explain to the Managing Director as being relevant to improve this situation?
|
|
Design of a supply chain to ensure strategic competitiveness
: You are required to submit a Supply Chain Management assignment. Details of the programme assessment scheme and general information on preparing and submitting assignments.
|