(Solved): Fizer Pharmaceutical paid $85 million on January 2, 2024, for 5 million shares of Carne Cosmetics co ...
Fizer Pharmaceutical paid
$85million on January 2, 2024, for 5 million shares of Carne Cosmetics common stock. The investment represents a
20%interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of
$3per share on December 21, 2024, and Carne reported net income of
$35million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was
$35.50per share. The book value of Carne's net assets was
$210million. The fair value of Carne's depreciable assets exceeded their book value by
$50million. These assets had an average remaining useful life of ten years. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries related to the investment during 2024. Complete this question by entering your answers in the tabs below. Calculation General Journal Complete the table below. Note: Enter your answers in millions, (i.e.,
10,000,000should be entered as 10 ). \table[[{ \table[[($ in millions)],[Purchase Price]]},\table[[Investee Net],[Assets]],\table[[Ownership],[Interest]],,\table[[Net Assets],[Purchased]],Difference,Attributable to:],[,,,,,,85,],[Fair Value Carne's assets,.,,210,
x,30,
%,
=,63,22,Goodwill],[Book Value Carne's assets,,,170,
x,30,
%,
=,51,12,Overvaluation of assets],[Depreciation adjustment:,,,,,Years,,,Adjustment,,],[Investment revenue,,
$,12,+,1,,
=,\table[[
$,1]],,]] Calculation Fizer Pharmaceutical paid
$85million on January 2, 2024, for 5 million shares of Carne Cosmetics common stock. The investment represents a
20%interest in the net assets of Carne and gave Fizer the ability to exercise significant influence over Carne's operations. Fizer received dividends of
$3per share on December 21, 2024, and Carne reported net income of
$35million for the year ended December 31, 2024. The fair value of Carne's common stock at December 31, 2024, was
$35.50per share. The book value of Carne's net assets was
$210million. The fair value of Carne's depreciable assets exceeded their book value by
$50million. These assets had an average remaining useful life of ten years. The remainder of the excess of the cost of the investment over the book value of net assets purchased was attributable to goodwill. Required: Complete the table below and prepare the appropriate journal entries related to the investment during 2024. Answer is not complete. Complete this question by entering your answers in the tabs below. Complete the table below. Note: Enter your answers in millions, (i.e.,
10,000,000should be entered as 10 ). \table[[(
$in millions),\table[[Investee Net],[Assets]],Ownership Interest,,\table[[Net Assets],[Purchased]],Difference,Attributable to:],[Purchase Price,,,,,,
$,85,,,],[Fair Value Carne's assets,
210\times ,
x,
30\times ,
%,
=,,
63\times 9,22,Goodwill,(],[Book Value Carne's assets,
170\times ,
x,
30\times ,
%,
=,,
51\times 9,12,Overvaluation of assets,(],[Depreciation adjustment:,,Years,,Adjustment,,,],[Investment revenue,12,+,
1\times ,,
=,
$,10,,,]]
