Advanced Accounting
CBE Final Assessment
Investments content area: 1.1.1 thru 1.1.3
Problem 1
On January 1, 2018, Hay Co. paid $610,000 for 30% of the voting common stock of Joy Corp giving it
the ability to exercise significant influence over the company. At the time of the investment, Joy had
net assets with a book value and fair value of $2,000,000 (no difference existed between the two
values). During 2018, Joy incurred a net loss of $75,000 and paid dividends of $110,000. Any excess
cost over book value is attributable to goodwill with an indefinite life. Prepare in Excel.
Required
a) Prepare a schedule to show the amount of goodwill from Hay's investment in Joy.
b) Prepare a schedule to show the balance in Hay's investment account at December 31, 2018.
Problem 2
On January 1, 2018, Jay Corp. acquired 40% of the outstanding common stock of Bob Corporation
for $1,300,000. This acquisition gave Jay the ability to exercise significant influence over the
investee. The book value of Bob Corporation was $2,430,000. Any excess cost over the underlying
book value was assigned to a patent that was undervalued on Bob's balance sheet. This patent has a
remaining useful life of ten years. For the year ended December 31, 2018, Bob reported net income
of $342,000 and paid cash dividends of $98,000. Prepare in Excel.
Required
(a) Prepare a schedule to show the balance Jay should report as its Investment in Bob Corporation at
December 31, 2018.
Problem 3
Goy Company owns 15% of the common stock of Troy Corporation and used the fair-value method
to account for this investment. Troy reported net income of $110,000 for 2018 and paid dividends of
$60,000 on October 1, 2018. How much income should Goy recognize on this investment in 2018?
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, Investments content area: 1.1.4 thru 1.1.7
Problem 4
The following are preliminary financial statements for Bob Co. and Jane Co. for the year ending
December 31, 2018 prior to Bob’s acquisition of Jane.
Bob Co. Jane Co.
Sales (360,000)
Expenses 240,000
Net income (120,000)
Retained earnings, January 1, 2018 (480,000)
Net income (120,000)
Dividends paid 36,000
Retained earnings, December 31, 2018 (564,000)
Current assets (includes cash) 360,000 120,000
Land 120,000 108,000
Building (net) 480,000 336,000
Total assets 960,000 564,000
Liabilities (108,000) (132,000)
Common stock (192,000) (72,000)
Additional paid-in capital (96,000) (12,000)
Retained earnings, December 31, 2018 (564,000) (348,000)
Total liabilities and stockholders’ equity (960,000) (564,000)
On December 31, 2018 (subsequent to the preceding statements), Bob exchanged 10,000 shares of its $10
par value common stock for all of the outstanding shares of Jane. Bob’s stock on that date has a fair value
of $60 per share. Bob was willing to issue 10,000 shares of stock because Jane's land was appraised at
$204,000. Bob also paid $14,000 to several attorneys and accountants who assisted in creating this
combination.
Required
Assuming that these two companies retained their separate legal identities, prepare a consolidation
worksheet as of December 31, 2018 at date of acquisition. Prepare in Excel.
Steps:
1. Prepare journal entries to record the acquisition on Bob’s records.
2. Prepare a post-acquisition (after acquisition) column of accounts for Bob Co.
3. Prepare consolidation journal entries (S) and (A).
4. Prepare a worksheet to produce a consolidated balance sheet as of the acquisition date. Use the
Excel template provided (tab 1- Problem 4).
This study source was downloaded by 100000899606070 from CourseHero.com on 02-15-2026 04:18:12 GMT -06:00
https://www.coursehero.com/file/231961336/Advanced-Accounting-final-assessmentdocx/
CBE Final Assessment
Investments content area: 1.1.1 thru 1.1.3
Problem 1
On January 1, 2018, Hay Co. paid $610,000 for 30% of the voting common stock of Joy Corp giving it
the ability to exercise significant influence over the company. At the time of the investment, Joy had
net assets with a book value and fair value of $2,000,000 (no difference existed between the two
values). During 2018, Joy incurred a net loss of $75,000 and paid dividends of $110,000. Any excess
cost over book value is attributable to goodwill with an indefinite life. Prepare in Excel.
Required
a) Prepare a schedule to show the amount of goodwill from Hay's investment in Joy.
b) Prepare a schedule to show the balance in Hay's investment account at December 31, 2018.
Problem 2
On January 1, 2018, Jay Corp. acquired 40% of the outstanding common stock of Bob Corporation
for $1,300,000. This acquisition gave Jay the ability to exercise significant influence over the
investee. The book value of Bob Corporation was $2,430,000. Any excess cost over the underlying
book value was assigned to a patent that was undervalued on Bob's balance sheet. This patent has a
remaining useful life of ten years. For the year ended December 31, 2018, Bob reported net income
of $342,000 and paid cash dividends of $98,000. Prepare in Excel.
Required
(a) Prepare a schedule to show the balance Jay should report as its Investment in Bob Corporation at
December 31, 2018.
Problem 3
Goy Company owns 15% of the common stock of Troy Corporation and used the fair-value method
to account for this investment. Troy reported net income of $110,000 for 2018 and paid dividends of
$60,000 on October 1, 2018. How much income should Goy recognize on this investment in 2018?
This study source was downloaded by 100000899606070 from CourseHero.com on 02-15-2026 04:18:12 GMT -06:00
https://www.coursehero.com/file/231961336/Advanced-Accounting-final-assessmentdocx/
, Investments content area: 1.1.4 thru 1.1.7
Problem 4
The following are preliminary financial statements for Bob Co. and Jane Co. for the year ending
December 31, 2018 prior to Bob’s acquisition of Jane.
Bob Co. Jane Co.
Sales (360,000)
Expenses 240,000
Net income (120,000)
Retained earnings, January 1, 2018 (480,000)
Net income (120,000)
Dividends paid 36,000
Retained earnings, December 31, 2018 (564,000)
Current assets (includes cash) 360,000 120,000
Land 120,000 108,000
Building (net) 480,000 336,000
Total assets 960,000 564,000
Liabilities (108,000) (132,000)
Common stock (192,000) (72,000)
Additional paid-in capital (96,000) (12,000)
Retained earnings, December 31, 2018 (564,000) (348,000)
Total liabilities and stockholders’ equity (960,000) (564,000)
On December 31, 2018 (subsequent to the preceding statements), Bob exchanged 10,000 shares of its $10
par value common stock for all of the outstanding shares of Jane. Bob’s stock on that date has a fair value
of $60 per share. Bob was willing to issue 10,000 shares of stock because Jane's land was appraised at
$204,000. Bob also paid $14,000 to several attorneys and accountants who assisted in creating this
combination.
Required
Assuming that these two companies retained their separate legal identities, prepare a consolidation
worksheet as of December 31, 2018 at date of acquisition. Prepare in Excel.
Steps:
1. Prepare journal entries to record the acquisition on Bob’s records.
2. Prepare a post-acquisition (after acquisition) column of accounts for Bob Co.
3. Prepare consolidation journal entries (S) and (A).
4. Prepare a worksheet to produce a consolidated balance sheet as of the acquisition date. Use the
Excel template provided (tab 1- Problem 4).
This study source was downloaded by 100000899606070 from CourseHero.com on 02-15-2026 04:18:12 GMT -06:00
https://www.coursehero.com/file/231961336/Advanced-Accounting-final-assessmentdocx/
