1. Business
  2. Accounting
  3. use the following data to answer questions in this part...

Question: use the following data to answer questions in this part...

Question details

Use the following data to answer questions in this part:

Balance sheet data 2009

Company C

JVC

Cash

$1,050

$300

Accounts receivable

3,000

700

Inventory

2,500

800

Fixed assets

4,500

2,400

Investment in JVC

400

Total assets

$11,450

$4,200

Accounts payable

$2,500

$1,200

Long-term debt

3,000

2,200

Equity

5,950

800

Total liabilities and equity

$11,450

$4,200

Income statement 2009

Company C

JVC

Sales

$15,430

$2,500

Equity in JV earnings

100

COGS

5,000

1,700

Other expenses

7,600

600

Net income

$2,930

$200

Company C uses LIFO method for inventories. The LIFO reserve was $800 for 2008 (ending inventory for 2008 under LIFO was 1,500) and $900 for 2009.

In 2010, Company C purchases a milling machine, a type of machine used for shaping metal, at a total cost of $9,000. $1,500 was estimated to represent the cost of the rotating cutter, a significant component of the machine. The company expects the machine to have a useful life of eight years and a residual value of $1,000 and that the rotating cutter will need to be replaced after three years. The company uses straight-line depreciation for all assets.

Company C purchased a 7% bond, at par, for $10,000 at the beginning of the year 2010. Interest rates have recently increased and the market value clined $1,000.

Assuming consolidation using the acquisition method, calculate Company C’s stockholders’ equity and total assets. Please explain your calculation.

Assuming proportionate consolidation, find Company C’s COGS and NI for the year ended 2009. Please explain your calculation.

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution