Solved

King Corp Owns 80% of Kong Corp

question 21

Multiple Choice

King Corp. owns 80% of Kong Corp. and uses the cost method to account for its investment, chapters) Corp. for the Year ended December 31, 2012 are shown below: Other Information: ▪King sold a tract of Land to Kong at a profit of $10,000 during 2012. This land is still the property of Kong Corp.
▪On January 1, 2012, Kong sold equipment to King at a price that was $20,000 higher than its book value. The equipment had a remaining useful life of 4 years from that date.
▪On January 1, 2012, King's inventories contained items purchased from Kong for $10,000. This entire inventory was sold to outsiders during the year. Also during 2012, King sold Inventory to Kong for $50,000. Half this inventory is still in Kong's warehouse at year end. All sales are priced at a 25% mark-up above cost, regardless of whether the sales are internal or external.
▪Kong's Retained Earnings on the date of acquisition amounted to $350,000. There have been no changes to the company's common shares account.
▪Kong's book values did not differ materially from its fair values on the date of acquisition with the following exceptions:
▪Inventory had a Fair value that was $20,000 higher than its book value. This inventory was sold to outsiders during 2012.
▪A Patent (which had not previously been accounted for) was identified on the acquisition date with an estimated fair value of $15,000. The patent had an estimated useful life of 3 years.
▪There was a goodwill impairment loss of $4,000 during 2012.
▪Both companies are subject to an effective tax rate of 40%.
▪Both companies use straight line amortization. The amount of goodwill appearing on King's December 31, 2012 Consolidated Statement of Financial Position would be:

Understand the factors determining the market value of a bond.

Understand the relationship between disposable income and consumption.

Comprehend the concept of autonomous consumption.

Grasp the significance of the marginal propensity to consume (MPC) and save (MPS).

Definitions:

Temples

Sacred buildings dedicated to worship and religious or spiritual rituals, often significant in various religious traditions.

Great Pyramid

Also known as the Pyramid of Khufu or Cheops, it is the oldest and largest of the three pyramids in the Giza pyramid complex in Egypt.

Gizeh

An archaeological site on the outskirts of Cairo, Egypt, known for the Great Pyramid and the Great Sphinx, dating back to the ancient Old Kingdom.

Interior

Pertaining to the inside or inner part of something, often referring to the design and arrangement of the inside space of buildings or rooms.