Jaynes Inc

question 82

Essay

Jaynes Inc. acquired all of Aaron Co.'s common stock on January 1, 2010, by issuing 11,000 shares of $1 par value common stock. Jaynes' shares had a $17 per share fair value. On that date, Aaron reported a net book value of $120,000. However, its equipment (with a five-year remaining life) was undervalued by $6,000 in the company's accounting records. Any excess of consideration transferred over fair value of assets and liabilities is assigned to an unrecorded patent to be amortized over ten years.
What balance would Jaynes' Investment in Aaron Co. account have shown on December 31, 2010, when the equity method was applied for this acquisition?

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Definitions:

Physical Appearance

The way an individual's body and features look to themselves and others, often influencing personal identity and social interactions.

Psychosexual Stages

A Freudian concept describing the stages of a child's development, focusing on the parts of the body that provide pleasure during different phases of growth.

Socioeconomic Status

An individual's or group's economic, social, and work status, often measured by income, education, and occupation.

Outgroup Homogeneity

The tendency to view members of an outgroup as more similar to each other than they actually are, often underlying stereotypes and prejudice.