Josephine's Bakery Had the Following Assets and Liabilities at the Beginning

question 191

Essay

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: $$\begin{array} { | l | r | r | } \hline & \text { Assets } & \text { Liabilities } \\\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \\\hline \text { End of the year } & 135,000 & 73,000 \\\hline\end{array}$$
If the owners made no investments in the business and no dividends were paid during the year, what was the amount of net income earned by Josephine's Bakery during the current year?

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Definitions:

Goodwill

An intangible asset that represents the excess of the purchase price over the fair market value of an acquired company's net assets, attributed to factors like reputation or customer loyalty.

Impairment

A decrease in the recoverable value of an asset below its carrying amount, leading to a write-down and charge against earnings.

Consolidating

The process of combining financial statements from multiple departments or subsidiaries within a company to create a single set of financial statements.

Equity Method

A procedure for accounting for ownership interests, where the investment's carrying amount is adjusted for the investor's proportionate share of the associate company's profits or losses over time.