Redwood Manufacturing Inc. acquired 30 percent of the voting…
Redwood Manufacturing Inc. acquired 30 percent of the voting shares of Aspen Components Ltd. for $600,000. Redwood has significant influence over Aspen and therefore applies the equity method. During the year, Aspen reported net income of $240,000 and declared dividends of $100,000.
Read DetailsNorthern Controls Manufacturing Inc. purchased a specialized…
Northern Controls Manufacturing Inc. purchased a specialized production system for $980,000. Sixty percent of the cost relates to the physical structure with a twenty-year life and forty percent relates to a computerized control system with an eight-year life. Several years later, the control system was replaced at a cost of $360,000. Accumulated depreciation on the original control system at replacement was $165,000. The remaining structure was tested for impairment when demand declined. Its carrying amount was $535,000, undiscounted future cash flows were $490,000, and fair value was $450,000.
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