Homework Answers
Requirement a: Record the following journal entries for unrealized holding gain and additional investment in equity.
|
Date |
Account Title and Explanation |
Debit |
Credit |
|
Mar 1 |
Equity investment (($765,000 ÷ 17%) × 8%) − $340,000 |
$20,000 |
|
|
2019 |
Unrealized holding gain |
20,000 |
|
|
To adjust the value of equity investment |
|
Date |
Account Title and Explanation |
Debit |
Credit |
|
Mar 1 |
Equity investment |
$765,000 |
|
|
2019 |
Cash |
$765,000 |
|
|
To record purchase of additional equity investment |
Requirement b: Record the following journal entries to recognize the unrealized holding gain and additional equity investment.
|
Date |
Account Title and Explanation |
Debit |
Credit |
|
Mar 1 |
Equity investment (($765,000 ÷ 17%) × 8%) − $320,000 |
$40,000 |
|
|
2019 |
Unrealized holding gain |
40,000 |
|
|
To adjust the value of equity investment |
The company will recognize a total unrealized holding gain of $40,000 as no fair value gain is recognized at December 31, 2018.
|
Date |
Account Title and Explanation |
Debit |
Credit |
|
Mar 1 |
Equity investment |
$765,000 |
|
|
2019 |
Cash |
$765,000 |
|
|
To record purchase of additional equity investment |
Requirement c: Record the following journal entries to recognize the unrealized holding gain and additional equity investment.
|
Date |
Account Title and Explanation |
Debit |
Credit |
|
Mar 1 |
Not applicable |
||
|
2019 |
|
Date |
Account Title and Explanation |
Debit |
Credit |
|
Mar 1 |
Equity investment |
$765,000 |
|
|
2019 |
Cash |
$765,000 |
|
|
To record purchase of additional equity investment |
Note: We should not recognize unrealized holding gains in this case as it does not qualify as an observable price change in orderly transaction.
Add Answer to:
:13 Hs rsio8Ircomplete aer Marked ou of Change from the fair value method to the equity...
Equity method journal entries (price greater than book value) An investor purchases a 30% interest in...
Equity method journal entries (price greater than book value) An investor purchases a 30% interest in an investee company, and the investor concludes that it can exert significant influence over the investee. The book value of the investee's Stockholders' Equity on the acquisition date is $500,000, and the investor purchases its 30% interest for $195,000. The investor is willing to pay the purchase price because the investee owns an unrecorded (internally developed) patent that the investor estimates is worth $150,000....
Equity method journal entries (price equals book value) Prepare journal entries for the transactions below relating...
Equity method journal entries (price equals book value) Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method. a. An investor purchases 14,400 common shares of an investee at $13 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the investee. b. The investee reports net income of $144,000. c. The investor receives a cash dividend of $1.50 per common...
Review of pre-consolidation equity method (controlling investment in affiliate, fair value equals book value) Assume an...
Review of pre-consolidation equity method (controlling investment in affiliate, fair value equals book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $100,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained...
How do I calculate part B in this problem ? Equity method journal entries with intercompany...
How do I calculate part B in this problem ?
Equity method journal entries with intercompany sales of inventory An investor owns 25% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investor's balance sheet at $2,000,000. During the year, the investee reported net income of $800,000 and paid dividends of $200,000. In addition, the investor sold inventory to the investee, realizing a gross...
Problem 1 The stockholders' equity section of Barrel Corporation's balance sheet at December 31, 2017, appears...
Problem 1 The stockholders' equity section of Barrel Corporation's balance sheet at December 31, 2017, appears below: Stockholders' equity Paid-in capital Common stock, S10 par value, 400,000 shares authorized: 250,000 issued and outstanding $2,500,000 Paid-in capital in excess of par 1.500.000 Total paid-in capital 4.000.000 Retained earings 600.000 Total stockholders' equity $4,600,000 As of December 31, 2017, what was the average issuance price for Common Stock? Show calculation On February 1, 2018, the Board of Directors declared a $0.50 per...
On February 5, 2018, Cinch Rental Corporation's board of directors declared a dividend of $0.10, to...
On February 5, 2018, Cinch Rental Corporation's board of directors declared a dividend of $0.10, to be paid on March 18, 2018, to the shareholders of record as of the close of business on March 9, 2018. Cinch has 3,500,000 shares of $0.01 par-value common stock authorized with 1,300,000 shares issued and outstanding. The company has no preferred stock. Record the declaration of the dividend and the payment of the dividend. Include the proper dates with each journal entry. (Record...
Cash dividends involve three events. On the date of declaration, the directors bind the company to pay the dividen...
Cash dividends involve three events. On the date of declaration, the directors bind the company to pay the dividend. A dividend declaration reduces retained earnings and creates a current liability. On the date of record, recipients of the dividend are identified. On the date of payment, cash is paid to stockholders and the current liability is removed. Neither a stock dividend nor a stock split alters company value. However, the value of each share is less due to the distribution...
*Problem 14-7 On April 1, 2017, Sarasota Company sold 16,200 of its 12%, 15-year, $1,000 face value bonds at 98, Interest payment dates are April 1 and October 1, and the company uses the straight-li...
*Problem 14-7 On April 1, 2017, Sarasota Company sold 16,200 of its 12%, 15-year, $1,000 face value bonds at 98, Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2018, Sarasota took advantage of favorable prices of its stock to extinguish 7,500 of the bonds by issuing 247,500 shares of its $10 par value common stock. At this time, the accrued interest was paid in cash....
Kohler Corporation reports the following components of stockholders’ equity at December 31, 2018. Common stock—$15 par...
Kohler Corporation reports the following components of stockholders’ equity at December 31, 2018. Common stock—$15 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 825,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 400,000 Total stockholders' equity $ 1,295,000 During 2019, the following transactions affected its stockholders’ equity accounts. Jan. 2 Purchased 4,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable...
1) If P Co. uses equity method, the entry to record net loss reported by S...
1) If P Co. uses equity method, the entry to record
net loss reported by S Co. in year 2019 will include: *
a) Credit Cash $27,000
b) Debit Equity Loss $27,000
c) Debit Equity Income $27,000
d) Debit Investment in S Co $27,000
2) If P Co. uses cost method, the entry to record
distributed dividend by S Co. in year 2018 will include: *
a) Credit Investment in S Co. $45,000
b) Debit Cash $45,000
c) Credit Investment...
Equity method journal entries (price greater than book value) An investor purchases a 30% interest in an investee company, and the investor concludes that it can exert significant influence over the investee. The book value of the investee's Stockholders' Equity on the acquisition date is $500,000, and the investor purchases its 30% interest for $195,000. The investor is willing to pay the purchase price because the investee owns an unrecorded (internally developed) patent that the investor estimates is worth $150,000....
Equity method journal entries (price equals book value) Prepare journal entries for the transactions below relating to an Equity Investment accounted for using the equity method. a. An investor purchases 14,400 common shares of an investee at $13 per share; the shares represent 25% ownership in the investee and the investor concludes that it can exert significant influence over the investee. b. The investee reports net income of $144,000. c. The investor receives a cash dividend of $1.50 per common...
Review of pre-consolidation equity method (controlling investment in affiliate, fair value equals book value) Assume an investee has the following financial statement information for the three years ending December 31, 2019: (At December 31) 2019 2018 2017 Current assets $285,000 $277,500 $207,000 Tangible fixed assets 662,500 575,000 563,000 Intangible assets 40,000 45,000 50,000 Total assets $987,500 $897,500 $820,000 Current liabilities $120,000 $110,000 $100,000 Noncurrent liabilities 266,250 242,500 220,000 Common stock 100,000 100,000 100,000 Additional paid-in capital 100,000 100,000 100,000 Retained...
How do I calculate part B in this problem ?
Equity method journal entries with intercompany sales of inventory An investor owns 25% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investor's balance sheet at $2,000,000. During the year, the investee reported net income of $800,000 and paid dividends of $200,000. In addition, the investor sold inventory to the investee, realizing a gross...
Problem 1 The stockholders' equity section of Barrel Corporation's balance sheet at December 31, 2017, appears below: Stockholders' equity Paid-in capital Common stock, S10 par value, 400,000 shares authorized: 250,000 issued and outstanding $2,500,000 Paid-in capital in excess of par 1.500.000 Total paid-in capital 4.000.000 Retained earings 600.000 Total stockholders' equity $4,600,000 As of December 31, 2017, what was the average issuance price for Common Stock? Show calculation On February 1, 2018, the Board of Directors declared a $0.50 per...
On February 5, 2018, Cinch Rental Corporation's board of directors declared a dividend of $0.10, to be paid on March 18, 2018, to the shareholders of record as of the close of business on March 9, 2018. Cinch has 3,500,000 shares of $0.01 par-value common stock authorized with 1,300,000 shares issued and outstanding. The company has no preferred stock. Record the declaration of the dividend and the payment of the dividend. Include the proper dates with each journal entry. (Record...
Cash dividends involve three events. On the date of declaration, the directors bind the company to pay the dividend. A dividend declaration reduces retained earnings and creates a current liability. On the date of record, recipients of the dividend are identified. On the date of payment, cash is paid to stockholders and the current liability is removed. Neither a stock dividend nor a stock split alters company value. However, the value of each share is less due to the distribution...
*Problem 14-7 On April 1, 2017, Sarasota Company sold 16,200 of its 12%, 15-year, $1,000 face value bonds at 98, Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2018, Sarasota took advantage of favorable prices of its stock to extinguish 7,500 of the bonds by issuing 247,500 shares of its $10 par value common stock. At this time, the accrued interest was paid in cash....
1) If P Co. uses equity method, the entry to record
net loss reported by S Co. in year 2019 will include: *
a) Credit Cash $27,000
b) Debit Equity Loss $27,000
c) Debit Equity Income $27,000
d) Debit Investment in S Co $27,000
2) If P Co. uses cost method, the entry to record
distributed dividend by S Co. in year 2018 will include: *
a) Credit Investment in S Co. $45,000
b) Debit Cash $45,000
c) Credit Investment...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago