solve correct a. At what amount will the investee's Stockholders' Equity be reported after income and dividends have been closed to Retained Earnings (assume no other changes to Stockholders'Equity)?$0b. Provide the following journal entries:1. Record the recognition of Equity Income by the investor.2. Record the receipt of the $180 dividend.(to record equity income.)(to record the receipt of dividends.)Debit0000Credit0000c. At what amount is the Equity Investment reported on the investor's balance sheet?50 Accounting for Equity Investments (Basic)Assume an investor purchases all of the stock of the investee (and, thus, its business) in a stock purchase for $3,000. The reported book values of the investee's net assets equal theirfair values. The investee's balance sheet on the date of purchase is as follows:$300Accounts receivable $300 Mortgage payableInventories600Building2400 Stockholders' equity3000Total assets$3.300 Total liabilities and equity $3,300Now, assume, subsequent to the purchase, the investee reports net income of $600 and pays $180 in dividends to the investor.

Equity Income is also called retained Earnings. Equity income Computed by deducting Dividend from…

a. At what amount will the investee's Stockholders' Equity be reported after income and dividends have been closed to Retained Earnings (assume no other changes to Stockholders' Equity)? $0 b. Provide the following journal entries: 1. Record the recognition of Equity Income by the investor. 2. Record the receipt of the $180 dividend. (to record equity income.) (to record the receipt of dividends.) Debit 0 0 0 0 Credit 0 0 0 0 c. At what amount is the Equity Investment reported on the investor's balance sheet? 50

a. At what amount will the investee's Stockholders' Equity be reported after income and dividends have been closed to Retained Earnings (assume no other changes to Stockholders' Equity)? $0 b. Provide the following journal entries: 1. Record the recognition of Equity Income by the investor. 2. Record the receipt of the $180 dividend. (to record equity income.) (to record the receipt of dividends.) Debit 0 0 0 0 Credit 0 0 0 0 c. At what amount is the Equity Investment reported on the investor's balance sheet? 50

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 15P: Investments in Equity Securities Manson Incorporated reported investments in equity securities of...

See similar textbooks

Similar questions

Do not give answer in image
Accounting Assume an investor company purchases all of the stock of the investee company in a stock purchase for $900 on 1/1/2022. The investee's balance sheet on the date of purchase is as follows: Accounts receivable $75 Mortgage payable $75 Inventories $150 Building $600 Stockholders' equity $750 Total assets $825 Total liabilities and equity $825 Assume the additional purchase price relates to the b uilding value not reported on investee company's balance sheet. The building held by the investee has a remaining useful life of 10 years on the acquisition date and depreciated based on the straight-line method. Also assume, subsequent to the purchase, the investee reports net income of $150 and pays $45 in dividends to the investor during 2022. Required: Provide all necessary journal entries related to this investment for the investor company using the equity method during 2022
Assume an investor company purchases all of the stock of the investee company in a stock purchase for $900 on 1/1/2022. The investee’s balance sheet on the date of purchase is as follows: Accounts receivable $75 Mortgage payable $75 Inventories $150 Building $600 Stockholders’ equity $750 Total assets $825 Total liabilities and equity $825 Assume the additional purchase price relates to the b uilding value not reported on investee company’s balance sheet. The building held by the investee has a remaining useful life of 10 years on the acquisition date and depreciated based on the straight-line method. Also assume, subsequent to the purchase, the investee reports net income of $150 and pays $45 in dividends to the investor during 2022. Required: Provide all necessary journal entries related to this investment for the investor company using the equity method during 2022
The image is little unclear but data is readable thnx
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 $16 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 $172,800. c. The investor receives a cash dividend of $1.50 per common share from the investee. d. The investor sells all 14,400 common shares of the investee for $260,280. General Journal Ref. Description Debit Credit a. b. C. d. Equity investment
Assessing Financial Statement Effects of Equity Method SecuritiesUse the financial statement effects template to record the following transactions involving investments in marketable securities accounted for using the equity method.a. Purchased 12,000 common shares of Bakersfield Co. at $10 per share; the shares represent 30% ownership in Bakersfield.b. Received a cash dividend of $1.50 per common share from Bakersfield.c. Bakersfield reported annual net income of $75,000.d. Sold all 12,000 common shares of Bakersfield for $128,500.Use negative signs with answers, if appropriate. Balance Sheet Income Statement Noncash Contrib. Earned Transaction Cash Asset + Assets = Liabilities + Captial + Capital Revenues - Expenses = Net income a. Purchased shares of Bakersfield. Answer Answer Answer Answer Answer Answer Answer Answer b. Received cash dividend from Bakersfield. Answer Answer Answer Answer Answer Answer Answer Answer c.…
options for a: Available-for-sale Investments, at cost cash Retained Earnings Unrealized gain(loss) on available-for-sale Investments Valuation Allowance for available-for-sale Investments options for b first slot is yes or no Second slot is as other revenue/expense or in the stockholder equity section
What is a Capital Asset?, Holding Period, Calculation of Gain or Loss, Net Capital Losses (LO 4.1, 4.2, 4.3, 4.5) Charu Khanna received a Form 1099-B showing the following stock transactions and basis during 2019: Stock DatePurchased Date Sold SalesPrice CostBasis 4,000 shares Green Co. 06/04/08 08/05/19 $12,000 $3,000 500 shares Gold Co. 02/12/19 09/05/19 54,000 62,000 5,000 shares Blue Co. 02/04/09 10/08/19 18,000 22,000 100 shares Orange Co. 11/15/18 07/12/19 19,000 18,000 None of the stock is qualified small business stock. The stock basis was reported to the IRS. Calculate Charu's net capital gain or loss using Schedule D and Form 8949.
e. Paid the cash dividends declared in (d). Description Debit Credit Cash Dividends Payable v 70,000 Cash v 300,150 X f. Purchased 4% bonds issued by Solstice Corp. as an available-for-sale investment for $300,150. Description Debit Credit Available-for-Sale Investments-Solstice Corp. Bonds 264,000 x Cash 264,000 x
Short-term investments accountants must report on the balance sheet (depending on circumstances) are: Available-for-sale securities or intangible assets. Trading securities or available-for-sale securities. Held-to-maturity investments or trading securities. Inventory or trading securities. Your company purchases a 60% share in ABC Corporation. As the accountant, how do you treat the revenue, expense, assets and liabilities of ABC Corporation? Depreciate the assets minus revenue on the balance sheet. These are ignored by the investor company. Combine the revenue, expenses, assets and liabilities with that of the investor company. Proportionately recognize in the investor company’s income statement. How would an accountant record a written promise-to-pay from a customer? It would be recorded as a Loan on the company’s financial statements. It would be noted in a footnote on the Income Statement. It would be recorded as Note receivable on the company’s…
Investments in Equity Securities Noonan Corporation prepares quarterly financial statements and invests its excess funds in marketable securities. At the end of 2018, Noonans portfolio of investments consisted of the following equity securities: Dunne the first half of 2019, Noonan engaged in the following investment transactions: Required: 1. Record Noonans investment transactions for January 6 through June 30, 2019. 2. Show the items of income or loss from investment transactions that Noonan reports for each of the first and second quarters of 2019. 3. Show how the preceding items are reported on the first and second quarter 2019 ending balance sheets, assuming that management expects to dispose of the Keene and Sachs securities within the next year.
During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss