At the beginning of 2024, specifically on January 1st, Global Enterprises acquired a significant stake in the company Miniature Essentials by purchasing 25% of its available voting shares. This acquisition was made with a cash payment of $197.500. On the acquisition date, the book value and the fair value of Miniature Essentials were both at $790,000. Given the nature of this investment, the equity method was considered the most suitable accounting approach. As the year came to a close, Miniature Essentials reported a net income of $75,000 on December 31, 2024. Additionally, during the year 2024, Miniature Essentials distributed cash dividends totaling $21,500. Required: What is the balance on the Investment account that would be reported on Global Enterprises financial statements as of December 31, 20247

At the beginning of 2024, specifically on January 1st, Global Enterprises acquired a significant stake in the company Miniature Essentials by purchasing 25% of its available voting shares. This acquisition was made with a cash payment of $197.500. On the acquisition date, the book value and the fair value of Miniature Essentials were both at $790,000. Given the nature of this investment, the equity method was considered the most suitable accounting approach. As the year came to a close, Miniature Essentials reported a net income of $75,000 on December 31, 2024. Additionally, during the year 2024, Miniature Essentials distributed cash dividends totaling $21,500. Required: What is the balance on the Investment account that would be reported on Global Enterprises financial statements as of December 31, 20247

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2022, Oriole Corp. bought 28,000 shares of the available 100,000 common shares of Iceberg Inc., a publicly traded firm. This acquisition provided Oriole with significant influence. Oriole paid $722,000 cash for the investment. At the time of the acquisition, Iceberg reported assets of $2,493,000 and liabilities of $1,192,000. Asset values reflected fair market value, except for capital assets that had a net book value of $505,000 and a fair market value of $753,000. These assets had a remaining useful life of five years. For 2022 Iceberg reported net income of $390,000 and paid total cash dividends of $100,000. On May 16, 2023, Oriole sold 14,000 of its shares in Iceberg for $425,000. Oriole has no immediate plans to sell its remaining investment in Iceberg. Iceberg is actively traded, and stock price information follows: January 1, 2022 $29 December 31, 2022 $31 January 1, 2023 $32 (a) Assuming Oriole is using the equity method under ASPE. did the initial investment…
On January 1, 2024, Pine Company owns 40 percent (124,000 shares) of Seacrest, Incorporated, which it purchased several years ago for $700,600. Since the date of acquisition, the equity method has been properly applied, and the carrying amount of the investment account as of January 1, 2024, is $905,200. Excess patent cost amortization of $37,200 is still being recognized each year. During 2024, Seacrest reports net income of $846,000 and a $372,000 other comprehensive loss, both incurred uniformly throughout the year. No dividends were declared during the year. Pine sold 24,800 shares of Seacrest on August 1, 2024, for $236,528 in cash. However, Pine retains the ability to significantly influence the investee. During the last quarter of 2023, Pine sold $71,000 in inventory (which it had originally purchased for only $42,600) to Seacrest. At the end of that fiscal year, Seacrest's inventory retained $12,800 (at sales price) of this merchandise, which was subsequently sold in the first…
On August 1, 2023, Sandhill Corporation, which follows ASPE, purchased 20% of the outstanding voting shares in WLT Corporation for $1,220,000. At the time of purchase, WLT's net assets were undervalued by $70,000 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $300,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,342,000. On January 10, 2024, WLT paid a cash dividend. Sandhill's ownership entitles it to $15,000 of the dividend. Prepare the journal entries on the books of Sandhill Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Sandhill elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order…
Juniper Inc. acquired a 25% interest in Saturn Co. on January 1, 2021, for $260,000. During 2021, Saturn reported net income of $86,000, and paid a total cash dividend to shareholders in the amount of $16,000. Juniper uses the equity method to account for this investment. At the end of 2021, Juniper will report the following debit balance in the investment account: Question 6 options: $285,500 $260,000 $277,500 $281,500
BuyCo, Inc., holds 20 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $11,900 per year. For 2020, Marqueen reported earnings of $117,000 and declares cash dividends of $34,000. During that year, Marqueen acquired inventory for $48,000, which it then sold to BuyCo for $80,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $33,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed?
Live Large Inc. had the following transactions involving non-strategic investments during 2023. 2023 Apr. 1 Paid $100,050 to buy a 90-day term deposit, $100,000 principal amount, 5.0 %, dated April 1. There was a $50 transaction fee included in the above-noted payment amount. June 12 Purchased 3,000 common shares of Blue Balloon Ltd. at $22.25. There was a $50 transaction fee included in the above-noted payment amount. 9 Purchased 1,800 common shares of Purple Car Corp. at $49.50. There was a $50 transaction fee included in the above-noted payment amount. 20 Purchased 700 common shares of Yellow Tech Ltd. at $15.75. There was a $50 transaction fee included in the above-noted payment amount. July 1 Purchased for $67,412 a 7.0%, $65,000 Space Explore Inc. bond that matures in eight years when the market interest rate was 6.4%. There was a $50 transaction fee included in the above-noted payment amount. Interest is paid semiannually beginning December 31, 2023. Live Large Inc. plans to…
Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $652,000 in cash. Annual excess amortization of $13,700 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $498,000, and Rambis reported a $232,000 balance. Herbert reported internal net income of $44,750 in 2020 and $58,350 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $23,300 in 2020 and $36,900 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? Equity method, initial value method and partial…
Consider the following scenario: A newly incorporated company ("iX Nuts") engages in the selling of macadamia nuts. For the 2022 year of assessment, the following is applicable: ● The company was initially funded by a bank loan of $500k bearing interest at 5% payable annually in arrears Share capital was $1,000 paid for in cash by shareholders ● The company purchased $1m worth of macadamia nuts as stock during the year. 10% of this was owing to creditors at year end • The company had sold 80% of its stock by year end ● The company incurred packaging costs of $100,000 in converting purchased macadamia nuts into the final product that is ready for sale. This amount is considered to be part of the cost of goods sold. • The mark-up the company applied to its cost (including packaging) was 120% 75% of the company's sales were cash with the remainder being credit sales Salaries for the company for the year were $240,000 ● The only equipment purchased by the company was a packaging machine…
On January 1, 2021, X Inc. purchased 25% of the voting shares of Y Inc. However, due to a system crash, the initial amount of consideration paid for this 25% has been lost. X uses the equity method. X has significant influence over Y. Calculate the Value of the initial purchase X Inc. paid for its 25% ownership (i.e. January 1, 2021), given the following information that you were able to find: Value of the Investment account in Y Inc. at the end of 2023 was $97,000 Y's net income and declared dividends for the following three years are as follows: Net Income (loss) Dividends 2021 $50,000 $20,000 2022 $70,000 $80,000 2023 $30,000 $60,000
Please help me
Hope you could help me with this, thank you in advance! :)
On January 2, 2021 Pod Company purchased 25% of the outstanding ordinary shares of Jobs, Inc. and subsequently used the equity method to account for the investment. During 2021 Jobs, Inc. reported net income of P420,000 and distributed dividends of P180,000. The ending balance in the Equity Investments account at December 31, 2021 was P320,000 after applying the equity method during 2021. What was the purchase price Pod Company paid for its investment in Jobs, Inc? a.) P170,000 b.) P260,000 c.) P380,000 d.) P470,000