Answered: Buildings (18-year life) Equipment…

Buildings (18-year life) Equipment (5-year life) Franchises (8-year life) Book Value Fair Value $ 400,000 $ 680,000 1,200,000 1,400,000 8 $ $ 480,000

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 8MC

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Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $600,000 on January 2, 2021. During 2021, Darby Company declared dividends of $100,000 and reported earnings for the year of $400,000. If Blanco Company used the fair value method of accounting for its investment in Darby Company, its Equity Investments (Darby) account on December 31, 2021 should be: a. $580,000 b. $660,000 c. $600,000 d. $680,000 If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Equity Investments (Darby) account at December 31, 2021 should be: a. $580,000 b. $600,000 c. $660,000 d. $680,000
On January 2, 2021, Howdy Doody Corporation purchased 15% of Ranger Corporation's common stock for $80,000. During 2021, Ranger had net income of $120,000 and declared and paid a dividend of $40,000. On December 31, 2021, the fair value of the Ranger stock owned by Howdy Doody had increased to $90,000. How much should Howdy Doody show in the 2021 income statement as income from this investment? Answer: $
On January 1, 2024, Coronado Company purchased 8,208 shares of Whispering Company's common stock for $124,000. Immediately after the stock acquisition, the statements of financial position of Coronado and Whispering appeared as follows: Assets Cash Accounts receivable Inventory Investment in Whispering Company Plant assets Accumulated depreciation-plant assets Total Liabilities and Owners' Equity Current liabilities Mortgage notes payable Common stock, $10 par value Other contributed capital Retained earnings Total (a2) Coronado $38,250 57,310 42,270 124,000 144,750 (56,310) $350,270 : Whispering $17,170 28,620 25,000 107,510 (19,510) $158,790 $17,080 40,190 111,980 $ 126,260 54,760 $350,270 Prepare a schedule to compute the difference between book value of equity and the value implied by the purchase price. Any difference between the book value of equity and the value implied by the purchase price relates to subsidiary plant assets. Parent Share $ $26,620 $ 102,600 16,790 12,780…
On January 1, 2025, Vaughn Corporation purchased 20% of the common shares of Bramble Company for $196,000. During the year, Bramble earned net income of $77,000 and paid dividends of $19,250. Prepare the entries for Vaughn to record the purchase and any additional entries related to this investment in Bramble Company in 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.)
. Compute for the CARRYING VALUE of the investment as of December 31, 2019.
On January 2, 2025, Cullumber Company purchased 20% of the outstanding common stock of Blossom, Inc. and subsequently used the equity method to account for the investment. During 2025, Blossom reported net income of $1380000 and distributed dividends of $600000. The ending balance in the Investment in Cullumber account at December 31, 2025 was $1020000 after applying the equity method during 2025. What purchase price did Cullumber pay for its investment in Blossom, Inc.? O $1176000 O $624000 O $1416000 O $864000
Marigold Corp.'s transactions for the year ended December 31, 2021 included the following: • Acquired 50% of Ivanhoe Company's common stock for $305000 cash which was borrowed from a bank. • Issued 5300 shares of its preferred stock for land having a fair value of $483000. • Issued 570 of its 11% debenture bonds, due 2026, for $594000 cash. • Purchased a patent for $334000 cash. • Paid $188000 toward a bank loan. • Sold available-for-sale securities for $1201000. • Had a net increase in returnable customer deposits (long-term) of $128000. Marigold’s net cash provided by investing activities for 2021 was $409500. $562000. $867000. $896000.
How much should be reported in the 2019 Profit or Loss?
The Crump Companies, Inc. has ownership interests in several public companies. At the beginning of 2021, the company’s ownership interest in the common stock of Silken Properties increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment in equity securities account was $31 million at the time of the change. Accountants working with company records determined that the balance in an investment in equity affiliate account would have been $48 million if the equity method had been used previously.Required:1. Will Crump apply the new method retrospectively or apply the new method prospectively?2. Suppose Crump is changing from the equity method rather than to the equity method. Will Crump apply the new method retrospectively or prospectively?
On January 1, 2024, Cat Company purchased the following investments: 1) 20,000 shares (representing 35%) of AA Company stock for $23 per share. 2) 8,000 shares (representing 14%) of ZZ Company stock for $15 per share.. Cat Company recorded the sale of some of its investments during 2025 as follows: 1) On December 31, 2025, Cat Company sold 6,000 shares of the AA Company stock for $30 per share. 2) On September 1, 2025, Cat Company sold 4,000 shares of the ZZ Company stock for $21 per share. During 2024 and 2025, AA Company and ZZ Company reported the following information: AA Company: Net income. Total dividends paid Market value at Dec 31 ZZ Company: Net income Total dividends paid Market value at Dec 31 2024 $200,000 $105,000 $27 per share 2024 $260,000 $125,000 $26 per share 2025 $160,000 $ 35,000 $24 per share 2025 $225,000 $100,000 $29 per share Calculate the balance in the Investment in AA Company account reported on Cat Company's December 31, 2024 balance sheet.
Calculate the percentage of Bonita acquired by Metlock Company.